Earnings release
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CADENCE REPORTS THIRD QUARTER 2026 CADENCE DESIGN SYSTEMS, INC. CFO COMMENTARY Key Takeaways • Exceeded Q3 guidance for revenue, non-GAAP operating margin, and non-GAAP EPS • Raising 2026 revenue growth outlook for the third time this year to ~21% • Achieved new record backlog of $8.2 billion Q4 2026 Outlook • Revenue: $1.695 billion - $1.725 billion • GAAP operating margin: 30% - 31% • Non-GAAP operating margin: 44% - 45% • GAAP EPS: $1.23 - $1.29 • Non-GAAP EPS: $2.19 - $2.25 • Expect to use approximately $400 million to repurchase Cadence shares in Q4 Q3 2026 KEY METRICS • Revenue: $1.633 billion • GAAP operating margin: 26.2% • Non-GAAP operating margin: 44.1% • GAAP EPS: $1.05 • Non-GAAP EPS: $2.11 • Operating cash flow: $424 million FY 2026 Outlook • Revenue: $6.387 billion - $6.417 billion • GAAP operating margin: 28.2% - 29.2% • Non-GAAP operating margin: 44.2% - 45.2% • GAAP EPS: $4.84 - $4.90 • Non-GAAP EPS: $8.37 - $8.43 • Operating cash flow: ~$2.0 billion • Expect to use more than 50% of free cash flow to repurchase Cadence shares for the year Financial Results Webcast Our Q3 2026 financial results webcast will begin October 26, 2026 at 2:00 p.m. (Pacific). The webcast may be accessed at www.cadence.com/cadence/ investor_relations. An archive of the webcast will be available on October 26, 2026 until 5:00 p.m. (Pacific) on December 17, 2026. October 26, 2026 ............................... Cadence Q3 2026 Financial Results .................................................. 1
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Financial Metrics (In Millions, except per share data) 2021 2022 2023 2024 2025 2026E Revenue $ 2,988 $ 3,562 $ 4,090 $ 4,641 $ 5,297 $6,387- $6,417 Revenue growth 11% 19% 15% 13% 14% 21% - 21% 3-year CAGR* 12% 15% 15% 16% 14% ~16% GAAP operating expenses $ 2,209 $ 2,488 $ 2,839 $ 3,291 $ 3,805 $4,571 GAAP operating expense growth 8% 13% 14% 16% 16% ~20% Non-GAAP operating expenses $ 1,877 $ 2,125 $ 2,373 $ 2,667 $ 2,935 $3,540 Non-GAAP operating expense growth 8% 13% 12% 12% 10% ~21% GAAP operating margin 26.1% 30.1% 30.6% 29.1% 28.2% 28.2% - 29.2% Non-GAAP operating margin 37.2% 40.3% 42.0% 42.5% 44.6% 44.2% - 45.2% Rule of 40 Metric** 48.6% 59.5% 56.8% 56.0% 58.7% ~66% GAAP earnings per share $ 2.50 $ 3.09 $ 3.82 $ 3.85 $ 4.06 $4.84 - $4.90 Non-GAAP earning per share $ 3.29 $ 4.27 $ 5.15 $ 5.97 $ 7.14 $8.37 - $8.43 Non-GAAP EPS growth* 18% 30% 21% 16% 20% 18 % 3-year Non-GAAP EPS CAGR* 21% 25% 23% 22% 19% 18 % Weighted average diluted shares outstanding 278.9 275.0 272.7 273.8 273.3 274 - 276 Cash flow from operations 1,101 1,242 1,349 1,261 1,729 ~$2,000 Capital expenditures 65 123 102 143 142 ~$240 * At midpoint of outlook. ** Rule of 40 Metric = Revenue growth % + Non-GAAP operating margin %. Profitability Trends (In Millions) 2021 2022 2023 2024 2025 2026E* GAAP operating margin 26.1% 30.1% 30.6% 29.1% 28.2% 28.7% Non-GAAP operating margin 37.2% 40.3% 42.0% 42.5% 44.6% 44.7% Stock-based compensation (7.0)% (7.6)% (8.0)% (8.4)% (8.6)% (8.9)% Non-GAAP operating margin adjusted for stock- based compensation 30.2% 32.7% 34.0% 34.1% 36.0% 35.8% GAAP operating income $ 779 $ 1,074 $ 1,251 $ 1,351 $ 1,492 $ 1,831 Non-GAAP operating income $ 1,111 $ 1,436 $ 1,717 $ 1,974 $ 2,361 $ 2,862 Non-GAAP operating income adjusted for stock-based compensation $ 901 $ 1,166 $ 1,391 $ 1,583 $ 1,906 $ 2,293 * At midpoint of outlook. Cadence Design Systems, Inc. October 26, 2026 ............................... Cadence Q3 2026 Financial Results .................................................. 2
