Cadence Design Systems (CDNS) raised its 2026 revenue growth outlook to 21% year-over-year for the third time this year, after reporting third-quarter revenue of $1.633 billion and a record backlog of $8.2 billion.

The electronic design automation software company now expects full-year revenue of $6.387 billion to $6.417 billion, up from the $6.26 billion to $6.34 billion range it issued after the second quarter. It also lifted the non-GAAP earnings outlook to $8.37 to $8.43 a share, from $8.05 to $8.15.

Revenue grew 22% year over year. Sequential revenue rose 3% from $1.584 billion. Chief financial officer John Wall said the quarter showed strong double-digit growth across all product categories, driven by growing momentum from AI-driven designs.

GAAP diluted earnings were $1.05 a share, matching the year-ago quarter. Non-GAAP diluted earnings were $2.11 a share, compared with $1.93 a year earlier. GAAP operating margin was 26.2%, down from 31.8% a year earlier. Non-GAAP operating margin was 44.1%.

Product and maintenance revenue was $1.487 billion. Services revenue was $146 million. Recurring revenue was 79% of the mix.

Core EDA, 69% of revenue, grew 20% year-over-year, the company said, citing 16 new digital and signoff full-flow wins and adoption among memory and hyperscaler customers. Semiconductor IP revenue increased 24% year-over-year on demand for Star IP across interface, memory and foundation IP. System Design and Analysis revenue grew 30% year-over-year, with PCB and advanced packaging, the Millennium platform and the physical SDA portfolio. Hardware posted a record quarter, the company said, on expansions with marquee customers and growth in the hardware cloud.

Cadence launched Maestro, a portfolio of domain-specialized AI models for chip and system design, and said several customer deployments were underway. It claimed initial workflow results of up to 30% higher quality and 5X greater token efficiency versus general-purpose foundation models. Cadence AI Super Agents had more than 100 active customer engagements.

China’s share of revenue was 16%. The Americas remained 43%, Other Asia 19%, Europe, Middle East and Africa 15%, and Japan 7%.

Remaining performance obligations expected to be recognized in the next 12 months were $4.2 billion.

The company used $400 million to repurchase shares, double the $200 million spent in each of the first two quarters. The board authorized an additional $2.5 billion for the repurchase program. Headcount was 15,753. Cash and cash equivalents were $1.452 billion. Debt principal was $2.650 billion. Free cash flow was $362 million.

For the fourth quarter, Cadence expects revenue of $1.695 billion to $1.725 billion, GAAP operating margin of 30% to 31%, non-GAAP operating margin of 44% to 45%, GAAP earnings of $1.23 to $1.29 a share, and non-GAAP earnings of $2.19 to $2.25 a share. It expects to use about $400 million to repurchase shares in the quarter.

For the full year, it expects GAAP operating margin of 28.2% to 29.2%, non-GAAP operating margin of 44.2% to 45.2%, GAAP earnings of $4.84 to $4.90 a share, and operating cash flow of about $2.0 billion. It said it expects to use more than 50% of free cash flow to repurchase shares for the year.