CDNS Filings — Cadence Design Systems, Inc. - FilingSpy
CDNS
Cadence Design Systems, Inc.
A maker of AI-driven software, hardware, and silicon "blueprints" (intellectual property) that engineers use to design computer chips and electronic systems, including tools like Virtuoso, Innovus, and Palladium. It was born in 1988 from the merger of two design-software startups, SDA Systems and ECAD. The name blends "CAD" (computer-aided design) with a musical term—fitting, since early tools were named Composer and Virtuoso.
Q2 FY2026 revenue rose 18.7% to $1.47B while operating cash flow fell 26.9% to $355.8M
fell 26.9% to $355.8M as acquisition spending outpaced collections. rose 18.7% to $1,474.2M and rose 23.0% to $1.23, driven by a shift toward up-front sales that lifted that mix to 23% from 18% a year earlier. The company carries higher debt and lower cash after acquisition outlays, with the Hexagon deal still pending.
Key takeaways
fell 26.9% to $355.8M from $487.0M on timing of customer receipts, and cash and equivalents fell 49.4% to $1,406.7M as investing cash for business combinations rose to $2,112.0M.
rose 18.7% to $1,474.2M with product and maintenance up 21%, and climbed to 23% of total from 18%, pulling to 77% from 82%.
held at 29.3% and rose 19.3% to $431.3M even as G&A rose 40% to $88.2M from acquisition headcount and professional services.
Section summaries
Management's Discussion and Analysis
Revenue grew 24% YoY to $1.58B in Q2 FY2026, driven by software, hardware, and IP demand, while operating margin expanded to 28% from 19%.
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Total increased 24% to $1.58B in Q2 FY2026, with product and maintenance up 22% and services up 47%, reflecting broad-based demand across software, hardware, and IP offerings.
rose 23.0% to $1.23 and rose 22.7% to $335.7M.
New risk factors cite U.S.-China tensions, tariffs, and a recent cyber incident with limited theft of source code and test files.
What changed
Q2 FY2026 percentage rose to 23% from the 18% Q1 FY2026 level flagged to watch, continuing the shift toward up-front sales management expected to increase through 2025.
Cash fell to $1,406.7M from $3,001.3M at FY2025 year-end as the €2.70B Hexagon acquisition has not yet closed but cash spending on business combinations rose to $2,112.0M, against the flagged watch on funding mix against $3,001.3M year-end cash.
Q2 FY2026 of $355.8M followed the flagged Q1 decline of 26.9% and came in below the prior year's $487.0M, confirming the receipt-timing pressure flagged for Q2.
China enters Q2 FY2026 under three-year BIS/DOJ probation terms after the post-rescission rebound, with no Q2 China figure reported in this filing against the $245.0M Q3 FY2025 base.
trajectory continues from the $2.5B senior notes load after the $300M 2025 Term Loan maturity, with no new figure given this quarter.
What to watch
Q3 FY2026 percentage against the 23% Q2 level as hardware and IP delivery timing continues.
Close of the €2.70B Hexagon acquisition and its cash-and-debt funding mix against $1,406.7M quarter-end cash.
Q3 FY2026 against $355.8M this quarter after the 26.9% decline.
China in Q3 FY2026 under three-year BIS/DOJ probation terms after the post-rescission rebound.
China surged 96% to $236M, partly due to the absence of temporary BIS export license requirements that had restricted software deliveries in the prior-year period.
improved to 28% from 19%, primarily because the prior-year period included a loss on a ; this was partially offset by higher and incremental expenses from recent acquisitions.
Cost of product and maintenance rose 26%, driven by a 214% jump in related to the D&E business acquisition, while hardware product costs were flat.
Operating expenses increased 21%, with R&D up 20% and marketing and sales up 20%, mainly due to higher headcount from acquisitions and continued investment in technical talent.
Cash provided by operations grew 15% to $991M, but cash and equivalents fell to $1.44B from $3.00B at year-end, largely due to payments for business combinations.
Quantitative and Qualitative Disclosures About Market Risk
The company faces foreign currency, interest rate, and equity price risks, using forward contracts and monitoring to manage exposures.
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and expenses are exposed to foreign currency fluctuations, with a stronger dollar hurting local-currency revenue and a weaker dollar hurting local-currency costs.
The company uses foreign currency forward contracts (not designated as accounting hedges) with maturities of 90 days or less to hedge asset and liability exposures.
As of June 30, 2026, total of forward contracts was $1.05 billion, with an estimated of $(13.8) million.
A hypothetical 10% decrease in the U.S. dollar would decrease the of forward contracts by $12.0 million; a 10% increase would increase fair value by $15.1 million.
Interest rate risk arises from cash equivalents and debt securities; a 1% rate increase would reduce the of marketable debt securities by $3.3 million.
Equity price risk stems from a portfolio of strategic equity investments, including marketable and non-marketable securities.
For information regarding pending legal proceedings, related matters and associated risks, see Note 14 in the notes to condensed consolidated financial statements under Part I, Item 1 in this Quarterly Report and the “Risk Factors” section in our Annual Report and this Quarterly…
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For information regarding pending legal proceedings, related matters and associated risks, see Note 14 in the notes to condensed consolidated financial statements under Part I, Item 1 in this Quarterly Report and the “Risk Factors” section in our Annual Report and this Quarterly Report.
Updated risks highlight geopolitical and trade policy uncertainty, and evolving cybersecurity threats including a recent data incident.
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Global economic and political instability, including inflation, interest rates, and geopolitical conflicts, may reduce customer R&D spending and demand for our products.
Rising U.S.-China tensions, tariffs, and trade restrictions could disrupt our supply chain, increase costs, and reduce , especially given our substantial China-derived revenue and reliance on Taiwan's tech hub.
We face evolving cybersecurity threats from state-sponsored actors and hackers, with a recent incident involving limited theft of test files, configuration settings, and source code.
Cyberattacks using AI and zero-day exploits could compromise our Cadence Cloud portfolio, data centers, or customer environments, leading to reputational harm, litigation, and financial loss.
Reliance on third-party IT providers and acquired companies with weaker security increases our exposure to breaches and integration risks.