Cadence Design Systems, Inc - Computational Software for Intelligent System Design
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Cadence Design Systems, Inc. Computational Software for Intelligent System Design Company Overview Presentation Q1 2021
Safe Harbor Statement and Regulation G
Safe Harbor Statement
The following discussion contains forward-looking statements based on current expectations or beliefs, as well as a number of preliminary assumptions about
future events that are subject to factors and uncertainties that could cause our actual results to differ materially from those expectations or results described in
the forward-looking statements. You are cautioned not to put undue reliance on these forward-looking statements, which are not a guarantee of future
performance and are subject to a number of risks, uncertainties and other factors, many of which are outside Cadence’s control.
Additional information concerning factors that could cause such a difference can be found in our filings with the U.S. Securities and Exchange Commission,
which include our most recent reports on Form 10-K and Form 10-Q and future filings, and the cautionary statements regarding forward-looking statements in
our press release dated April 26, 2021 (including those relating to the COVID-19 pandemic). We expressly disclaim any duty to update the forward-looking
statements provided in the following discussion
Regulation G
In addition to financial results prepared in accordance with Generally Accepted Accounting Principles, or GAAP, this presentation will contain certain non-GAAP
financial measures. Cadence management believes that in addition to using GAAP results in evaluating our business, it can also be useful to measure results
using certain non-GAAP financial measures. Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures with
their most direct comparable GAAP financial results, including those set forth in our April 26, 2021 press release and our CFO Commentary for the quarter
ended April 03, 2021, both of which can be found in the quarterly earnings section of the investor relations portion of our website at cadence.com.
2 © 2021 Cadence Design Systems, Inc. All rights reserved.
Company Overview 3 © 2021 Cadence Design Systems, Inc. All rights reserved.
Cadence at a Glance
Computational technology for
designing today’s electronic systems
Culture
Innovation,
20+ significant new
$736M products ~3 years
Employees
Q1 2021
Leader Revenue 8,990+
Worldwide
Computational
Software for Industry
Intelligent System Software and
Design™ programming
HQ
Silicon Valley
Very high customer renewal rates and loyalty
Nasdaq: CDNS; S&P 500 and Nasdaq 100 indexes
Source: Cadence CFO Commentary, Q1 2021
https://www.cadence.com/content/dam/cadence-www/global/en_US/documents/company/investors/1q21-cfo-commentary.pdf
4 © 2021 Cadence Design Systems, Inc. All rights reserved.
Recent Business Highlights
Delivered revenue in Q1, YoY growth of
Generated non-GAAP operating margin
Dynamic Duo 2.0: Palladium® Z2 & Protium™ X2
Delivering 2X capacity and 1.5X higher performance Xcelium™ ML
improvements on both systems for up to 5X verification
regression throughput
Provides best-in-class run-time performance, bring-up time, time-to-
debug, and time-to-compile, enabling an order of magnitude
improvement of chip to system level verification productivity
IP availability and
Cadence Expands tool flow foundry
into Computational certification for 7nm,
Fluid Dynamics Next-Generation Sigrity™ X for Up 6nm, 5nm, 4nm,
Capabilities
beyond electronic to 10X Faster System Analysis and 3nm process
subsystems to
include top-level Massively distributed simulation enables large- technologies
system designs scale complex analysis in the cloud
Source: Cadence Earnings Press Release, April 26, 2021
https://www.cadence.com/en_US/home/company/newsroom/press-releases/pr-ir/2021/cadence-reports-first-quarter-2021-financial-results.html
5 © 2021 Cadence Design Systems, Inc. All rights reserved.
Cadence Strong Performance
First Quarter 2021 Earnings Summary
Quarter Results Trailing 12 Months
Revenue Revenue
19% YoY Growth 18% YoY Growth
38% Operating
Margin
non-GAAP
37% Operating
Margin
non-GAAP
Source: Cadence CFO Commentary, Q1 2021
https://www.cadence.com/content/dam/cadence-www/global/en_US/documents/company/investors/1q21-cfo-commentary.pdf
6 © 2021 Cadence Design Systems, Inc. All rights reserved.
A Great Place to Work Around the Globe 7 © 2021 Cadence Design Systems, Inc. All rights reserved.
Developing and Deploying
Computational Software
5,600+
R&D
1,900+
FIELD
1,500+
PATENTS
8,990+
EMPLOYEES
23
GLOBAL
ENGINEERS ENGINEERS WORLDWIDE DEVELOPMENT
CENTERS
8 © 2021 Cadence Design Systems, Inc. All rights reserved.
