AI Takeaway
Cadence Design Systems delivered strong Q1 FY2026 results with revenue of $1.47B (+18.7% YoY) and net income of $335.7M (+22.7% YoY), though operating cash flow declined 26.9% and investing cash outflows surged nearly 96x YoY, reflecting significant acquisition activity.
Revenue
$1.47B
++18.66% YoY
EPS (Basic)
$1.23
++21.78% YoY
Operating Income
$431.33M
++19.31% YoY
Filed · Analysis updated · Source: SEC EDGAR 10-Q filing
Revenue grew 18.7% YoY to $1.47B in Q1 FY2026, while net income rose 22.7% to $335.7M and diluted EPS increased 23.0% to $1.23, demonstrating robust demand for Cadence's EDA and IP solutions.
Source: Source: 10-Q Income Statement
Operating margin held steady at approximately 29.3% (vs. 29.1% in Q1 FY2025), indicating disciplined cost management even as R&D spending increased 15.8% YoY to $508.4M, reflecting continued investment in next-generation design tools.
Source: Source: 10-Q Income Statement & Key Ratios
Investing cash outflows surged to -$2.11B in Q1 FY2026 from just -$21.8M in Q1 FY2025, a ~96x increase, strongly suggesting a major acquisition or strategic investment that also drove total assets up 34.2% YoY to $12.1B.
Source: Source: 10-Q Cash Flow Statement & Balance Sheet
2 more insights available
Upgrade to unlockThe dramatic surge in investing cash outflows (-$2.11B vs. -$21.8M prior year) indicates a major acquisition was completed in Q1 FY2026. Integrating large acquisitions carries execution risk, including potential disruption to operations, cultural misalignment, and failure to realize expected synergies, which could weigh on future profitability.
Source: Source: 10-Q Cash Flow Statement
Unlock 4 more detailed risk analysis
Upgrade to unlockReported EPS of $1.96 versus the $1.94 analyst consensus — a +1.2% beat for Q1 FY2026.
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Revenue | $1.47B | $1.24B | +18.66% |
Operating Income | $431.33M | $361.52M | +19.31% |
Net Income | $335.66M | $273.58M | +22.69% |
EPS (Basic) | $1.23 | $1.01 | +21.78% |
EPS (Diluted) | $1.23 | $1.00 | +23.00% |
R&D Expense | $508.44M | $439.1M | +15.79% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Total Assets | $12.1B | $9.01B | +34.23% |
Current Assets | $3.18B | $4B | -20.45% |
Current Liabilities | $2.16B | $1.3B | +66.25% |
Stockholders' Equity | $6.56B | $4.78B | +37.38% |
Cash & Equivalents | $1.41B | $2.78B | -49.36% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Cash Flow | $355.78M | $487.02M | -26.95% |
Investing Cash Flow | $-2.11B | $-21.78M | -9595.07% |
Financing Cash Flow | $174.52M | $-345.78M | +150.47% |
Share Buybacks | $200M | $350.01M | -42.86% |
D&A | $84.62M | $52.92M | +59.92% |
| Metric | Current | Previous | YoY Change |
|---|---|---|---|
Operating Margin | 29.3% | 29.1% | +0.16% |
Net Margin | 22.8% | — | — |
ROE | 5.1% | — | — |
ROA | 2.8% | — | — |
Current Ratio | $1.471 | — | — |
Other companies in Application Software
Cadence Design Systems posted strong Q1 FY2026 results with revenue of $1.47B (+18.7% YoY), net income of $335.7M (+22.7% YoY), and diluted EPS of $1.23 (+23.0% YoY). Operating margin held steady at ~29.3%, demonstrating solid execution across its EDA and IP business.
Cash and equivalents fell 49.4% YoY to $1.41B, driven by investing cash outflows of -$2.11B compared to just -$21.8M in Q1 FY2025 — a ~96x increase — strongly indicating a major acquisition was completed during the quarter. The company partially offset this with $174.5M in net financing inflows.
Key risks include integration challenges from what appears to be a significant acquisition (given $2.11B in investing outflows), a 26.9% decline in operating cash flow despite strong earnings, and rapidly rising current liabilities (+66.2% YoY) that compressed the current ratio to 1.47x. Cadence also faces ongoing exposure to semiconductor industry spending cycles.
Cadence invested $508.4M in R&D during Q1 FY2026, up 15.8% YoY from $439.1M, representing approximately 34.5% of quarterly revenue. This high R&D intensity reflects the company's focus on AI-driven EDA tools and next-generation semiconductor design solutions.
Cadence's financial health remains solid with a current ratio of 1.47x, stockholders' equity of $6.56B (+37.4% YoY), and total assets of $12.1B, though the sharp decline in cash (-49.4% to $1.41B) and surge in current liabilities (+66.2%) reflect the impact of a major acquisition. Operating margin of ~29.3% and net margin of ~22.8% confirm the core business remains highly profitable.