01—Abstract
Summary
Summary of the 10-Q filed May 1, 2026. Cited figures are marked; the original filing is the authoritative source.
Cadence Design Systems Inc. (CDNS) reported strong financial results for the first quarter of 2026, demonstrating robust revenue growth and improved profitability.
Total revenue increased by 19% year-over-year to $1.47 billiona, driven by a significant surge in product and maintenance revenue, which grew 21%. This growth was supported by continued customer investment in complex chip designs and the integration of recent acquisitions, particularly the Hexagon D&E business. The company also saw substantial increases in operating expenses, largely due to strategic investments in R&D and sales headcount, including those from acquisitions, as well as higher amortization costs related to acquired intangibles.
Despite these increased investments, Cadence maintained a stable operating margin of 29%. The acquisition of the Hexagon D&E business for approximately $2.9 billionb, financed through cash and stock, significantly boosted goodwill and acquired intangibles on the balance sheet. The company's cash position decreased sequentially due to this acquisition and share repurchases, but it maintains a healthy liquidity position with access to a $1.25 billion revolving credit facility.
02—Key points
Key Highlights
- Total revenue for the first quarter of 2026 increased by 19% to $1.47 billion compared to the prior year quarter, driven by strong performance in product and maintenance revenue (+21%).
- The acquisition of Hexagon's design and engineering business for approximately $2.9 billion closed in February 2026, significantly increasing goodwill to $4.93 billion and acquired intangibles to $1.93 billion.
- Operating expenses grew by 15% to $808.1 million, primarily due to increased R&D and marketing/sales investments, including headcount from acquisitions and higher amortization of acquired intangibles.
- Net income increased by 22.6% to $335.7 million, resulting in diluted EPS of $1.23, up from $1.00 in the prior year quarter.
- Cash and cash equivalents decreased significantly to $1.41 billion from $3.00 billion, largely due to cash used in business combinations.
- The company successfully drew $425 million on its new $1.25 billion revolving credit facility, which expires in August 2029.
- Remaining performance obligations (backlog) stood at a substantial $8.0 billion as of March 31, 2026, indicating strong future revenue visibility.
03—One dollar
04—Financials
Financial Highlights
Figures from 10-QQ1 FY2026filed May 1, 2026Financial Statements
Q1 FY2026 against Q1 FY2025
| Line item | Q1 FY2026Q1 FY2025 | Change |
|---|---|---|
| Revenue | $1.47B$1.24B | +18.7% |
| R&D Expenses | $508.44M$439.10M | +15.8% |
| Operating Expenses | $1.04B$880.85M | +18.4% |
| Operating Income | $431.33M$361.52M | +19.3% |
| Interest Expense | $31.61M$29.12M | +8.6% |
| Net Income | $335.66M$273.58M | +22.7% |
| EPS (Basic) | $1.23$1.01 | +21.8% |
| EPS (Diluted) | $1.23$1.00 | +23.0% |
| Shares Outstanding (Basic) | 272.06M271.97M | 0.0% |
| Shares Outstanding (Diluted) | 273.73M273.63M | 0.0% |
05—Questions
Frequently Asked Questions
What was the primary driver of Cadence's revenue growth in Q1 2026?
Cadence's revenue growth in Q1 2026 was primarily driven by a 21% increase in product and maintenance revenue, totaling $1.35 billion. This was supported by continued customer investment in complex chip designs and the initial revenue contributions from recent acquisitions.
How did the Hexagon acquisition impact Cadence's balance sheet?
The acquisition of Hexagon's design and engineering business for approximately $2.9 billion significantly impacted the balance sheet. Goodwill increased substantially from $2.75 billion at the end of 2025 to $4.93 billion at the end of Q1 2026, and acquired intangibles grew from $718 million to $1.93 billion.
What is the outlook for Cadence's future revenue based on its backlog?
Cadence has a strong revenue pipeline, with remaining performance obligations (backlog) totaling $8.0 billion as of March 31, 2026. The company expects to recognize approximately 55% of this backlog as revenue over the next 12 months, providing good visibility into future financial performance.
How has the company's cash position changed and what is its liquidity situation?
Cadence's cash and cash equivalents decreased by approximately $1.6 billion sequentially to $1.41 billion, primarily due to the significant cash outlay for business combinations. However, the company maintains strong liquidity, with access to a $1.25 billion revolving credit facility and a substantial backlog, indicating it has sufficient resources to meet its obligations and fund its operations.
06—Continue