Corporate Social Responsibility
Pay Equity
▪ Global salary pay parity based on gender and U.S. salary pay
parity based on race and ethnicity
Recognition
▪ Ranked #3 in the software category and #7 overall on
Investor’s Business Daily List of the Top 50 ESG Companies
Carbon Emissions Reduction
▪ Set a greenhouse gas reduction target of a 15% decrease for
Scope 1 and 2 emissions by 2025 over a 2019 baseline
Best Workplace Recognitions
▪ 23 best workplace recognitions across 14 countries
COVID-19 Response
▪ Recognized as one of People Magazine’s Companies That
Care for our support of employees and the community during
the pandemic
Sustainability
▪ Products that help customers realize sustainability
Source: Cadence Sustainability Report, 2020
https://www.cadence.com/en_US/home/company/csr.html
9 © 2021 Cadence Design Systems, Inc. All rights reserved.
Intelligent System Design Strategy 10 © 2021 Cadence Design Systems, Inc. All rights reserved.
Major Electronics Industry Trends
Data Science and 5G
Machine Learning Hyperscale Communications
Computing
Autonomous Industrial
Vehicles IoT
11 © 2021 Cadence Design Systems, Inc. All rights reserved.Drivers of Convergence in Computational Software
Explosion of Data and AI
Computational Needs
System Design AI / ML
Algorithm, HW, SW, Data Analytics
Multiphysics
Growing Cost, Complexity of Lack of Moore, CPU and
Mechanical and Silicon Design
EDA Software Performance Scaling
IC, Package, PCB
12 © 2021 Cadence Design Systems, Inc. All rights reserved.Cadence Is Leading the Computational Software Convergence
INTELLIGENT
System Design AI / ML
Algorithm, HW, SW, Data Analytics SYSTEM
Multiphysics
DESIGN
EDA
IC, Package, PCB
Intelligent System Design™
Merger of EDA, system design, AI Pervasive intelligence throughout design Grounded in computational engineering
Co-optimizing system, hardware, software Spanning multiple system domains
13 © 2021 Cadence Design Systems, Inc. All rights reserved.Intelligent
• The Intelligent System Design™ strategy drives
System Design – growth in our core EDA and IP business, broadens
Expanding Beyond our reach in system companies and targeted
verticals, and guides expansion into newer
Traditional EDA adjacent areas.
• The foundation of the strategy continues to be
delivering semiconductor device design
excellence via our core EDA and IP business. In
addition, we are building upon our core
competency in computational software to expand
into two new areas:
o System innovation, where we are expanding
into new system domains, and
o Pervasive intelligence, where we will apply AI
and our algorithmic know-how to our core
business and specific verticals.
14 © 2021 Cadence Design Systems, Inc. All rights reserved.Cadence Intelligent System Design Strategy
Computational Software as a Core Competency
PERVASIVE
INTELLIGENCE Develop AI and algorithmic solutions
SYSTEM
INNOVATION
Expand into new system domains
DESIGN
EXCELLENCE
Execute on core EDA + key IP
15 © 2021 Cadence Design Systems, Inc. All rights reserved.Cadence Strategy
Consumer Hyperscale Mobile Communications Automotive Aero / Defense Industrial Health
PERVASIVE • Machine learning (ML) technology
INTELLIGENCE • Data analytics platform
• Artificial intelligence (AI) enablement
SYSTEM
INNOVATION
• Multi-level, multiphysics analysis platform
• 3D-IC, high-speed RF design and analysis platforms
DESIGN
• System and embedded software partnerships
EXCELLENCE
• Custom IC design and simulation platforms
• Digital IC design and signoff platforms
• Functional verification platform
• Enterprise intellectual property (IP)
Cloud Enabled — Partnerships with Ecosystem Leaders
16 © 2021 Cadence Design Systems, Inc. All rights reserved.Cadence
Recent product news
Product Innovations and News
Pervasive Intelligence
• Tensilica® Vision Q8 and P1 DSPs for high-end and always-on applications
• Xcelium™ ML for up to 5X faster verification regression throughput
PERVASIVE • JasperGold® ML machine learning-enabled smart formal verification
INTELLIGENCE
• Data Analytics System Innovation
Platform
• Acquired NUMECA and Pointwise for top-level system designs in multiphysics system
SYSTEM • ML Enabled analysis, CFD, and high-fidelity mesh generation
INNOVATION Tools and Flows
• Next-generation Sigrity™ X for up to 10X faster system analysis
• System Analysis
• Clarity™ 3D Solver, Clarity 3D Transient Solver, and Celsius™ Thermal Solver for 10X
• Embedded SW faster multiphysics system analysis and compliance
DESIGN • Security
EXCELLENCE Design Excellence
• Dynamic Duo 2.0: Palladium® Z2 and Protium™ X2 for 2X capacity and 1.5X
Core
(EDA and IP) performance
• Optimized PPA results with Cadence® digital full flow, certified for 7/6/5/4/3nm
• Spectre® X Simulator for high-speed, high-capacity circuit simulation
Only with Cadence
17 © 2021 Cadence Design Systems, Inc. All rights reserved.Cadence Acquires NUMECA
To Expand System Analysis Capabilities with Computational Fluid Dynamics
Automotive & Aerospace & Marine / Energy &
Transportation Defense Naval Power Generation
• Leader in CFD, mesh generation, multi-physics
simulation and optimization
• Extends Cadence systems capability beyond
electronic subsystems to include top-level system
designs
• Next generation OMNIS™️ environment inclusive
of pre-processing, solving and post-processing 3D
MCAD models
• Digital prototypes explore full design envelope and
identify optimal geometry configuration
18 © 2021 Cadence Design Systems, Inc. All rights reserved.Cadence Acquires Pointwise
To Expand System Analysis Offerings
CFD Meshing for Aerospace Applications
Aerospace &
Defense
• Leader in CFD mesh generation
• Expands Cadence multiphysics systems analysis
capabilities
• High-fidelity discretization of aircraft geometries
for aerospace industry
• Send mesh for external aerodynamics simulations
to the Cadence OMNIS™️ CFD platform
• Export mesh data to 40 leading CAE formats for
best-in-class workflow
19 © 2021 Cadence Design Systems, Inc. All rights reserved.Financial Performance 20 © 2021 Cadence Design Systems, Inc. All rights reserved.