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Fourth Quarter 2026 Financial Outlook Q4 2025 Q3 2026 Q4 2026E Total Revenue ($ Millions) $ 1,440 $ 1,633 $1,695 - $1,725 Q/Q Growth 3% 4% - 6% Y/Y Growth 22% 18% - 20% GAAP Operating Margin 32.2% 26.2% 30% - 31% Non-GAAP Operating Margin 45.8% 44.1% 44% - 45% GAAP EPS $ 1.42 $ 1.05 $1.23 - $1.29 Non-GAAP EPS $ 1.99 $ 2.11 $2.19 - $2.25 Fiscal Year 2026 Financial Outlook Previous Current FY 2025 FY 2026E FY 2026E Recurring Revenue 80% ~80% ~80% Total Revenue ($ Millions) $ 5,297 $6,260 - $6,340 $6,387 - $6,417 Y/Y Growth 14% 18% - 20% 21% - 21% Revenue from Beginning Backlog ~69% ~65% ~64% GAAP Operating Margin 28.2% 27.75% - 28.75% 28.2% - 29.2% Non-GAAP Operating Margin 44.6% 43.75% - 44.75% 44.2% - 45.2% GAAP Other Income & Expense ($ Millions) $ 30 $(17) - $3 $0 - $10 Non-GAAP Other Income & Expense ($ Millions) $ (24) $(115) - $(95) $(101) - $(91) GAAP Tax Rate 27.1% ~26% ~27% Non-GAAP Tax Rate 16.5% 16.5% 16.5% Weighted Average Diluted Shares Outstanding (Millions) 273.3 275.5 - 277.5 274 - 276 GAAP EPS $ 4.06 $4.76 - $4.86 $4.84 - $4.90 Y/Y Growth 5% 17% - 20% 19% - 21% Non-GAAP EPS $ 7.14 $8.05 - $8.15 $8.37 - $8.43 Y/Y Growth 20% 13% - 14% 17% - 18% Cash Flow from Operations ($ Millions) $ 1,729 ~$2,000 ~$2,000 DSO 64 ~65 ~65 Capital Expenditures ($ Millions) $ 142 ~$240 ~$240 Cadence Design Systems, Inc. October 26, 2026 ............................... Cadence Q3 2026 Financial Results .................................................. 3
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Third Quarter Financial Results Backlog (In Billions) 2022 2023 2024 2025 Q3 2026 Backlog $ 5.8 $ 6.0 $ 6.8 $ 7.8 $ 8.2 Revenue (In Millions) Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 Product and Maintenance $ 1,208 $ 1,332 $ 1,349 $ 1,431 $ 1,487 Services 131 108 125 154 146 Total Revenue $ 1,339 $ 1,440 $ 1,474 $ 1,584 $ 1,633 Table may not foot due to rounding Recurring and Up-Front Revenue Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 Revenue Recognized Over Time 78 % 77 % 73 % 72 % 74 % Other Recurring Revenue 4 % 2 % 4 % 6 % 5 % Recurring Revenue 82 % 79 % 77 % 78 % 79 % Up-Front Revenue 18 % 21 % 23 % 22 % 21 % Total Revenue 100 % 100 % 100 % 100 % 100 % Trailing Twelve Months Recurring and Up-Front Revenue Trailing Twelve Months Ended Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 Recurring Revenue 80 % 80 % 79 % 79 % 78 % Up-Front Revenue 20 % 20 % 21 % 21 % 22 % Total 100 % 100 % 100 % 100 % 100 % Revenue Mix by Geography (% of Total Revenue) Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 Americas 43 % 47 % 45 % 43 % 43 % China 18 % 12 % 13 % 15 % 16 % Other Asia 18 % 20 % 20 % 20 % 19 % Europe, Middle East and Africa 14 % 14 % 16 % 15 % 15 % Japan 7 % 7 % 6 % 7 % 7 % Total 100 % 100 % 100 % 100 % 100 % Revenue Mix by Product Category (% of Total Revenue) Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 Core EDA 71 % 69 % 71 % 68 % 69 % Semiconductor IP 14 % 15 % 14 % 15 % 15 % System Design and Analysis 15 % 16 % 15 % 17 % 16 % Total 100 % 100 % 100 % 100 % 100 % Cadence Design Systems, Inc. October 26, 2026 ............................... Cadence Q3 2026 Financial Results .................................................. 4
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Gross Margin Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 GAAP Gross Margin 86.4 % 86.9 % 85.4 % 84.9 % 85.6 % Non-GAAP Gross Margin 88.0 % 88.5 % 88.0 % 88.2 % 88.8 % Total Costs and Expenses (In Millions) Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 Total GAAP Costs and Expenses $ 913 $ 977 $ 1,043 $ 1,134 $ 1,205 Total Non-GAAP Costs and Expenses $ 701 $ 781 $ 815 $ 863 $ 913 Operating Margin Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 GAAP Operating Margin 31.8 % 32.2 % 29.3 % 28.4 % 26.2 % Non-GAAP Operating Margin 47.6 % 45.8 % 44.7 % 45.5 % 44.1 % Net Income Per Share Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 GAAP Net Income Per Share $ 1.05 $ 1.42 $ 1.23 $ 1.33 $ 1.05 Non-GAAP Net Income Per Share $ 1.93 $ 1.99 $ 1.96 $ 2.11 $ 2.11 Total DSO Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 DSO 55 64 67 65 66 Balance Sheet and Cash Review Free Cash Flow (In Millions) Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 Net Cash from Operating Activities $ 311 $ 553 $ 356 $ 635 $ 424 Capital Expenditures 34 41 49 53 62 Free Cash Flow $ 277 $ 512 $ 307 $ 582 $ 362 Cash and Cash Equivalents (In Millions) Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 Cash and Cash Equivalents $ 2,753 $ 3,001 $ 1,407 $ 1,440 $ 1,452 • Approximately 15 percent of our cash and cash equivalents were in the U.S. at quarter-end. Debt (In Millions) Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 Debt (principal value) $ 2,500 $ 2,500 $ 2,925 $ 2,500 $ 2,650 Share Repurchase (In Millions) Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 Share Repurchase $ 200 $ 200 $ 200 $ 200 $ 400 Number of Shares 0.584 0.613 0.671 0.580 1.305 Employees Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 Headcount 13,693 13,800 15,110 15,445 15,753 Cadence Design Systems, Inc. October 26, 2026 ............................... Cadence Q3 2026 Financial Results .................................................. 5
