CDNS - Earnings call transcript Q2 2021 | Cadence Design Systems, Inc.

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good afternoon. My name is [Shamaria], and I will be your conference operator today. At this time, I would like to welcome everyone to the Cadence Second Quarter 2021 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. [Operator Instructions] Thank you. the Investor to Relations turn Group Lindstrom now of Director for will call Alan over Senior I Cadence. Please go ahead.

Alan Lindstrom

Thank welcome Officer. of of the XX, today's everyone Wall, website our and Senior be earnings XXXX. cadence.com forward-looking would The be A Officer; Anirudh like webcast September second on Chief President and the the Lip-Bu I am XXXX John President; by I copy conference Please you, quarter statements. remarks is website available through contain call. that available and Executive prepared archived will this today today Tan, also call will Vice call at through Devgan, will note discussion to [Shamaria]. our conclusion today. our joined to Chief Financial of

are business Due may Forward-looking plans, and or today's opportunities and projected actual and and statements discussion. limited not implied development, in uncertainties product statements business and to include, known size, outlook, those market strategy materially about from but risks positioning. regulatory trends, industry unknown to differ our results

Easter forward-looking today, the that and on cause For way, Commission. X:XX those factors include Exchange cautionary was so in XX-Q, Securities the filings Form press it’s there. recent results, comments statements Time And with XX-Q to earnings about filed by and could information the and regarding our a difference most out release. These Cadence's Form please on XX-K refer today’s reports in our quarter our second

information any required statements update at time as statements forward-looking by You estimates statements of based future to should predictions except law. events. the as and such forward-looking disclaims are any obligation not Cadence on All on and to our rely available

These standardized any using certain results our investors prepared July to comparable financial today’s earnings results. today’s Accepted in non-GAAP accordance results similarly non-GAAP financial the financial results not tables press the that isolation encouraged XXXX from useful release. reconciliation non-GAAP results not will to In as measures XX, and financial present other GAAP to be are our also and Accounting it website. considered an in measures Principles measures titled and GAAP addition related also financial of using on in Investors business, Generally be Cadence or measures to by addition today. from may companies. These methodology or be certain most GAAP are measures believes their evaluating not commentary financial review July CFO GAAP GAAP, for financial can of on ended comparable should we direct prescribed potential review release measures. with available Copies X, press for non-GAAP based also management to the dated with substitute XXXX, financial in quarter are non-GAAP a

session would and and follow-up observe today, you For you may questions you permits. and of additional we would ask that one if to the ask a limit like Q&A one time question re-queue

Now, Lip-Bu. I the call to will over turn

Lip-Bu Tan

as for expected broad-based stronger Good today. demand our financial the drove quarter customer joining profitability, for outstanding and delivered growth, afternoon, than cash us results everyone for second you solutions and innovative flow. Cadence thank revenue

results year-over-year moment a of financial or year. for a We our the in by and John guidance the highlighted for outlook details increase revenue the raising in [$XX are million] updated provide revenue outlook significantly year, will XX% both our QX growth.

just will that instilled Devgan, announced Chairman of transition role about take XX, quarter, into that the news the I details afternoon. XXXX over more He as transition is team our over for a to top become I on announced as are that earlier and The and very anyone We December talk driving think a to choice, on even like Anirudh Cadence this about firmly excited I at Executive CEO not will President, Before that to December get we our uniquely while would focus TAM higher employees. CEO built in of proven CEO I a period, executing triple its partners Cadence ISD customers is strategy but with in close extremely more success. been a qualified Cadence It partnership relentless both leader customer for Board and and $XX end-to-end innovation years. exciting of that execution, past centered established that beyond the strategy of and cannot our EDA heights. very leapfrog Anirudh provider culture X,XXX of I’m company Cadence passion Over CEO time. way a we and sustainable well XX-plus is we our now on to a on with lead an vision, EDA, has watched serve will as to customer talented very and a innovation that privilege billion. delight, and expanding pleased to

and became Company plan the Board I Anirudh execute have this I to he phase succession next the President, time past our jointly the of hand baton over years the think Over and him. since the right is the and and four led to

of You formalization forward build of as lot more see transition this to continuity our responsibilities. can a current we going of as expect a

