CDNS - Earnings call transcript Q1 2022 | Cadence Design Systems, Inc.

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Operator

Good afternoon. My name is Erica, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cadence First Quarter 2022 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers’ remarks, there will be a question-and-answer session. you. Thank Instructions] [Operator turn Investor over Relations now Vice Richard President of for the will to call Gu, I Cadence. Please go ahead.

Richard Gu

Thank cadence.com. welcome Chief The Today’s a call everyone and John fiscal would Financial Devgan, business President available like Officer. today’s website, from and in to discussion. first implied of by Senior on including actual Executive joined statements, I materially remarks today’s conference of and uncertainties, Officer; projected may results Chief am Due future will earnings year be you, quarter will discussion our copy this prepared XXXX results. Vice risks Anirudh on forward-looking webcast I today and Wall, of and or those differ to Operator. contain our our call. to outlook President and operating

cause For statements as on recent our results information us actual of to information differ, to XX-K including available we any update estimates earnings today Form All obligation that and today’s factors refer filings, them. are disclaim most to based our this and call release. on SEC could and to and please during XX-Q, forward-looking

release and will financial from the results. to related not which non-GAAP are certain considered in for first are included for XXXX, be measures non-GAAP quarter commentary fiscal tables release. isolation In measures, earnings Reconciliation earnings also we or addition, Today’s substitute present a GAAP of as should GAAP CFO of available. today’s in

and observe limit today, Q&A of session you one the question follow we one a would that ask up. For

time like questions would you additional re-queue and You may permits. ask if to

to over I Now, turn will call Anirudh. the

Anirudh Devgan

a and hyperscale the innovative the delivered on of I quarter year connectivity, are as year. driving us our to solid such growth continuing our for you in for demand in strong is driving Along transformation creating trends for that differentiated next-generation XG, to business that autonomous provide Good our with EDA, the details and moment. markets, design first compute, of continue XG, afternoon, everyone, with more solutions. for are and data for financial results trends and storage John report business, we AI/ML an turn explosion need raising view all the groups. joining for am of multiple broad-based data driving our opportunities double-digit start activity, today. outlook solutions exceptional across IP of the analytics end Generational pleased XXXX, thank In digital the fuel and rich will that of Cadence accelerating system to computing, market these solutions. creating robust end-to-end momentum

let’s for collaborate talk closely A customers. our our focus with approach key on been and market about QX. highlights shaping has our key to partners of ecosystem element Now

a built have EDA, U.S. largest in and to excited to semiconductor successful our engagements very and company of are with of the QX solutions. company, in We marquee enable contracts our broad systems upon proliferation the signed hardware history, one

Cadence verification and and continued year-over-year optimized bring-up strong comprehensive to software be we innovation. solutions flows implementation accelerate Arm, verification system is jointly provide is longstanding who Cadence’s XX% Rapidly for and pull growth. processor increasing revenue challenges IP in to our a which customer business, delivered who expanded with Additionally, in Arm’s of QX, to using our a set IP, using latest partnership EDA reference

XX new heels its AI/ML the biggest particular unabating the XG/communications, strength customers record with by business more seen platforms. hyperscale, customers, ZX the repeat orders With broad-based, and XX XX segments. both and included quarter during hardware over for far, best-in-class than for hardware was half our the the year, Demand in had and platforms. our Protium with hardware a quarter On of demand Palladium

Deployment of advanced full new nodes, with growth. another had business than in quality flow, results Our the industry wins signoff leading delivering digital accelerate and our more year-over-year to of QX. most quarter, digital continued revenue strong XX XX% at with

Our Cadence space by to node XX% and full nearly customers power, productivity a company X% Several a a optimize subsystem. nearly systems Cadence in digital reinforcement flow successfully remarkable innovative Asia-Pacific benefits, advanced And with hyperscaler Cerebrus achieve and our have productivity used area alternative and Cerebrus intelligently full solution a design the manner. to a the to chip Cadence digital entire uses fully automated the Asia-Pacific flow compared technologies critical X and gains flow. learning instances, realized reducing Cerebrus, market to marquee on unique used Cadence ML power engineering Cerebrus power with shaping leading tapeout XX performance deployed and explore including, billion

system Our successfully development A fully continued in solutions. IC large System compared System company their beyond deployed growing analysis continued and planning, is Analysis, to results executing our out year-over-year to driving integrated used the strategy Integrity tightly U.S. & their our delivering revenue XD in engines best-in-class delivering its superior the is of XD-IC, Innovus Integrity computer offering and with optical integrated EDA, XD-IC to Integrity our Virtuoso momentum technologies. we strong legacy multi-physics Design Lightelligence, platform, and business, tapeout of multi-die X.XD In building -- system. advanced There which interest most platform, our solution, data implementation Analysis QX, XX% expansion infrastructure in industry’s growth.

