Cadence Design Systems (CDNS) 8-K Results of Operations and Financial Condition

Exhibit 99.02

CADENCE REPORTS SECOND QUARTER 2023
CADENCE DESIGN SYSTEMS, INC.
CFO COMMENTARY
Key Takeaways • Exceeded key financial metrics for Q2. • Raising 2023 revenue outlook and increasing non-GAAP operating margin to 41.7%. • Raising 2023 outlook for non-GAAP EPS growth to 19%, a 3-year CAGR of 22%.	Q3 2023 Outlook • Revenue : $990 million - $1.01 billion. • GAAP operating margin: ~29%. • Non-GAAP operating margin: ~40%. • GAAP EPS: $0.76 - $0.80 • Non-GAAP EPS: $1.18 - $1.22 • Expect to use approximately $125 million to repurchase Cadence shares in Q3.	Q2 2023 KEY METRICS
		• Revenue $977 million • GAAP operating margin 31% • Non-GAAP operating margin 42% • GAAP EPS $0.81 • Non-GAAP EPS $1.22 • Operating cash flow $414 million
FY 2023 Outlook • Revenue: $4.05 - $4.09 billion. • GAAP operating margin: 30.2% - 31.2%. • Non-GAAP operating margin: 41.2% - 42.2%. • GAAP EPS: $3.35 - $3.41 • Non-GAAP EPS $5.05 - $5.11 • Operating cash flow: $1.3 - $1.4 billion. • Expect to use at least 50% of free cash flow to repurchase Cadence shares for the year.	Financial Results Webcast
	Our Q2 2023 financial results webcast will begin July 24, 2023 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 July 24, 2023 until 5:00 p.m. (Pacific) on September 15, 2023.

July 24, 2023 Cadence Q2 2023 Financial Results 1

Cadence Design Systems, Inc.

Financial Metrics

(In Millions, except per share data)	2017*		2018		2019		2020*		2021		2022		2023E*
Revenue	$	1,943	$	2,138	$	2,336	$	2,683	$	2,988	$	3,562	$4,050- $4,090
Revenue growth*	7%		10%		9%		15%		11%		19%		14% - 15%
3-year CAGR	7%		8%		9%		11%		12%		15%		~15%
3-year CAGR without 53rd week impact	8%						11%						~16%
GAAP operating expenses	$	1,619	$	1,742	$	1,845	$	2,037	$	2,209	$	2,488	~$2,818
GAAP operating expense growth	3%		8%		6%		10%		8%		13%		~13%
Non-GAAP operating expenses	$	1,409	$	1,491	$	1,587	$	1,739	$	1,877	$	2,125	~$2,373
Non-GAAP operating expense growth	5%		6%		6%		10%		8%		13%		~12%
GAAP operating margin**	17%		19%		21%		24%		26%		30%		30.7	%
Non-GAAP operating margin**	28%		30%		32%		35%		37%		40%		41.7	%
GAAP earnings per share	$	0.73	$	1.23	$	3.53	$	2.11	$	2.50	$	3.09	$3.35 - $3.41
Non-GAAP earning per share	$	1.40	$	1.87	$	2.20	$	2.80	$	3.29	$	4.27	$5.05 - $5.11
Non-GAAP EPS growth**	16%		34%		18%		27%		18%		30%		19	%
3-year Non-GAAP EPS CAGR**	14%		20%		22%		26%		21%		25%		22	%
Weighted average shares diluted outstanding	280.2		281.1		280.5		279.6		278.9		275.0		272 - 274
Cash flow from operations	471		605		730		905		1,101		1,242		$1,300 - $1,400
Capital expenditures	58		62		75		95		65		123		~$105

* Fiscal 2014 and 2020 were 53-week years, compared to all other years which are 52 week years. 2020 (which impacts the 3 year CAGR in 2023) included approximately $45 million revenue impact for the extra week. 2014 revenue (which impacts the 3 year CAGR in 2017) included approximately $27 million revenue impact for the extra week.

** At midpoint of guidance.

Profitability Trends

(In Millions)	2017		2018		2019		2020		2021		2022		2023E*
Revenue	$	1,943	$	2,138	$	2,336	$	2,683	$	2,988	$	3,562	$	4,070
Revenue Growth	7%		10%		9%		15%		11%		19%		~14%
3-Year Revenue Growth CAGR	7%		8%		9%		11%		12%		15%		~15%
GAAP operating margin	17%		19%		21%		24%		26%		30%		30.7%
Non-GAAP operating margin	28%		30%		32%		35%		37%		40%		41.7%
Stock-based compensation	(7)%		(8)%		(8)%		(7)%		(7)%		(8)%		~(8)%
Non-GAAP operating margin adjusted for stock-based compensation	21%		22%		24%		28%		30%		32%		33.7%
GAAP operating income	$	324	$	396	$	492	$	646	$	779	$	1,074	$	1,252
Non-GAAP operating income	$	534	$	647	$	749	$	944	$	1,111	$	1,436	$	1,697
Non-GAAP operating income adjusted for stock-based compensation	$	404	$	479	$	567	$	747	$	901	$	1,166	$	1,368

* At midpoint of guidance.