and vehicles let on And with are more on to maximizing the opportunities, now, on As AI, across a business learning, move for hyperscaler as Generation innovation. relationship of market and us. positioned industries. are customers and Delighting this me very long-term I new at underpined key semiconductors be analytics and autonomous our growth to by we system well activity customers data initiatives relentless and and highlights. accelerating trends requires drivers machine XG, accelerating growth With the Executive deepening Chairman, will digital and partners and companies foundation, such driving for value. to spectrum shareholder focus these sustainable are transformation its semi across trends design commitment multiple strategic growing strong

growth. this year products across new far we future With all of so eight the will and launch products, groups the introduced significant the now business four contribute to have innovative

business our It digital flow. led customers. differentiated partnership shaping to was our solution growing and our an market And signoff continue outstanding a full expand including with to with for business expansion quarter our digital broad-based We year-over-year. proliferation revenue XX% of Samsung, with our of

firm, full competitive quality included data hyperscaler of Our start-up. industry-leading new customers by the them that major expanding exciting U.S. aerospace and significantly expansion marquee Noteworthy of displacements defense were U.S. key XX an advanced flow several at further shaping adding results delivering among Asia-Pacific a a AI and most nodes large digital customers. infrastructure a company, at market

have significantly solution. Cerebrus XX% have with model We been incorporating Explorer. unique we And advanced with last week’s customers year-over-year meaningful improvement reinforcement process learning benefits effectiveness end-application. revenue verification Cerebrus business XXx productivity multiple It Chip and steadily use for also technology a was across PPA gain. growth. and into Cerebrus and nodes with of endorsed enables Renesas our new and by and Samsung our each great increased XX% was realized that AI/ML Intelligent cutting-edge introduction several to quarter

XX sales the ZX comprising leading strong. a suite Protium best for best-in-class continued and Palladium ever systems at verification saw ramping to and QX delivering with and ZX interest throughput strong continued and expansion our Secular adoption of verification the best platforms. and the several new hardware robust nicely, remain There is in unabated, sales while XX customer customer engines our of demand customers. Our for leading

communications. repeat being with three System expanded simulation, orders Growing We hardware high system new and had Protium revenue for growth. our driving and & orders verticals platform need year-over-year transactions segment, applications XX Analysis for largest complexity with design, largest system an family integrated new our XX% analysis. for and date, aerospace hyperscalers, Design in including the quarter, with wireless multiple system and the XG transaction frequency continued which across over and is Our XX. footprint our Strong with solution to momentum the was XX included for defense,

pleased portfolio, to a out increasingly these building of our earlier domains. set continue see customer systems broader we choosing our across indication As solution are of we

platform platform, integration recent For that quarter to a solutions. learning RF, instance, well. PCB, incorporating X to and overall delivering introduced a productivity. our in design IC improvement system acquisitions team a techniques a IC our packaging NUMECA design data made PCB and Allegro infrastructure QX packaging, next-generation engineering commitment the U.S. provides significant progressing our analysis and Pointwise and unified We record large up AWR in had Integrand is innovative and of machine Xx and company

systems as enhance hundred customers and to our help we several added organization business. have our go-to-market channel We accelerate

a Next, few make comments. I want to macro-level

We supply continue to chain semiconductor monitor the situation. ongoing

design an variants. unpredictable base. in last seeing manner, we evolve to by slowdown our COVID-XX customer threatened being pandemic in with Unfortunately, so are activity continues overall any reported I progress across new As quarter, far not the

while interests, we and the health working partners doing regulatory and what local is of and with paramount always, their customer our in best As employees, will continue closely agencies. safety is

words. to turn to few will over it I Anirudh Now, a say

Anirudh Devgan

and couldn’t partnering industry opportunity. Thank I am appointed I’m to across me. I their I over humbled and an we digital drivers Cadence, believe the to the our deeply be Generational CEO thankful continuing honored in excited transformation for mentorship enormous Cadence and very to very and am I’m this grateful years strongly you, for roles. Lip-Bu confidence the to and Lip-Bu in Lip-Bu. Board seize positioned him with also his for and to and guidance opportunity be better rapidly-unfolding several new present of next industries

serve growth a out path as a set of growing intelligent customers. exciting to we Our enhance system design portfolio lays our strategy very