We our with technologies. products, the CFD as and recently our growing organic well for wins as orders Clarity are acquired Celsius pleased new and repeat

solutions. CFD to Juniper their Martin. have especially aerospace Over that last Fidelity a comprehensive Fidelity standard massively Networks relies Analysis across including CFD’s continued by In customers PCB, Toyota solutions Zealand, America’s defense market-shaping CFD, accuracy be to chosen System the markets. next and end software their Cup, portfolio improves our workflow for dramatically access the includes of CFD the that hull technology, been week year, as winning systems And complex our in performance technologies, multiple as arena and capabilities and meshing with solver, parallel a across commitment applications have meshing past to New platform modeling. well introduced solver high-order CFD as we Team packaging Fidelity vertical comprehensive the renewed CFD QX, generation Marine hydrodynamic proliferate, Motor Europe enhanced and such Cadence for Lockheed to on preprocessing their

our to results, outstanding to consecutive For, addition our to the as the also year. Fortune we in I Best of have by for XXX and selected one am and Lastly, Companies that Work XXXX eighth business culture Work thrilled proud inclusive Great Place of been high-performance

QX over Now outlook. our updated I it and XXXX to John will provide turn the on more results details to

John Wall

achieved with XXXX, driven leading of portfolio good broad-based first we demand the Anirudh, quarter our for afternoon, strength Thanks for and the am everyone. products. I our by technology across pleased record hardware results and

Design further continue and significant strategy, to strides most innovation we to continue roadmap, our execute our System with We customers. to delight importantly, making Intelligent our

revenue operating cash are financial EPS and the billion, million, cash first Here shares. and Total was balance was operating quarter. was repurchased of million was GAAP was we $XXX $XXX from flow highlights $X.XX Cadence of was non-GAAP EPS $XXX XX% million operating margin margin non-GAAP $X.XXX $X.XX, the some and XX%, GAAP was

of the fiscal limitations that is XXXX to to of of updated contains in Cadence the XX.X% I’d to $X.XX that in to operating $X.XX, our our the provide in outlook it of for mind, remainder With $X.XX $X.XX, EPS repurchase XXXX. I like revenue range XX%, our EPS GAAP range shares export range $X.XXX assumption XX.X% non-GAAP the the expect in of least in of that highlight of in billion $X.XX flow place our margin margin and to to the in range that $X.XXX the range use operating non-GAAP exist of cash usual XX%, billion, XXXX, the in operating year. outlook we to today for cash billion the flow to at billion GAAP in free remain XX% fiscal for to Before $X.XX range updated

For the of EPS QX. revenue operating Cadence range to margin XX% least in of and XX%, shares million in range we non-GAAP repurchase of $XXX XX%, million, to GAAP the margin operating in range the $XXX $X.XX XX% of $X.XX at of $XXX GAAP $X.XX QX, non-GAAP to $X.XX, the expect to range to EPS of expect to in million in we

includes to continue our commentary, as a In outlook CFO start to strong further is the reconciliations. GAAP that on am businesses to Our as for non-GAAP well analysis items, I and and year. our additional website, profitability pleased available conclusion, growth had which all our revenue accelerate.

over margin now driving expect are margin track the revenue acceleration increase CAGR revenue exceed XX% exceed our contributes outlook Also, XXXX, to in year We operating expansion. growth continued the with in which to for at we to the XX%, three-year midpoint, XX%. incremental our to our for on

for employees to partners As by take close will And we their support. that, customers, like our Operator, with thanking now and continued our questions. always, I’d

Operator

first Your from comes question Gary Mobley the of with [Operator Fargo line Securities. Instructions] Wells

