Cadence raises 2026 revenue growth outlook to 21% as quarterly revenue reaches $1.633 billion
Key Facts
Cadence raised its forecast for revenue growth in fiscal 2026 to 21% year over year and set a full-year revenue range of $6.387 billion to $6.417 billion, according to its third-quarter results. The update follows strong quarterly performance and increased demand for chip and system design tools. The chief executive said the higher outlook reflects "broad-based business momentum, expanding technology leadership, and a record backlog." The company posted third-quarter revenue of $1.633 billion, compared with $1.339 billion in the same period a year earlier. Diluted earnings per share, on a non-GAAP basis, were $2.11, compared with $1.93 a year earlier.
The update marks a further improvement in the company's outlook from its July estimates, when it expected annual growth of about 19% and revenue of $6.260 billion to $6.340 billion. Cadence raised its growth estimate after widening its full-year revenue range in July, according to its second-quarter results disclosure. In that update, the full-year non-GAAP diluted earnings-per-share range was $8.05 to $8.15. The current revenue guidance puts the top of the annual range above the previous range, consistent with the strength in activity described by management. The chief executive linked the revised outlook to a mix of business momentum, technology leadership and orders, while the chief financial officer pointed to the role of AI-driven designs in quarterly growth.
Third-quarter revenue rose 22% year over year, with double-digit growth across all product categories, the chief financial officer said. Recurring revenue increased 18%, adding to the company's base of ongoing revenue during the quarter. By business, Core EDA grew 20%, intellectual property revenue rose 24%, and system design and analysis revenue increased 30% year over year. These rates show growth across product lines rather than in a single business. The chief financial officer attributed the performance to "the increasing momentum of AI-driven designs."
Cadence ended the quarter with a record backlog of $8.2 billion as of September 30, 2026. The company said $4.2 billion of remaining performance obligations are expected to be recognized as revenue in the twelve months following the quarter-end. The backlog indicates the volume of contracted business that could be converted into revenue over the next year, with the timing of recognition still tied to execution. The orders are consistent with the chief executive's explanation for raising the outlook, as he described them as record-setting alongside expanding technology leadership. The company also said it had more than 100 active customer engagements involving AI Super Agents during the quarter.
The company announced the launch of Maestro, a portfolio of domain-specific AI models designed for chips and systems. Cadence said initial workflow results showed up to 30% higher quality and five times greater token efficiency compared with general-purpose models. It said customer deployments had already begun, without specifying their number or value in the announcement. The launch places AI tools among the company's products for design work, while management attributed the higher revenue outlook to broader business momentum and the order backlog. Maestro was therefore announced alongside the quarterly results and outlook update, without the company presenting it as the sole driver of the revision.
For the fourth quarter, Cadence expects revenue of $1.695 billion to $1.725 billion and non-GAAP diluted earnings per share of $2.19 to $2.25. The company had announced that its third-quarter results call would be held on October 26, 2026, at 2 p.m. Pacific time, with the archive available through December 17, 2026. After the results were announced on Monday, October 26, the company's shares rose about 2% in after-hours trading, according to Investing.com. Cadence also said it repurchased $400 million of shares during the quarter. On October 26, the board approved an additional $2.5 billion for the repurchase program.