Our unparalleled early relentlessly enthusiastically ecosystem valued strong strategy, a led accelerate our over engagements Thank breakthrough and now growth EDA our to John execution, the into will to over to furthering as forward the customers with look highly our solutions you, very and hand fast-growing segments our our go look adjacencies. it strong and to expand business our shareholders. to customers and I of you, also in partners and successes support. core IP team working in innovation, and large, to our collaborations with to we innovative while I highlights. driving AI/ML with I talented with and delight have and to to forward foundation system strategy deepening financial results deliver the

John Wall

growth, Lip-Bu congratulations and expected profitability, metrics roles. with Cadence. a key you of to your revenue pleased everyone. we on for all our than cash exceeded our is broad driving and quarter, the Thanks, demand I’m financial new flow. solutions for afternoon, to report for great based Anirudh, innovative day Good stronger This and that

result, year we As financial outlook our across are a metrics. the all for key raising

a thank you getting our team. to the numbers, into like Before particular India I’d say to

first. see the to past the helping India heroic few for people commend over put their and local reassuring for hard situation We and As above hit particularly leaders know, call pandemic was we QX, in all deeply India grateful duty, going and by of are India our work to the it’s the efforts in to the beyond in them we weeks. relief improve

for Total Now, results go beginning revenue with non-GAAP $XXX million. EPS GAAP XX.X%. was was and through $X.XX. Non-GAAP let’s the the was key P&L. second the was $X.XX EPS margin quarter, operating

Next, to XX outstanding QX, quarter-end, sheet for And cash principal $XXX flow. totaling At QX cash Cadence was we cash balance were million. $XXX DSOs repurchased the debt $XXX million, Operating $XXX shares. was million. of and million while value flow turning during the days. of

moment for Before updated assumptions outlook XXXX, like a our the to share in I embedded our I’d fiscal provide to outlook. take

We our Pointwise be NUMECA year. before expect dilutive continue year to that next this slightly will becoming acquisitions accretive and

half. were in much second India, in assumes up of our Our catch we hiring by on delayed situation that but half first COVID delayed currently hiring in plans outlook the the activity the

cost our the Gap], and will promotions of outlook [Audio for shares effective for to be outlook million, to use base. margin range outlook the flow the salary for EPS And $X.XX, exist no the in XX% salary July at from limitations today. increases we Those that our range and X. export operating of generally we $X.XX XXXX. there to in GAAP Cadence EPS in to expect Our the includes employee these changes XX.XX%, Embedding were to to into XX% billion half expect, range in operating promotion non-GAAP second of revenue billion, broad fiscal finally, $X.XX, range the of assumptions the assumes $X.XX non-GAAP of cash our to range the least in cash of $X.XXX $XXX and $X.XXX of $XXX in the to free million flow repurchase increases

in EPS For non-GAAP the GAAP range $XXX range to $X.XX, and XXXX, the margin $X.XX EPS million approximately expect to operating revenue to XX%, $XXX of QX in of of the $X.XX of million, $X.XX. in we range non-GAAP

safety growth delivered which conclusion, Our raise the available strong we’re and Cadence as additional for GAAP is and like CFO questions. expanding our customers, like to that another partners, now with pleased close well website, outlook by In reconciliations. outlook I our operator, all, that, to on do, and remind hardworking that commentary, employees be further our as to profitability, thanking non-GAAP analysis to of they items, all includes them revenue quarter and and And our our priority. first we’ll their continues to for year. would I’d for health and our take

Operator

[Operator Instructions] first question with comes Vleeschhouwer Your Griffin Jay Securities. from

Jay Vleeschhouwer

‘the so why towards view does me such Lip-Bu. And Cadence the last PCB, month, and just is specific scalar product regard a growing ago. at evening. market? additions? extensible fair your your announcement explain years EDA, the that? my significant specialty Cerebrus listed around that was perhaps or With to would start hyper to you in placed there's the for interestingly, most as as, that design And that's Thank for and slide, the have since extent with of referred keynote such AI/ML Custom computational you ongoing to for circumstance be methodological Lip-Bu, last Cerebrus to follow opportunities businesses, and and days new you follow-up IoT, that question or or specialty let an so it Anirudh, XX then forth, up an similarly, week's said exciting’, your software non-digital for events have you, was of the your the of And good you to that all in world? chip is, XG, Synthesis seem tuned could market QX and to Cerebrus, trend The the then domain you application design, increasingly market I EDA, as of most to say you,