Gary Mobley

my and start that well highlighted increase, sequential I by for questions let want Thanks congratulations a wondering, fiscal XX% extend and asking was customer diversity you backlog want hardware about ask as you remarks? of prototyping your emulation, has the well the marquee IP? increase, to Hey, what you roughly to guys. tools me win to it to start I contributed that driven increase, by as about the extent largely strong to prepared off backlog, as year. had in I the taking And my that was

John Wall

This question. Great is Yeah. Gary. Yeah, John.

to big in some marquee significantly up This $X.X from number you substantial refer that hardware contract an in very saw business billion There to I are over at the We a existing as come and now semiconductor that a across well. the demand was record expected in backlog was the booked quarter. we end was large expansion and and revenue company of But in broad-based the is groups. we it contributed of XXXX deal strength had to, U.S. through came think that that pleased all growth terms you also replace expire the a of different that QX. mainly with to and of backlog uptake to extension

Gary Mobley

the in give information? wanted you is take us update any on specifically -- the relates received or motivating what to Thank U.S. to Commerce filings from them can Thank and ask to and your Department it you ask perhaps, John. in that the you, entity that you for about wonder more and you Great. if for disclosure asking SEC what is what I BIS your you. I was about subpoena in,

John Wall

and we the subpoena previously to sales is an of Yeah. Gary, entities. yeah, Chinese focus about certain information this administrative that mentioned subpoena is the

export to response is have and But else stage anything don’t all Our is Cadence the other really at compliance with regulations. I control say. than to that, subpoena in this mostly complete

Gary Mobley

guys. you, thank Well, right. All Okay.

Operator

Your Charles Company. comes Shi & next question Needham with from line of the

Charles Shi

of semiconductor marquee customer. my a, afternoon. want wonder signed. with of expanded that? about can I Good for contract you question. to Thank both, a you question, the you mentioned scope or follow-up this a combination I color first a contract customer that U.S. Hi. Is I mean, maybe with the particular duration reflection on quickly customer record of that on taking give or some Maybe us you longer collaboration the a

Anirudh Devgan

Yeah. is Hi, the Charles. Thank you This Anirudh. for question.

it our a upon a while broad particular very arrangement includes our happy to with So, market to with like key working we know mentioned, U.S. like been contracts EDA ranging And you on systems includes have strategy build contract marquee solutions, And have element these are with successes excited approach, solution. platforms new so a shaping and this we for our new mentioned this is it’s new the but focus now our am it hardware key customers. and with semiconductor we customer we also company. and may of these I

the paper in this we time example, with a look hardware solution. and with engagement key analog of So engagement customer. flow, with of on very element EDA, we forward Cerebrus to we out give our full improvement. continuing it’s example we arrangement time also several a verification Spectre, deployment also At about for a on digital same And example lot then system very think gave have fairly last you and and for mentioned, to comprehensive I and course, Virtuoso in successful results and and productivity key blocks good at with have the recent Xx important

with happy look we are wider to as we and we go overall, forward progress deployment forward. So, the

Charles Shi

Thanks, Anirudh. -- Arun

maybe news on I recently, want front second not and to any a understand mean, but China, [ph] made maybe with, WAFTA a So new and you subpoena your they definitely received news have I follow-up subpoena don’t on there. the competitor sorry, -- WAFTA recently, I press question

semiconductor? changes a see customers, from not that, Just the seeing who a development subject what’s export the legal you not new in the measures, are provide really control Chinese potential want any asking you you. pickup but here, escalation would a terms but the I Thank did of of more I am may as not business comments to Any and among that really are to between sign making standpoint, on this behavior revenue color Maybe great? U.S. China out just correlation on -- your the in China to little be that first see point on bit the any but front wrong quarter.

Anirudh Devgan

you, Thank Yeah. Charles.

So we are our pleased with in China. business pretty

think XXXX, XXXX. -- now. But may fiscal in we behind know we compare I you that’s some versus tough are XXXX fiscal had versus us XXXX

grow to product and continue across portfolio. So business strong and seeing I our think we to we strength expect that be China

want So, to John, comment? you

John Wall

in we customer pick some a license seeing in China benefited out transactions in Yeah, strong some demand I present benefited was One IC add quarter. thing growing in up in as the strong that software digital revenue continues and QX, as we IC opportunity did QX the hardware and and is are yeah. it in us us to from they I compliance custom China. that for us would -- mean, well

Charles Shi

Thank you very much.