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Forward Looking Statements This CFO Commentary contains forward-looking statements, including Cadence's outlook on future operating results, financial condition, strategic objectives, capital allocation and share repurchase program, business model and prospects, technology and product developments and performance, customer adoption and demand, strategic relationships, backlog, industry trends and Cadence's ability to capitalize on them, market dynamics and market growth, tax rates, legislative and regulatory developments and other statements using words such as “anticipates,” “believes,” “expects,” “intends,” “plans,” “will,” and words of similar import and the negatives thereof. Forward-looking statements are subject to a number of risks, uncertainties and other factors, many of which are outside Cadence’s control and which may cause actual results to differ materially from expectations expressed or implied in the forward-looking statements, including, among others: (i) Cadence’s ability to compete successfully in the highly competitive industries in which it operates and realize the benefits of its investments in research and development, including opportunities presented by AI; (ii) the success of Cadence’s efforts to maintain and improve operational efficiency and growth; (iii) the mix of products and services sold, the timing of orders and deliveries and the ability to develop, install or deliver Cadence’s products or services; (iv) changes in customer demands or supply constraints that could result in delays in purchases, development, installations or deliveries of Cadence’s products or services, including those resulting from consolidation, restructurings and other operational efficiency improvements of Cadence’s customers; (v) economic, geopolitical and industry conditions, including export controls, tariffs, other trade restrictions and other government regulations, as well as rising tensions, armed conflicts around the world, increased energy costs and supply chain constraints; (vi) changes in tax laws, interest rate and currency exchange rate fluctuations, inflation rates, Cadence’s increased debt levels and obligations and Cadence’s ability to repay debt or access capital and debt markets in the future; (vii) legislative or regulatory requirements; (viii) Cadence’s acquisition of other companies, businesses or technologies or the failure to successfully integrate and operate them; (ix) harm caused by compromises in cybersecurity and cybersecurity attacks; (x) capital expenditure requirements and events that affect cash flow, liquidity or reserves, or estimates Cadence may take from time to time with respect to accounts receivable, taxes and tax examinations, litigation, regulatory or other matters; (xi) the effects of any litigation, regulatory, tax or other proceedings to which Cadence is or may become a party or to which Cadence or its products, services, technologies or properties are subject, including Cadence’s ongoing obligations under its July 2025 settlement agreements with the U.S. Department of Justice (“DOJ”) and Bureau of Industry and Security (“BIS”), any further inquiries or adverse actions by the DOJ, BIS or other governmental authorities and any impact of the settlements on Cadence’s operations and business dealings; and (xii) Cadence’s ability to successfully meet any environmental, social and governance targets and practices. In addition, the timing and amount of Cadence’s repurchases of its common stock are subject to business and market conditions, corporate and regulatory requirements, stock price, acquisition opportunities and other factors. Cadence's share repurchase program may be modified, suspended or terminated without prior notice. For a detailed discussion of these and other cautionary