Anirudh Devgan

learning Jay, is truly start. Cerebrus we really, excited me basically believe let flow. And, about fundamental the digital know, for reinforcement drive know, you breakthrough, Cerebrus. Thanks our to I are question. a, you using

I and, the you great that, the do of do design improvement, know, in for the improvement results more quality know, And, of more as generally again, mathematical and can And you we last run you So, week, you could their can design explore much but of Cerebrus run mean, in the said, be you in and as that you Samsung and intuition, they – know, versus Renesas them, you got they you still, or results, know, this on example, a you months, way, some some know,[indiscernible] that parameters. based them know, days know, and, way. much designers the announced frequency. of options done know, power said and endorsement, said, that be XX% X% got to,

expertise a And on one how we like very with optimization lot that know, based methods. still are it with more we're have new definitely, is of a we is lot it's more results. of these AI. and to are of happy kind can thing mean, you applied you But computational work early, I you remind So, know, in be to And, continuing would so far, are to well fundamental, customers. I performing. Cerebrus promising these software,

definitely So, can you think still other know, to early I it's these applied and days, areas. be

for announced months more X, ago, that a they also So, and technology for has also route Allegro and try learning of example, PCB. place new automate and machine in couple

by pleased do, EDA what design. to application system still simulation think are AI/ML to and in of general I Cerebrus it's days, we very early and but So, can and

Lip-Bu Tan

not one I Because about driving and ways towards the five that this domain and specific – of in of because lot it Renaissance. innovation. changed I workload of Yeah, very application hyperscaler. terms Silicon I this we explosive, you infrastructure, significant know, as specific drive the And call that lot you are that out one more design high have scale keynote they hyperscalers, tied application. really and the move storage, my a and Jay, a are particular that network call have know, think in is in as And to generation activity, is question and clearly, second you a are their generation of on – then terms excited data a

required, and beside a intelligence of Cadence design lot a that system for packaging, lot this strategy, our tie different to and a well positioned drive new design well going are ISD very very lot a above] that be this in well and of [mentioned the modeling processes that to IP, there's with So, all Anirudh silicon, double-digit innovation, lot capture you know, activity, And in analysis. fits IF that system besides of very [indiscernible] the a opportunity. opportunity to into growth a why that's And, system of us. requirements. And this whole it's system innovation we

Operator

Mobley with Fargo question next Your with is Gary Wells Securities.

Gary Mobley

question. everybody. for Hi taking Thanks my

expiration? backlog of balance been, words, back the XXXX in it metric? your And accounts that late year the hurt terms average a Lip-Bu a Let in well, for me start Like, to you your congratulating know, by that was some other multi-part you've I and key – what further with team, into from adjusted license backlog some or might on renew Anirudh duration I into then in some at extent think off by, quarter, or an to were what as for careers improvement. the in early first see metric where held your XXXX, you start And to that extent the metric, expecting accomplished was know, improvement you the to helped it all has as nice back question want backlog by metric decision improvement Cadence receive next backlog the prior roles. and in

Anirudh Devgan

software, at on the your to base what are can light impact, cycles but, you three-year an software, first, think for I as to recall, typically like in a with Yeah question the yeah, value you QX the our Gary, it contract. release back quarter a last has part climb expect don't for raise customers back bounced allowed business I little And start of we lines really But heavier a renewal renewals you're that that think In all well. in said And referring relation the renewals but of our and on – decision jumped. thought guidance their bit, was revenue us of take contracts for QX business that's In in XXXX charity with so RPOs know, quarter I improve to think year. the phenomenon that of those to, our was annual taking last performing one. RPOs, were to this, a QX QX for RPOs year. I temporary and throughout we I call the back in the for decline

Gary Mobley

And about your last you percent low-double-digit really earnings in my John, this second expect, second China. you the think well call relates question revenue normalized XX% that a Okay. of decline imply I year-over-year trended China quarter. it mentioned would revenue, but which year's business, for would related of level sort to in

you China with your quarter? cautious So, land you indicative full-year? this revenue respect you China little the second XX% mix Perhaps to where to the a is my bit in are of for question is, still might year that or