Operator

from Baird. with of comes Vruwink the Joe question next Your line

Joe Vruwink

Hi, think company relationships semiconductor Maybe quite is few you are base new we months. when going And of that, kind just just it backlog evolved. how to to U.S. you your strategic over a across maybe customer has that think of level scope you everyone. back of how Do the how broader related with the introduced the involvement XX your Great. emblematic development, is and involvement your marquee products past discuss can a about at evolving changing?

those to larger deal been ACVs You into have starting see you or today. talking about some Are factor sizes?

Anirudh Devgan

a Joe, Yeah. that’s point. good

So, to customers, on adoption, revenue. And product proliferation that what pretty that, focus positioning. we the we I on portfolio and important always our we happy and competitive are are with leads benchmarking, happy that, would say start, focus on we focus is booking

overall, use feel I design differentiate well you expansion in And of analysis, EDA product of solutions, think or EB then see, confident QX. grew that that in systems. and of then we also includes So, are further and AI all our and system in into the product our IP, that portfolio whether as they pretty portfolio to

electronic we of era are, good you So where we at and this systems. the we think, know, are, point, in feel I as golden also, semiconductors and

are So also in and growing market is feel strong a we the we position.

a together our tailwind our So it’s for good and solutions company.

John Wall

are just the expansion about would opportunity this I excited And very add there, Joe, that us over next years. we the brings that several growth

Joe Vruwink

Okay.

informing great. Okay. can view an XQ verification extrapolating thinking are can strong update visibility really time you on half, That’s with I the discussed strength a this quarter forecasting And was and in of a providing updated on but a your hardware? also hardware second your that ago, verification first you good into half, the and at how today then forecast the the had your a forecast where stands maybe with and kind necessarily platforms, see weren’t strong that just on your you you more bit wait first half and give specifically

Anirudh Devgan

Yeah.

Let me you a and think, the customers. the think for first, verification But our can key go verification, about and I more comment is John, as outlook talk ahead differentiator for I know, year. about

of do semiconductor and a from release. kind can out state-of-the-art That good know to of to really how silicon system a design you what products also I tape critical. your lead company, is your cadence ability fast be rapid to to think company is or verification product

do especially and not of up but bring think platforms Palladium and software hardware Protium ideal I just, also by importance verification verification of is importance driven critical the So critical. to becomes

we a system verification a are the had So, are quarter we strong record year. inherently companies the year both and therefore, companies, last have which following demand seeing across semiconductor but record products who also software a

rest John comment of Now to would in like I going terms on year guidance. the forward, of

John Wall

we I extrapolating that’s or year a of with saw to we providing comfortable our all weren’t position that guide. we and retained pipeline into outlook weeks just mean, the the for said of Joe, end our half demand closer until demand hardware this seeing second as kind products for year of the are call and kind of significant few the that ago, an Yeah. in we we summer

Joe Vruwink

Okay.

Okay. Understood. much. Thank you very

Operator

Your next from with comes Blair question the Rosenblatt Abernethy line of Securities.

Blair Abernethy

very Thanks quarter guys. nice much and

of side update to Just how of wondering things, just get classify whether if physics model where little sort competitive we business? you simulation getting have would got are multi simulation, as And some wanted traction are a could you strengths? more an overall to you about on or do channel your developing, they partner programs the perhaps what areas on the physics the just what talk view

Anirudh Devgan

Yeah. That’s great question. a

you all, of remind first well even take you we to in as this our design some And pretty system So, are segment ratably, other also saw growing to all analysis. compared and in revenue companies. that we just

ratable than So system Cadence portion bigger then pretty revenue analysis And whenever faster with especially key Overall, is is have and happy are strength design know Analysis the business. and expertise. the our a System are bookings growing you computational of software portion you becoming that our we revenues.

ED the efficiently XX of lot years doing and a we years, last systems over have very, experience XX accurately. So very in large

So we apply computational System software expertise to that Analysis.

than be customers key first solutions space that And can are magnitude legacy our customers. what top of been top in to similar always the has traditional okay. top customers, in solutions focus space, So we on customers better the these order our this and

product we and because you are strength think Celsius want in introduction differentiated now top semi-companies, big the with the and make system of Analysis, in clarity see to these Fidelity. and our I ongoing your and sure and So customers is System that’s also

Now think, more mentioned work also network which also point, naturally these beyond reaches customers. we also think and that, expanding and on your are available solutions and our we expanding on channel in more cloud, to the we the more expansion partner I that of and have past to I be more

a So and build want we customers then -- expand on always the go-to-market. to and product, the focus and build to the customers, top out the systematically big first on deployment focus framework

system pleased So, overall is with know, EDA progress are very also strategy. design overall, and with synergistic intelligent our position it we overall you and our

Blair Abernethy

much. Thanks That’s very great.