Financial Summary
2020 Revenue Non-GAAP EPS1
2,500 $3.00
$2.75
$2.50
2,000
Revenue $2.25
($ millions) $2.00
1,500 $1.75
$1.50
1,000 $1.25
$1.00
Non-GAAP $0.75
operating 500
$0.50
margin1 $0.25
0 $0.00
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
Free
cash flow Notes:
1. Non-GAAP operating margin and non-GAAP EPS (excludes amortization of acquired intangibles, stock-based compensation, non-qualified deferred compensation
expenses and certain non-recurring cash expenses). See quarterly earnings releases and CFO Commentary for reconciliations to GAAP measures.
21 © 2021 Cadence Design Systems, Inc. All rights reserved.Recurring Revenue Model
High visibility software revenue stream 800 Revenue2
700
• Recurring revenue mix: 85 - 90% for 2021 600
($ millions)
500
• Backlog1: $3.6B (Q1 2021)
400
300
200
100
0
2016 2017 2018 2019 2020 2021
• 19% (Q1’21/Q1’20)
Notes:
1. Backlog = Remaining Performance Obligations + IP Access Agreements
2. Q4 2020 was a 14-week quarter
22 © 2021 Cadence Design Systems, Inc. All rights reserved.Diversified Business Across Products and Regions
Functional Verification Americas
14% 6%
26%
China 18%
Digital IC Design and 10%
Signoff
46%
Other Asia
Custom IC Design and
Simulation 18%
23% EMEA
System Design and 27%
Analysis 12%
Japan
IP
23 © 2021 Cadence Design Systems, Inc. All rights reserved.Driving Profitable Growth
Non-GAAP Operating Margin1
40%
35%
30%
25%
• Focus on growth and disciplined ROI-centric 20%
resource allocation 15%
10%
• Non-GAAP operating margin 38%1 (Q1 2021) 5%
0%
2016 2017 2018 2019 2020 TTM
Q1'21
Notes:
1. Non-GAAP operating margin and non-GAAP EPS (excludes amortization of acquired intangibles, stock-based compensation, non-qualified deferred compensation expenses
and certain non-recurring cash expenses). See quarterly earnings releases and CFO Commentary for reconciliations to GAAP measures.
24 © 2021 Cadence Design Systems, Inc. All rights reserved.Cash Flow, Capital Structure, and Capital Allocation
Free cash flow generation
• $810M (2020)
Capital structure (Q1 2021) Free cash flow Stock repurchase
1200
1000
• Cash: $743M 1000
($ millions)
800
($ millions)
800
• ST credit facility: $350M 600 600
• LT debt: $350M 400 400
200 200
Capital allocation 0
2016 2017 2018 2019 2020 TTM
0
2016 2017 2018 2019 2020 TTM
Q1'21 Q1'21
• Internal investment
• M&A
• Repurchase stock
25 © 2021 Cadence Design Systems, Inc. All rights reserved.In Summary
Mission-critical Data-driven Culture of innovation Growth, focus, and
solutions for economy and its creates the products discipline drive
designing supporting for category financial
semiconductors and technology waves leadership and performance
electronic systems combined with our growth
Intelligent System
Design™ strategy
expand TAM
26 © 2021 Cadence Design Systems, Inc. All rights reserved.© 2021 Cadence Design Systems, Inc. All rights reserved worldwide. Cadence, the Cadence logo, and the other Cadence marks found at https://www.cadence.com/go/trademarks are trademarks or registered trademarks of Cadence Design Systems, Inc. Accellera and SystemC are trademarks of Accellera Systems Initiative Inc. All Arm products are registered trademarks or trademarks of Arm Limited (or its subsidiaries) in the US and/or elsewhere. All MIPI specifications are registered trademarks or service marks owned by MIPI Alliance. All PCI-SIG specifications are registered trademarks or trademarks of PCI-SIG. All other trademarks are the property of their respective owners.
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