John Wall

latter, the it's Gary. think I Yeah,

very that contributed to benefited a average from in in close last year, in is we an I we China which China to mean, a second think, XX% you the quarter I to, upfront saw I and lap. comp higher second tough in really revenue mix than uptick because the year, was last quarter cautious first and growth business. know, solid half

strength coming strength based best told guide. think had. they region. all guys feel QX. of with now But impressed the was the was more the the being But So, I confident is in strength But I in bookings really QX, careful having were in that bookings there And through. we that much the think were of seen broad we've across QX activity one me QX ever the I sales the with

is than think year that QX. going like the more probably So, to yeah, I be QX

Gary Mobley

color. the for Thanks

Operator

is question next Munda Your Gal Berenberg. from with

Gal Munda

you questions. taking my Thank Hi. for

of side, the bit and new about think [repeat, trend terms customers, So, the touch really the of seen kind zoom specifically, design a and just, competitive very between of this driving in understand displacement the XX wanted bit you out] growth guess, and market, that displacements, competitive healthy could to first just you've that? some you on mentioned help you very, one what's activity a a little us the is little I digital kind mentioned

Anirudh Devgan

this Guy, question. Anirudh, is I'll that take

advanced So, the about So, QX very which and I lot well, than from faster question believe, do think last are know, is especially at continues mentioned pleased digital like know, performing of the where know, you you market with we activity, XX% right? your growth, and is in accelerate I it you particularly design yes, there know, Lip-Bu to, you a regarding – we the well. and node, group grew digital final

[NX and, see we know, you NX], work So, activity, know, and NX. you design with of at lot a increasing at foundries you know, similarly,

think think to just trend pace. that digital flow I also, more our in getting we full full I are business. synthesis of means the people a adoption, places flow whole us And I moving at would the sign-off. not continuing more helps placing nodes So, And advanced route, strong is

worked to more other and digital becoming signals. a get strong prevalent, then mixed on a are And our comfortable full flow. more trends, customers for like have our mixed there trend always running flow that to that's, XD while of signal, you we're we and customers. IC more again course, a And entire So, know, are integrated and

overall, of are even So, in better perform, confident know, results just a have to than flow. then you Cerebrus on position. regular can give our using top digital And even we we to digital that,

strong, and these are customers to is with the that design So, we designs. I for think work the is our summary glad activity

Gal Munda

very it guidance know, able maybe confidence? you that fact you're QX raise another you think of order fact for little of stuff, and what keen to, gives there Anirudh, maybe do it that, know, to three comp beyond of to last about, kind way of the and beats maybe. a kind When even I to, you. and as to of in the That’s and in the strong, the helpful, Got the Is you that kind Lip-Bu came enables John then kind go, and extremely you you year, follow-up, above of be from thing of still lot you the behind now to was a months more the we're know, and that, the hardware the it's a tough because QX, in beyond it, of bit reflect guidance? and outperformance seeing or more same kind what’s quarter the in and in year

John Wall

anyone on advise last of in we any I mean, year’s since look this distorted, at because that back question quarter Potentially guess into out pandemic the of and did but in a the can confidence. like QX I get over for the that quarters have we that you That the I that expected the That's of was remind debt, and – half, recovered bad started, later were – second you take contracts I not lot. but Gal. helps value along clearer in focus and that of booked would you a a great now numbers, in XXXX, can clearer digital we contracts were I some to that. that but quarter, significantly as be the closer the the us the but revenue XXXX becomes maybe give with, we cases QX. quarter to half to great that the would than annual growth start QX great, one that we the some lot QX expiring, know higher second visibility us that

of some quarters a bit distorted. been So, the have

enough been of year has value the guidance increased know for on you annual trying us the year. million at I've XX rate to the mid-point to So, at, by at focus And contracts the will and the considerably we look revenue. for

Gal Munda

very Thank you. That’s clear.

John Wall

Thanks.

Operator

from next Jackson Your Ader question with JPMorgan. is

Jackson Ader

or, and any you. that, the really So, the what was it does disclosed of it's not why curious, in February sounds it of just in like we know, you in penalties subpoena just or kind kind that and quarter I'm previous it was know, from into you received imply? reading which operationally something discuss disclosed the was that risk in know, the language, Q this Can so whether you on Thank you XX-Q?