statements related to Cadence and its business, please refer to Cadence’s filings with the U.S. Securities and Exchange Commission, including its most recent report on Form 10-K, subsequent reports on Form 10-Q and future filings. All forward-looking statements in this document are based on management's expectations as of the date of this document and, except as required by law, Cadence disclaims any obligation to update these forward-looking statements to reflect future events or circumstances. GAAP to Non-GAAP Reconciliation Non-GAAP financial measures should not be considered as a substitute for or superior to measures of financial performance prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of non-GAAP financial measures contained within this CFO Commentary with their most directly comparable GAAP financial results. Investors are also encouraged to look at the GAAP results as the best measure of financial performance. See our earnings press release issued today for further discussion of our non-GAAP financial measures, as well as the reconciliation provided in the Appendix to this CFO Commentary. Cadence’s management uses non-GAAP net income because it excludes items that are generally not directly related to the performance of the company’s core business operations and therefore provides supplemental information to Cadence’s management and investors regarding the performance of the business operations, facilitates comparisons to the historical operating results and allows the review of Cadence’s business from the same perspective as Cadence’s management, including forecasting and budgeting. © 2026 Cadence Design Systems, Inc. All rights reserved worldwide. Cadence, the Cadence logo and the other Cadence marks found at www.cadence.com/go/trademarks are trademarks or registered trademarks of Cadence Design Systems, Inc. All other trademarks are the property of their respective owners. Cadence Design Systems, Inc. October 26, 2026 ............................... Cadence Q3 2026 Financial Results .................................................. 6
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APPENDIX I Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited) Reconciliation of GAAP Total Expenses to Non-GAAP Total Expenses (In Millions) Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 GAAP total costs and expenses $ 913 $ 977 $ 1,043 $ 1,134 $ 1,205 Reconciling items to non-GAAP total costs and expenses Stock-based compensation expense (116) (113) (138) (147) (145) Amortization of acquired intangibles (26) (30) (51) (80) (80) Acquisition and integration-related costs (37) (49) (41) (33) (25) Restructuring (27) (2) — — (42) Non-qualified deferred compensation (expenses) credits (6) (2) 3 (11) — Non-GAAP total costs and expenses* $ 701 $ 781 $ 815 $ 863 $ 913 Table may not foot due to rounding * The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. Reconciliation of GAAP Total Expenses to Non-GAAP Total Expenses (In Millions) 2021 2022 2023 2024 2025 2026E GAAP total costs and expenses $ 2,209 $ 2,488 $ 2,839 $ 3,291 $ 3,805 $ 4,571 Reconciling items to non-GAAP total costs and expenses Stock-based compensation expense (210) (270) (326) (391) (455) (569) Amortization of acquired intangibles (67) (60) (62) (90) (105) (289) Acquisition and integration-related costs (23) (41) (56) (96) (135) (122) Restructuring 1 — (11) (24) (29) (42) Non-qualified deferred compensation (expenses) credits (6) 8 (11) (11) (14) (9) Special charges* (27) — — (3) (2) — Loss related to contingent liability** — — — (8) (129) — Non-GAAP total costs and expenses*** $ 1,877 $ 2,125 $ 2,373 $ 2,667 $ 2,935 $ 3,540 Table may not foot due to rounding * 2021 includes costs related to a voluntary retirement program. ** Related to resolution of previously disclosed legal proceedings with the DOJ and BIS. *** The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. Cadence Design Systems, Inc. October 26, 2026 ............................... Cadence Q3 2026 Financial Results .................................................. 7