July 24, 2023 Cadence Q2 2023 Financial Results 2

Cadence Design Systems, Inc.

Third Quarter 2023 Financial Outlook

	Q3 2022		Q2 2023		Q3 2023E
Total Revenue ($ Millions)	$	903	$	977	$990 - $1,010
Q/Q Growth			(4)%		1% - 3%
Y/Y Growth			14%		10% - 12%
GAAP Operating Margin	29%		31%		~29%
Non-GAAP Operating Margin	39%		42%		~40%
GAAP EPS	$	0.68	$	0.81	$0.76 - $0.80
Non-GAAP EPS	$	1.06	$	1.22	$1.18 - $1.22

Fiscal Year 2023 Financial Outlook

			Previous	Current
	FY 2022		FY 2023E	FY 2023E
Recurring Revenue	~85%		~85%	~85%
Total Revenue ($ Millions)	$	3,562	$4,030 - $4,070	$4,050 - $4,090
Y/Y Growth	19%		13% - 14%	14% - 15%
Revenue from Beginning Backlog	~70%		~75%	~75%
GAAP Operating Margin	30.1%		30% - 31%	30.2% - 31.2%
Non-GAAP Operating Margin	40.3%		41% - 42%	41.2% - 42.2%
GAAP Other Income & Expense ($ Millions)	$	(28)	$(18) - $(24)	$(7) - $(11)
Non-GAAP Other Income & Expense ($ Millions)	$	(14)	$(21) - $(27)	$(13) - $(17)
GAAP Tax Rate	19%		~26%	~26%
Non-GAAP Tax Rate	17.5%		17.5%	17.5%
Weighted Average Diluted Shares Outstanding (Millions)	275.0		272 - 274	272 - 274
GAAP EPS	$	3.09	$3.26 - $3.34	$3.35 - $3.41
Y/Y Growth	24%		6% - 8%	8% - 10%
Non-GAAP EPS	$	4.27	$4.96 - $5.04	$5.05 - $5.11
Y/Y Growth	30%		16% - 18%	18% - 20%
Cash Flow from Operations ($ Millions)	$	1,242	$1,300 - $1,400	$1,300 - $1,400
DSO	49		~45	~45
Capital Expenditures ($ Millions)	$	123	~$120	~$105

July 24, 2023 Cadence Q2 2023 Financial Results 3

Cadence Design Systems, Inc.

Second Quarter Financial Results

Backlog

(In Billions)	2019		2020		2021		2022		Q2 2023
Backlog	$	3.6	$	3.9	$	4.4	$	5.8	$	5.3

Revenue

(In Millions)	Q2 2022		Q3 2022		Q4 2022		Q1 2023		Q2 2023
Product and Maintenance	$	803	$	846	$	846	$	964	$	923
Services	55		57		54		58		54
Total Revenue	$	858	$	903	$	900	$	1,022	$	977

Recurring and Up-Front Revenue

	Q2 2022		Q3 2022		Q4 2022		Q1 2023		Q2 2023
Revenue recognized over time	84	%	81	%	84	%	77	%	82	%
Revenue from arrangements with non-cancelable commitments	2	%	3	%	3	%	3	%	3	%
Recurring Revenue	86	%	84	%	87	%	80	%	85	%
Up-Front Revenue	14	%	16	%	13	%	20	%	15	%
Total	100	%	100	%	100	%	100	%	100	%

Trailing Twelve Months Recurring and Up-Front Revenue

	Trailing Twelve Months Ended
	Q2 2022		Q3 2022		Q4 2022		Q1 2023		Q2 2023
Recurring Revenue	87	%	86	%	85	%	84	%	84	%
Up-Front Revenue	13	%	14	%	15	%	16	%	16	%
Total	100	%	100	%	100	%	100	%	100	%

Revenue Mix by Geography

(% of Total Revenue)	Q2 2022		Q3 2022		Q4 2022		Q1 2023		Q2 2023
Americas	45	%	45	%	46	%	44	%	41	%
China	13	%	17	%	13	%	17	%	18	%
Other Asia	18	%	17	%	18	%	18	%	18	%
Europe, Middle East and Africa	18	%	16	%	17	%	15	%	17	%
Japan	6	%	5	%	6	%	6	%	6	%
Total	100	%	100	%	100	%	100	%	100	%