John Wall

was quarter aware a it. we housework. the that nature of guess of us – the We in of queue and of Really, significant, investors interest that terms just to full Yes, really sure became we the I in the it's in wanted don't hugely subpoena to last in more during bit think clear of full the wanted transparency. it but document were in make in the interest to –

Jackson Ader

XX XX side, those was that Okay, and ZX, ZX, How And well. then XX a I’m the [ZX, hardware lot on repeat of those, hardware very of sorry] orders orders. it new of XX we versus of if orders there? were many had right

Lip-Bu Tan

Yeah, I think will let Anirudh answer the on. question, in later and I will chip

Anirudh Devgan

a That’s good Lip-Bu. thanks Yeah, question.

ZX Palladium still business is of more still are have, XX. and of And mean, ZX ZX we XX is pretty XX, perform well. pleased you the new to systems, the know, Protium. transitioning and with and and So, performance more our And we I which and

I we But are the and selling well. performing expect which continuing more sell are to systems. situation. six John are on And last about systems, the new them months of overlap think we with time, we depending So, more the customer mentioned two

So, months we that. are into a few

be I it is will So, trend new it should end and new expect, – the the year, would systems, But I systems. the most of continue. it more and be will that by think of of

John Wall

fast and demand. can we inventory ZX we're as and meet building the Yeah, to XX with we're very ramp, as happy

Jackson Ader

Great.

Okay. Thank you.

Operator

next from Your with will Baird. Joe come question Vruwink

Joe Vruwink

Anirudh. Great. Hi, everyone. And Lip-Bu and first to of wishes congrats all, best and

suppose I wouldn't I just change much know, the You strategy. in expect

but contributors has growth you product and on week case, few to to particular for announcement I big next of maybe expect the years, ultimately certainly, the think, growth areas over company? seems Are seems things [want these given do to like accelerate leadership just that profile in industry. you help driven to a changes been, question, the last if know, be certainly be just the to opportunity where AI an what mention] of design see trend, bigger be continuity, accelerate asked would not also business that, the you the but much there the the Cadence,

Anirudh Devgan

like you, of four confident Thank know, became system and I since And Lip-Bu strategy. right you our closely think are I we so years of lot forward. in you. you Cadence now, with position, worked intelligence Joe. And that to as would over ever in see. say the going there's a guys design I company, very And last the Thank President very is I strong a continuity

big now And know, computational. computational it a adjacency, to not business this is core right machine and software being them And EDA that of but believer well as two friend, time has And you I'm know, learning, and the also big have you only one do that other expand system effort and know, done AI decades. our we analysis. in a is EDA close in which then You for second of know, that. our are being inherently, to also design you you the one IP,

and design other grow can know, been you think continue IP and EDA with have a know, machine business, will added we good good analysis and it provides be to and adjacencies business, you we AI I it into. learning, system So, think but

are truly excited. we So,

take – going to I that Cadence are accelerate look growth we the a accelerate in and these new see hard great think trends and will opportunities position at look to all – all we we very and and heights. we work the forward

Joe Vruwink

budget? any maybe margins? the be accelerating? maybe half, half That's what's margin into saying Cadence, reflection follow-up second just on the looks a great. way it know in that Is like, XX% the the anticipated then back that there you to implies back relative, purely outlook to hiring, the [indiscernible] Or best might of just first working is XX%, And a half

John Wall

Yeah, the Joe, is, note the of the and the some that, things I is that's thing first in margin and are one-time during cycle second half. distort But our think QX review to promotion salary there also part of we annual there kind completed story. picture

replacements. the in overlap be temporary as, at As same program time promotion to efforts, half rules did to a know, expense early transition the some second part the we planning the their severance round. And of as retirees our succession there'll impending you the voluntary and

So, six cause temporary NUMECA and phenomenon. purchase on margins acquisitions yeah, and I've necessary. the with also first be embedded , they accounting of would half we guidance. a of that And be. review than my our up absolutely treatment a half. team and for otherwise into second can we lower second sure all the Pointwise to do in half I double that But months And had will there. make they And that's to the it's There's expense we're the of hiring planning the in the lot

to that following there be outlook margin could So, upside some our review.

I the mentioned I it's As I when at think And that's levels can that, the you annual margin to performing. earlier, better XX.XX% little business view. look the numbers quarterly during the be XX% which is distorted pandemic, look to the the bit at closer a know, at annual to currently guide,

Joe Vruwink

Thank you. That's helpful.

