$CDNS · CADENCE DESIGN SYSTEMS INC
Cadence Design Systems filed its Q3 FY2026 10-Q, reporting revenue of $1.633B (+22.0% YoY) and diluted EPS of $1.05 (flat YoY). The balance sheet reflects the transformative D&E acquisition: goodwill surged to $4.93B, acquired intangibles to $1.79B, and cash dropped to $1.45B from $3.00B at year-end. Operating cash flow for the nine months reached $1.414B, up 20% YoY.
- Q3 FY2026 revenue of $1.633B, up 22.0% YoY from $1.339B
- Q3 diluted EPS of $1.05, flat YoY as revenue growth offset by higher R&D (+27%) and restructuring costs
- Nine-month operating cash flow of $1.414B, up 20% from $1.175B in prior-year period
- Goodwill ballooned to $4.93B from $2.75B at year-end 2025, driven by D&E acquisition
- Cash and equivalents halved to $1.45B from $3.00B at year-end, reflecting $2.14B in M&A outflows
Stock closed at $343.08 (+6.49%) during regular session; extended-hours last trade at $344.50 (+0.41% vs close). The strong revenue beat and 22% top-line growth are being rewarded, though flat EPS YoY and the cash drawdown for M&A temper enthusiasm.
Cadence's 22% revenue growth confirms strong EDA demand, but flat EPS and a cash balance halved by M&A spending raise questions about near-term margin trajectory.
Cadence's 22% revenue growth outpaces typical EDA sector growth rates, reflecting share gains and the D&E acquisition contribution. The goodwill-heavy balance sheet mirrors broader semiconductor design software consolidation trends.
Goodwill now stands at $4.93B (40% of total assets), creating material impairment risk if acquired businesses underperform. Restructuring charges of $42.2M in Q3 signal ongoing cost realignment. Trade controls and tariffs are explicitly flagged as forward-looking risks.