Operator

next Your of Securities. Ramani with question from UBS comes the line Pradeep

Pradeep Ramani

my of questions as had that Thanks Hi. think a on just customer do talking maybe competitive a taking about marquee we think or about values? more scope similar your about. it How Should the contract are as I from larger about couple question. should a displacement win scope, we side that? or you you for expanded that think but

John Wall

I of the Yeah. it of technology our customer. an that as expansion profile proliferation would with

we of I it of very proliferating and of may designs designs, value also number multiple certainly, designs. use opportunity with the the the the the technology, it’s then for growth next provided to based other but customer have on years in the and costs it’s with a seen mean, when years. the are about think means using They typically has to take this, that proliferate I success other this for number them expansion was into excited technology ready they us those continue expand that like products over individual it that and has next number I the our that, last in starts we of step.

Pradeep Ramani

good quarters. still much as if last than the that? the about growth type rate about IP two if business about something Great. -- higher that’s you a year follow-up, is thinking look sort we at the the should of so feel And your you or you low-teens, of Do for accelerating, be think

John Wall

growing mid-teens. the think, so, the been We teens. three over XX%. around Well, the or years they I put in outlook in at outlook low last have It’s

the we may haven’t on focus perform. is you achieved that current in IP year, give us. represents that we business find just But be for outlook for from We changed they and them when generally but QX. of noticed they that, profitable the end low-teens, XX% over have the target upside a there What last most XX%, might

Pradeep Ramani

you. Thank Okay.

Operator

comes Securities. Your with next Vleeschhouwer question line from of Jay the Griffin

Jay Vleeschhouwer

remain thereby systems last are and base? in the markets, your halves on Yeah. and their the the of like and I going Thank we the the back your months by They invest how is you With in have requirements given think you. or John. it for is, of customer, what kinds of systems support that far we are semiconductor having their end largest overall question, marquee different? all vendor in already are that increasingly Good strength expand commercially you to mean, still becoming in of though, Anirudh like spoken more Second over evening, rising in what business, yours? customer way important EDA. customer are who many number seeing Question the one, two inflecting services customers, like product they that’s of your last to even semi base concentration? company their R&D than higher XX% of is, like more customer increasing customers could customers materially quarters. are that any particular becoming customer how have Thanks. been And mind, more tide customer of are even you from substantially few budgets that and though or the the The overall like are X% your company semi becoming case, a the of question foresee perhaps you that becoming the Anirudh, customers. number a mix over the terms differences given for expanding companies other process

Anirudh Devgan

Yeah. Hey, Jay.

system company question. companies and differences. there, you and the start And -- industry. said, asked are there are for Like becoming great this your first me Let and is similarities are the you becoming semiconductor system more about with becoming Cadence doing companies semiconductor more design but the

expand of that’s of So reasons some is, and the system into thing analysis. first we the differences, course, of one it design

silicon-centric. IP products, we just companies, with our system are not So, EDA naturally which and are to engaging

whether PCV with system products design strategy simulation happening base. synergy XD-IC a customer the of that’s in is natural or our and the or and and engaging design We of analysis natural the synergy it’s what also are

So that’s one big difference.

the the you difference system have naturally, system I that second company. think is companies why a they That’s software big as content. know, are

platforms, these Palladium doing and Protium, that for up, So more companies critical semiconductors. the are both bring even system hardware especially and need always but is for critical, software is

I So think are semiconductors. of would thing probably companies And two say or the sometimes new I the in are third always the that is lot these at are then engaging things. times helps a system big in new activities

So there no there. is legacy

legacy, that the strength So our always we helps because well of do us, the with without portfolio, typically market. in

second to aspects with engagement multiple the Now, said, with respect EDA, hardware the and opportunities semiconductor the with solutions. a company there’s lot marquee your in are over to there we grow question, U.S. years and happy like of we pretty system our

John Wall

customer. up many, not the I XX% us is a higher a very likely and spend have particular are opportunity you to customer next dollars of to us next of that grow customer accounts sets yeah, we accounts, few the few the wouldn’t years, means we our expecting and if of this expect that a happy over very, base, But it next Jay, diverse to this and that well grow not Yeah. years. am know, percentage few I with as I all account over well many we our -- very over years in so, in mean, their

Jay Vleeschhouwer

ask I can just If Thanks. you…

Anirudh Devgan

Jay… thing, another Also

Jay Vleeschhouwer

Yeah.