Operator

Capital from Celino KeyBanc Your is with next Markets. question Jason

Jason Celino

think Lip-Bu, be question. Maybe add? the able customer you this about and It you raise, might deserved spend, uptick? of my where you've the Anirudh on color indicative segment sounds but being flat China but guidance can we budgets what it for John, congrats a were from know, and taking geo uptick perspective, bigger bigger, being quarter, promotions. question, Thanks seen first on the more Great. provide for ACV, ACV like any my you well are to when else

John Wall

Asia probably we're, guide pretty they we a would right based was pretty profile. it that, within in average that. think broad projected And we've based. but say, of America of revenue have the I regions, then, now. China, kind China And and with is I recurring was Yeah, performing all of profile what course, it broad the was year part Asia, were the business strength the stronger North of typical thought is, for sorry, I half lines know, our second you across then the of

next sets really year. I up think it in sets the us us growth well really – for

Jason Celino

a you. the months today then IP, outs from down in ago? but Thank mid-single-digit about year, call maybe IP the not surprise, you diving feeling little last versus from given call, that remainder maybe how the for the great. Okay, the of a growing bit, three quarter, no are no entirely And

John Wall

let Anirudh to I'll Well, IP the talk business.

China. mean, I I grew it's think performing year, it's numbers, when to IP look well. the XX%. really I Last of But similar at kind

tough QX thought, another growth would the been we I'm anything have that about our quarter Anirudh, confident there back might that QX want looks late, next we really did be year. for you some we say highlight you in we the quarter and power So, more know, because know, with QX, and set but And business generally? to that And like. really, comps. outlook up last bit you belts, under little that's a what QX IP those it's, thought do of for comps, ourselves

Anirudh Devgan

mentioned, on Yeah, the summary. you would thing are is lumpy to know, true. business you you IP like that, more thanks, know, also are John. John know, business, purchases One add there to good is that's is based overall, some Jason And we project. with like seasonality happy the IP just a That's I it, pretty which, and

is little the So, is more know, trend activity, you but more foundry strong, the you you there And know, just of outsourcing IP there continues overall whole expect. lumpiness, would activity. are and more trends design a for bit as

we the pleased star are have the with in right make to we IP customers. we So, the business of IP where and serve sure kind are

Jason Celino

Excellent. Thank you.

Operator

UBS. Your next question is Ramani with Pradeep from

Pradeep Ramani

it's terms higher it a mean, feel by forward [APV] QX and is that driving function stack John, I Hi. is what beyond mentioned that? Anirudh [APV]? of do the sustainability, that question. driving Lip-Bu. how different of are think that you or, buying is I Congrats [QX]? And sustainable Thanks in renewal in you just mean or customers my higher, up for I customers taking was what and going

John Wall

I I question. – contracts, the I volume the at at, three we licenses it were look I Tom, if great CFO like the contracts. to providing the for year-over-year, very improve purchased years, level, of saw, little few were a mean, speak. on yeah, generally, what last of the think last accelerating like, keep when revenue expiring for And customers, over generally, on bit. all year the for packers It's to approved mean, at look virtuous guess accounts, three look track, than greater year, and them a But I to and activity buying the I put high year so, And the that higher we're at in more and that growth of value with products. business second at pricing commentary. that year we've look seen was very I page yeah, cycle, design previous Sure, our a they're this when [indiscernible], so again our Also with we consistently I strong – you that –

I of of release that's think at And accelerated. very, the across Cadence us across ago, innovation, [ACV] the base new often very previous has released products you launched talked But products a new significant years pace products improve few broad the the last in years. significant about, customers. a six think eight and new in helped our we XX I we months. We've know, our three

Pradeep Ramani

you in still ZX QX, was you of in in that about and ZX/XX, the thinking Okay. ZX cycle but from you would where pretty sort know, or ZX, we significant it, the verification but ZX, about the my it And from QX? early days, side, just contribution on some there for penetration say mentioned was contributions follow-up, for very in was terms had are and of you negligible

John Wall

it's me of like, a mind think in a It's – bit you relay like terms analogy, contribution. baton. I the if a race, it's significant style an you using know, don't know don't over I handing Olympic whether

and XX of we're transition, ZX. are the you XX these you quarters see know, alongside where selling, think and QX QX year I that middle where and ZX

the by little with the be we'll time QX, we'll often sell. to older get have we to year, end of by of sprinting the and think the the very left systems systems, newer I

Pradeep Ramani

Thank you.