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Reconciliation of GAAP Operating Income to Non-GAAP Operating Income and Non-GAAP Operating Income Adjusted for Stock-based Compensation (In Millions) 2021 2022 2023 2024 2025 2026E GAAP operating income $ 779 $ 1,074 $ 1,251 $ 1,351 $ 1,492 $ 1,831 Reconciling items to non-GAAP operating income Stock-based compensation expense 210 270 326 391 455 569 Amortization of acquired intangibles 67 60 62 90 105 289 Acquisition and integration-related costs 23 41 56 96 135 122 Restructuring (1) — 11 24 29 42 Non-qualified deferred compensation expenses (credits) 6 (8) 11 11 14 9 Special charges* 27 — — 3 2 — Loss related to contingent liability** — — — 8 129 — Non-GAAP operating income*** $ 1,111 $ 1,436 $ 1,717 $ 1,974 $ 2,361 $ 2,862 Stock-based compensation expense (210) (270) (326) (391) (455) (569) Non-GAAP operating income adjusted for stock- based compensation*** $ 901 $ 1,166 $ 1,391 $ 1,583 $ 1,906 $ 2,293 Table may not foot due to rounding * 2021 includes costs related to a voluntary retirement program. ** Related to resolution of previously disclosed legal proceedings with the DOJ and BIS. *** The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. Cadence Design Systems, Inc. October 26, 2026 ............................... Cadence Q3 2026 Financial Results .................................................. 8
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Reconciliation of GAAP Gross Margin as a Percent of Total Revenue to Non-GAAP Gross Margin as a Percent of Total Revenue Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 GAAP gross margin as a percent of total revenue 86.4% 86.9% 85.4% 84.9% 85.6% Reconciling items to non-GAAP gross margin as a percent of total revenue Stock-based compensation expense 0.3% 0.3% 0.4% 0.4% 0.4% Amortization of acquired intangibles 1.2% 1.3% 2.1% 2.9% 2.8% Non-qualified deferred compensation expenses (credits) 0.0% 0.0% 0.0% 0.0% 0.0% Acquisition and integration-related costs 0.1% 0.0% 0.1% 0.0% 0.0% Non-GAAP gross margin as a percent of total revenue* 88.0% 88.5% 88.0% 88.2% 88.8% * The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. Cadence Design Systems, Inc. October 26, 2026 ............................... Cadence Q3 2026 Financial Results .................................................. 9
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Reconciliation of GAAP Operating Margin as a Percent of Total Revenue to Non-GAAP Operating Margin as a Percent of Total Revenue Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 Q4 2026E GAAP operating margin as a percent of total revenue 31.8% 32.2% 29.3% 28.4% 26.2% 30% - 31% Reconciling items to non-GAAP operating margin as a percent of total revenue Stock-based compensation expense 8.7% 7.9% 9.4% 9.3% 8.9% 8% Amortization of acquired intangibles 1.9% 2.1% 3.4% 5.0% 4.9% 5% Acquisition and integration- related costs 2.8% 3.4% 2.8% 2.1% 1.5% 1% Restructuring 2.0% 0.1% 0.0% 0.0% 2.6% 0% Non-qualified deferred compensation expenses (credits) 0.4% 0.1% (0.2)% 0.7% 0.0% 0% Non-GAAP operating margin as a percent of total revenue* 47.6% 45.8% 44.7% 45.5% 44.1% 44% - 45% * The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. Cadence Design Systems, Inc. October 26, 2026 ............................... Cadence Q3 2026 Financial Results .................................................. 10
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Reconciliation of GAAP Operating Margin as a Percent of Total Revenue to Non-GAAP Operating Margin as a Percent of Total Revenue 2021 2022 2023 2024 2025 2026E GAAP operating margin as a percent of total revenue 26.1% 30.1% 30.6% 29.1% 28.2% 28.2% - 29.2% Reconciling items to non-GAAP operating margin as a percent of total revenue Stock-based compensation expense 7.0% 7.6% 8.0% 8.4% 8.6% 9% Amortization of acquired intangibles 2.2% 1.7% 1.5% 2.0% 2.0% 4% Acquisition and integration-related costs 0.8% 1.1% 1.4% 2.1% 2.5% 2% Restructuring 0.0% 0.0% 0.3% 0.5% 0.6% 1% Non-qualified deferred compensation expenses (credits) 0.2% (0.2)% 0.2% 0.2% 0.3% 0% Special charges* 0.9% 0.0% 0.0% 0.0% 0.0% 0% Loss related to contingent liability** 0.0% 0.0% 0.0% 0.2% 2.4% 0% Non-GAAP operating margin as a percent of total revenue*** 37.2% 40.3% 42.0% 42.5% 44.6% 44.2% - 45.2% * 2021 includes costs related to a voluntary retirement program. ** Related to resolution of previously disclosed legal proceedings with the DOJ and BIS. *** The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. Cadence Design Systems, Inc. October 26, 2026 ............................... Cadence Q3 2026 Financial Results .................................................. 11