Revenue Mix by Product Category

(% of Total Revenue)	Q2 2022		Q3 2022		Q4 2022		Q1 2023		Q2 2023
Custom IC Design and Simulation	23	%	22	%	22	%	20	%	22	%
Digital IC Design and Signoff	27	%	29	%	28	%	25	%	27	%
Functional Verification	24	%	25	%	25	%	32	%	27	%
IP	14	%	12	%	12	%	11	%	11	%
System Design and Analysis	12	%	12	%	13	%	12	%	13	%
Total	100	%	100	%	100	%	100	%	100	%

July 24, 2023 Cadence Q2 2023 Financial Results 4

Cadence Design Systems, Inc.

Gross Margin

	Q2 2022		Q3 2022		Q4 2022		Q1 2023		Q2 2023
GAAP Gross Margin	89.2	%	90.3	%	89.6	%	87.8	%	90.1	%
Non-GAAP Gross Margin	90.6	%	91.5	%	91.1	%	89.1	%	91.4	%

Total Costs and Expenses

(In Millions)	Q2 2022		Q3 2022		Q4 2022		Q1 2023		Q2 2023
Total GAAP Costs and Expenses	$	575	$	642	$	689	$	699	$	677
Total Non-GAAP Costs and Expenses	$	494	$	547	$	579	$	591	$	569

Operating Margin

	Q2 2022		Q3 2022		Q4 2022		Q1 2023		Q2 2023
GAAP Operating Margin	33.0	%	28.9	%	23.5	%	31.6	%	30.7	%
Non-GAAP Operating Margin	42.4	%	39.4	%	35.6	%	42.1	%	41.8	%

Earnings Per Share

	Q2 2022		Q3 2022		Q4 2022		Q1 2023		Q2 2023
GAAP Net Income Per Share	$	0.68	$	0.68	$	0.88	$	0.89	$	0.81
Non-GAAP Net Income Per Share	$	1.08	$	1.06	$	0.96	$	1.29	$	1.22

Total DSO

	Q2 2022	Q3 2022	Q4 2022	Q1 2023	Q2 2023
DSO	42	40	49	44	42

Balance Sheet and Cash Review

Free Cash Flow

(In Millions)	Q2 2022		Q3 2022		Q4 2022		Q1 2023		Q2 2023
Net Cash from Operating Activities	$	325	$	317	$	264	$	267	$	414
Capital Expenditures	24		44		37		26		20
Free Cash Flow	$	301	$	273	$	227	$	241	$	394

Cash and Cash Equivalents

(In Millions)	Q2 2022		Q3 2022		Q4 2022		Q1 2023		Q2 2023
Cash and Cash Equivalents	$	1,030	$	1,026	$	882	$	917	$	874

•Approximately 27 percent of our cash and cash equivalents were in the U.S. at quarter-end.

Share Repurchase

(In Millions)	Q2 2022		Q3 2022		Q4 2022		Q1 2023		Q2 2023
Share Repurchase	$	320	$	180	$	300	$	125	$	265
Number of Shares	2.138		0.959		1.939		0.668		1.178

•Q3 2022 includes 109,365 shares and $30 million equity forward contract from Q2 2022 ASR settled in Q3 2022.

•Paid $325 million for share repurchases during Q2 2023. $60 million worth of shares will settle during Q3 2023.

Employees

	Q2 2022	Q3 2022	Q4 2022	Q1 2023	Q2 2023
Headcount	9,570	9,994	10,228	10,579	10,832

July 24, 2023 Cadence Q2 2023 Financial Results 5

Cadence Design Systems, Inc.

Forward Looking Statements

This CFO Commentary contains forward-looking statements, including Cadence's outlook on future operating results, strategic objectives, business prospects, technology and product developments, industry trends 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; (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) change 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 that of the semiconductor and electronics industries, government regulations and trade restrictions; (vi) capital expenditure requirements, legislative or regulatory requirements, changes in tax laws, interest rates, currency exchange rate fluctuations, inflation rates and Cadence’s ability to access capital and debt markets; (vii) the acquisition of other companies, businesses or technologies or the failure to successfully integrate and operate them; (viii) events that affect cash flow, liquidity, or reserves, or settlement assumptions Cadence may take from time to time with respect to accounts receivable, taxes and tax examinations, litigation, regulatory or other matters; and (ix) 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 or properties are subject. 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.