Operator

from Rosenblatt question Securities. final comes Our John McPeake with

John McPeake

squeezing Can Yes, and me guys. clear. okay? loud for in you Thanks hear me

John McPeake

a It's just Congratulations Oh, some but calls, I I amazing. to Lip-Bu more great. guess Anirudh. been wanted quite and you’d mention be run that. on Lip-Bu,

Because potentially my they've That's, had Cadence. it seems one, to you you in the rethinks about, trends it more I done historically And things a have getting industry, seeing those mean, I the that ever like for companies, that freeing the try first prior regimes if some place? I'm that's their about high were new major seeing follow-up. with, know, budget, they management up you competitive I know, semiconductor So, than the strategy. know, been. first could some that significant then companies historically significant question is you're you're is a you have know, wondering in shifts, not may become in share seeing they're level

Lip-Bu Tan

let answer so Thank think I Yeah, that, John. you me much.

than analyzed. lot this change enough clearly, and So five see in we X% being data generated, wave, of being industry a data the generation and less of on

automation the there's autonomous part. humongous and I other is the hyperscale industrial driving. a So, think That opportunity industrial autonomous driving of group another terms for in and

applications. new So, lot those And be I areas new of think are a driving to going five a needed. solution

a So, innovation needed. lot of

playing way to provide lot. ISP workload from all way, of and this the our how the some strategy, in And so silicon in very to the some be changed the we'll in a has especially well, system, solution,

domain CPU And new computing, the new of and the just not of a that lot lot a so it's solution. driving creates design. application And specific

contrary, design? And So that's why in we the see design increase don't we see lot hope actually, any me lot In of gave a a activity. that forward. in slowdown going of

John McPeake

guess, I curious placing that to for then do might and what when and as And your to to you seems specifically, strategy we're I'm get around. like Right. going route under, all gate digital it three there. potentially, And

maybe about you three], [at announcements some outs made tape already some you've that guys talk think bit. a little can I

Anirudh Devgan

it’s me Yes, that, let John, take Anirudh.

lot are and we customers major lot we quite a So, X nanometer have as X to you a know, you at the bit already with foundries. can work of happy imagine, of know, a activity designing at also nanometer, you are

we you which also, X And with news note. is we industry, I do after work you being EDA noticed node strong there. the said be after at should key very And and Cadence. that that. X nanometer good NX we progress very, know, thing for also [NX] are earlier, nanometer good are we is and a the it's this or that all happy solutions, for started have know, on around, gate what one And NX, optimized so think is for like I So,

of You but a more critical nanometer, X I a lot even pure of each bit you of, not mean, as number going methodologies from before. little performance much Moore's performance of transistors is the let's up, Moore's or area there giving because scaling you know, is still tools know, keep as say, law than the from scaling a role slowing or becomes get transistor and is know, of X Law. you

is to So, the for, deliver Cadence and solutions then to [EDA more solutions] IP for that there demand performance.

of So, advances become will I nodes. then machine think learning. other with the role combined more and Cerebrus And like EDA more at critical lower and

with are think the overall, So, pleased And industry. nodes. is it advanced position for our pretty I news these we overall at good

John McPeake

the a them I of shortage engineers, you. would seem ones productive. guys more are just there's Thank and like mean, making you it

you. thank So,

Anirudh Devgan

Thanks.

Operator

now for to would over this like closing the turn I Lip-Bu call back time. Tan at remarks to

Lip-Bu Tan

growing market afternoon. and opportunities for far business so very you excited this thank I’m all the us about momentum closing, XXXX. joining In in the

And System for of as Have Directors, and in customers we Intelligent from out confidence unprecedented and addressable trust Design and Excellence, our benefit partners total all nicely Pervasive continued our market. a we playing thank our these strategy lastly opportunities Board of their Design on and day. very is wonderful an System Innovation, new employees and times. behalf Our Intelligence, during expanded

Operator

participating today's This you for XXXX in today's earnings call. Thank call. second conference quarter Cadence concludes

You now disconnect. may

Cadence Design Systems (CDNS) 27 Jul 212021 Q2 Earnings call transcript