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Reconciliation of GAAP Diluted Net Income Per Share to Non-GAAP Diluted Net Income Per Share (In Thousands, Except Per Share Data) Q3 2025 Q4 2025 Q1 2026 Q2 2026 Q3 2026 Q4 2026E Diluted net income per share on a GAAP basis $ 1.05 $ 1.42 $ 1.23 $ 1.33 $ 1.05 $1.23 - $1.29 Stock-based compensation expense 0.42 0.41 0.50 0.53 0.53 0.51 Amortization of acquired intangibles 0.10 0.11 0.19 0.29 0.29 0.29 Acquisition and integration- related costs 0.14 0.18 0.15 0.12 0.09 0.08 Restructuring 0.10 0.01 — — 0.15 — Non-qualified deferred compensation expenses (credits) 0.02 0.01 (0.01) 0.04 — — Other income or expense related to foreign currency forward exchange contract and settlement associated with an acquisition 0.07 0.04 (0.01) — — — Other income or expense related to investments, divestitures and non-qualified deferred compensation plan assets 0.03 (0.18) (0.04) (0.30) (0.01) — Income tax effect of non-GAAP adjustments — (0.01) (0.05) 0.10 0.01 0.08 Diluted net income per share on a non-GAAP basis* $ 1.93 $ 1.99 $ 1.96 $ 2.11 $ 2.11 $2.19 - $2.25 Shares used in calculation of diluted net income per share 273,798 272,932 273,725 276,163 275,278 * The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. Cadence Design Systems, Inc. October 26, 2026 ............................... Cadence Q3 2026 Financial Results .................................................. 12
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Reconciliation of GAAP Diluted Net Income Per Share to Non-GAAP Diluted Net Income Per Share (In Thousands, Except Per Share Data) 2021 2022 2023 2024 2025 2026E Diluted net income per share on a GAAP basis $ 2.50 $ 3.09 $ 3.82 $ 3.85 $ 4.06 $4.84 - $4.90 Stock-based compensation expense 0.75 0.98 1.19 1.43 1.67 2.07 Amortization of acquired intangibles 0.24 0.22 0.23 0.33 0.38 1.05 Acquisition and integration-related costs 0.08 0.15 0.21 0.35 0.49 0.45 Restructuring — — 0.04 0.09 0.11 0.15 Non-qualified deferred compensation expenses (credits) 0.02 (0.03) 0.04 0.04 0.05 0.03 Special charges* 0.10 — — 0.01 0.01 — Loss related to contingent liability** — — — 0.03 0.47 — Other income or expense related to foreign currency forward exchange contract and settlement associated with an acquisition — — — — 0.11 (0.01) Other income or expense related to investments, divestitures and non- qualified deferred compensation plan assets (0.03) 0.05 (0.17) (0.22) (0.31) (0.35) Income tax effect of non-GAAP adjustments (0.37) (0.19) (0.21) 0.06 0.10 0.14 Diluted net income per share on a non- GAAP basis*** $ 3.29 $ 4.27 $ 5.15 $ 5.97 $ 7.14 $8.37 - $8.43 Shares used in calculation of diluted net income per share 278,858 275,011 272,748 273,833 273,312 274 - 276M * 2021 includes costs related to a voluntary retirement program. ** Related to resolution of previously disclosed legal proceedings with the DOJ and BIS. *** The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. Cadence Design Systems, Inc. October 26, 2026 ............................... Cadence Q3 2026 Financial Results .................................................. 13
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Reconciliation of GAAP Total Other Income and Expense to Non-GAAP Total Other Income and Expense (In Millions) 2024 2025 2026E GAAP total other income and expense $ 45 $ 30 $0 - $10 Reconciling items to non-GAAP total income and expense Other income or expense related to foreign currency forward exchange contract and settlement associated with an acquisition — 29 (3) Other income or expense related to investments, divestitures and non-qualified deferred compensation plan assets (61) (83) (98) Non-GAAP total other income and expense* $ (16) $ (24) $(101) - $(91) * The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP. Cadence Design Systems, Inc. October 26, 2026 ............................... Cadence Q3 2026 Financial Results .................................................. 14