For a detailed discussion of these and other cautionary statements related to Cadence’s 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.

© 2023 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.

July 24, 2023 Cadence Q2 2023 Financial Results 6

Cadence Design Systems, Inc.

APPENDIX I

Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited)

Reconciliation of GAAP Total Expenses to Non-GAAP Total Expenses

(In Millions)	Q2 2022		Q3 2022		Q4 2022		Q1 2023		Q2 2023
GAAP total costs and expenses	$	575	$	642	$	689	$	699	$	677
Reconciling items to non-GAAP total costs and expenses
Stock-based compensation expense	(64)		(74)		(73)		(74)		(76)
Amortization of acquired intangibles	(15)		(13)		(16)		(15)		(15)
Acquisition and integration-related costs	(8)		(11)		(18)		(16)		(14)
Restructuring	—		—		—		—		—
Non-qualified deferred compensation (expenses) credits	6		3		(3)		(3)		(3)
Non-GAAP total costs and expenses*	$	494	$	547	$	579	$	591	$	569

* 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)	2017		2018		2019		2020*		2021		2022		2023E
GAAP total costs and expenses	$	1,619	$	1,742	$	1,845	$	2,037	$	2,209	$	2,488	$	2,818
Reconciling items to non-GAAP total costs and expenses
Stock-based compensation expense	(130)		(168)		(182)		(197)		(210)		(270)		(329)
Amortization of acquired intangibles	(57)		(53)		(53)		(64)		(67)		(60)		(63)
Acquisition and integration-related costs	(8)		(20)		(8)		(23)		(23)		(41)		(47)
Restructuring	(9)		(11)		(9)		(9)		1		—		—
Non-qualified deferred compensation (expenses) credits	(6)		1		(5)		(5)		(6)		8		(6)
Special charges**	—		—		(1)		—		(27)		—		—
Non-GAAP total costs and expenses***	$	1,409	$	1,491	$	1,587	$	1,739	$	1,877	$	2,125	$	2,373

*	Fiscal 2020 was a 53-week year.
**	2021 includes costs related to a voluntary retirement program.
***	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.

July 24, 2023 Cadence Q2 2023 Financial Results 7

Cadence Design Systems, Inc.

Reconciliation of GAAP Gross Margin as a Percent of Total Revenue to Non-GAAP Gross Margin as a Percent of Total Revenue

	Q2 2022	Q3 2022	Q4 2022	Q1 2023	Q2 2023
GAAP gross margin as a percent of total revenue	89.2%	90.3%	89.6%	87.8%	90.1%
Reconciling items to non-GAAP gross margin as a percent of total revenue
Stock-based compensation expense	0.2%	0.2%	0.3%	0.3%	0.2%
Amortization of acquired intangibles	1.2%	1.0%	1.2%	1.0%	1.1%
Non-qualified deferred compensation expenses (credits)	0.0%	0.0%	0.0%	0.0%	0.0%
Acquisition and integration-related costs	0.0%	0.0%	0.0%	0.0%	0.0%
Non-GAAP gross margin as a percent of total revenue*	90.6%	91.5%	91.1%	89.1%	91.4%

* 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.

July 24, 2023 Cadence Q2 2023 Financial Results 8

Cadence Design Systems, Inc.

Reconciliation of GAAP Operating Margin as a Percent of Total Revenue to Non-GAAP Operating Margin as a Percent of Total Revenue

	Q2 2022	Q3 2022	Q4 2022	Q1 2023	Q2 2023	Q3 2023E
GAAP operating margin as a percent of total revenue	33%	29%	23%	32%	31%	~29%
Reconciling items to non-GAAP operating margin as a percent of total revenue
Stock-based compensation expense	7%	8%	8%	7%	8%	9%
Amortization of acquired intangibles	2%	1%	2%	1%	2%	1%
Acquisition and integration-related costs	1%	1%	2%	2%	1%	1%
Restructuring	0%	0%	0%	0%	0%	0%
Non-qualified deferred compensation expenses (credits)	(1)%	0%	1%	0%	0%	0%
Non-GAAP operating margin as a percent of total revenue*	42%	39%	36%	42%	42%	~40%

* 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.

	2017	2018	2019	2020	2021	2022	2023E
GAAP operating margin as a percent of total revenue	17%	19%	21%	24%	26%	30%	30.2% - 31.2%
Reconciling items to non-GAAP operating margin as a percent of total revenue
Stock-based compensation expense	7%	8%	8%	7%	7%	8%	8%
Amortization of acquired intangibles	3%	2%	2%	3%	2%	2%	2%
Acquisition and integration-related costs	0%	1%	0%	1%	1%	1%	1%
Restructuring	1%	0%	1%	0%	0%	0%	0%
Non-qualified deferred compensation expenses (credits)	0%	0%	0%	0%	0%	(1)%	0%
Special charges *	0%	0%	0%	0%	1%	0%	0%
Non-GAAP operating margin as a percent of total revenue**	28%	30%	32%	35%	37%	40%	41.2% - 42.2%

*	2021 includes costs related to a voluntary retirement program.
**	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.

July 24, 2023 Cadence Q2 2023 Financial Results 9

Cadence Design Systems, Inc.

Reconciliation of GAAP Diluted Net Income Per Share to Non-GAAP Diluted Net Income Per Share

(In Thousands, Except Per Share Data)	Q2 2022		Q3 2022		Q4 2022		Q1 2023		Q2 2023		Q3 2023E
Diluted net income per share on a GAAP basis	$	0.68	$	0.68	$	0.88	$	0.89	$	0.81	$0.76 - $0.80
Stock-based compensation expense	0.23		0.27		0.27		0.27		0.28		0.32
Amortization of acquired intangibles	0.05		0.05		0.06		0.05		0.06		0.06
Acquisition and integration-related costs	0.03		0.04		0.06		0.06		0.05		0.04
Restructuring	—		—		—		—		—		—
Non-qualified deferred compensation expenses (credits)	(0.02)		(0.01)		0.01		0.01		0.01		—
Other income or expense related to investments and non-qualified deferred compensation plan assets**	0.03		0.02		(0.01)		(0.01)		(0.01)		—
Income tax effect of non-GAAP adjustments	0.08		0.01		(0.31)		0.02		0.02		—
Diluted net income per share on a non-GAAP basis*	$	1.08	$	1.06	$	0.96	$	1.29	$	1.22	$1.18 - $1.22
Shares used in calculation of diluted net income per share	275,172		274,957		272,997		273,159		272,996

*	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.
**	Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense.

July 24, 2023 Cadence Q2 2023 Financial Results 10

Cadence Design Systems, Inc.

Reconciliation of GAAP Diluted Net Income Per Share to Non-GAAP Diluted Net Income Per Share

(In Thousands, Except Per Share Data)	2017		2018		2019		2020		2021		2022		2023E
Diluted net income per share on a GAAP basis	$	0.73	$	1.23	$	3.53	$	2.11	$	2.50	$	3.09	$3.35 - $3.41
Stock-based compensation expense	0.46		0.60		0.65		0.71		0.75		0.98		1.20
Amortization of acquired intangibles	0.20		0.19		0.19		0.23		0.24		0.22		0.23
Acquisition and integration-related costs	0.03		0.07		0.03		0.08		0.08		0.15		0.17
Restructuring	0.03		0.04		0.03		0.03		—		—		—
Non-qualified deferred compensation expenses (credits)	0.02		(0.01)		0.02		0.02		0.02		(0.03)		0.02
Special charges**	—		—		—		—		0.10		—		—
Other income or expense related to investments and non-qualified deferred compensation plan assets***	(0.05)		—		(0.01)		—		(0.03)		0.05		(0.02)
Income tax benefit related to intercompany transfers of certain intellectual property rights	—		—		(2.05)		—		—		—		—
Income tax related to transition tax	0.24		—		—		—		—		—		—
Income tax related to tax rate change	0.09		—		—		—		—		—		—
Income tax effect of non-GAAP adjustments	(0.35)		(0.25)		(0.19)		(0.38)		(0.37)		(0.19)		0.10
Diluted net income per share on a non-GAAP basis*	$	1.40	$	1.87	$	2.20	$	2.80	$	3.29	$	4.27	$5.05 - $5.11
Shares used in calculation of diluted net income per share	280,221		281,144		280,515		279,641		278,858		275,011		272 - 274M

*	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.
**	2021 includes costs related to a voluntary retirement program.
***	Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense.

July 24, 2023 Cadence Q2 2023 Financial Results 11

Cadence Design Systems, Inc.

Reconciliation of GAAP Total Other Income and Expense to Non-GAAP Total Other Income and Expense

(In Millions)	FY 2021		FY 2022		FY 2023E
GAAP total other income and expense	$	(10.7)	$	(28.3)	$(7) - $(11)
Reconciling items to non-GAAP total income and expense
Other income or expense related to investments and non-qualified deferred compensation plan assets**	(6.7)		14.1		(6)
Non-GAAP total other income and expense*	$	(17.4)	$	(14.2)	$(13) - $(17)

*	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.
**	Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense.

July 24, 2023 Cadence Q2 2023 Financial Results 12