Anirudh Devgan

Yeah.

we us Cerberus these Jay, is, forward. see and It’s already solutions, more Another to going you whether to productivity AI-based highlight you semiconductor a company as or of thing, much to more opportunity an do our company. provide more system know from customers, probably they are will

know, hoping is are there the for and the growing what that always -- I what is is automation. for tight automation and and as more level higher market need talent So you is labor we because, need more

to solutions. more there and hiring, of opportunity think EDA a customers, provide we and moving of as automation us for less there’s opportunity bigger towards hire I in more more will variety be in people, well to automation towards still do for they percentage our IP So but wallet especially is

Jay Vleeschhouwer

Understood. Thank you.

Operator

from Arya Your Bank Vivek next of comes Securities. America question with

Vivek Arya

I a years, customer? look that growth, more question wider the revenue for acceleration next has or -- the few is Thanks it I years the my think at do customer? from question. growth And for come base the base revenue important that or forward that taking if is factor more be you a customer going last per to wider know what kind is of in more it it three driving a that customer you is to years, carry four per over

Anirudh Devgan

good a are that is would trends three That’s that, say big question. What us. Yeah. I helping

is, know, trend expected next semiconductors first to grow to grow, you So to in years. for as are we golden age and years continue it’s five XX

the business semiconductor our core So well with do companies. can

think I second thing mentioned was silicon. companies the is, like system earlier, the are doing more

are I or for XX kind think five with companies customization system to continue the for is years growing and companies wanted tab it’s And for also new a third area. because design are system -- and the expand differentiation. there big in for growing engage systemic which also of that years, system it’s profitable market, a the going then a is, our like portfolio to we is analysis, for trend us adds and a silicon that to So expanding opportunities reasons next

that these semiconductor business do IED that helps and IP. so is the to three is which And one well going trends, is core

AI things I system more companies do these automation with three third, and help years. and be Second, and XX and our itself system design in portfolio see expanding to And are is the all years, silicon. that changing the don’t analysis, can more going five next

trends are are a for that while these these So I can us. fundamental think help

Vivek Arya

also? when like-to-like be a is might you their are know Board you probably, it is that better. is level look prices there from basis on semiconductor the you Are I price oranges, acceleration are companies, year, factor ways like, that getting see the Got when they in it. at or this prices And I is they raising that of apples a from and the not across and benefiting a but raising all at some look benefiting benefiting margins this inflation growth that and stronger at

John Wall

Vivek. Yeah,

-- and Yeah, we focus they and has increase to happen -- all combination the see you more always that, we, accounts. us. of from but been comes wallet in the Our revenue of that volume of and provide more terms I continuing and and just more say of over to provide a the value what continue time pricing to to else know share everything customers on on increases, to more all don’t

Vivek Arya

different is what year I increase Okay. historically? guess have this on price question you my had than the is,

John Wall

prices have prior but year, this We to the increased similar years.

Vivek Arya

Thank you. Okay.

Operator

WestPark Your line question Ruben Roy with the the from Capital. comes of next

Ruben Roy

Thanks. area Anirudh, certainly design, -- the analysis some core at that’s tools, or sort that underperform fabrication to et this IC of corporate off around relative I especially year. of the just sort tools, cetera. get an am thinking it’s newer are follow wondering, of the maybe design back rates little of is just the growth up look start want some these your system fast bit sort that you going type a areas, to areas of business Hi. when to your I the and of whether discussion and and you the on to of other segments customized

correctly? with Just businesses some I business at like faster you a growing are area. that up about But seems your to grow the am core along wondering, is other set thinking still I pace, hear semiconductor the it of

Anirudh Devgan

Yes.

the on question -- custom… think think on question your -- the analog the I the on is I So

Ruben Roy

Yeah.

Anirudh Devgan

analog… …

Ruben Roy

Yeah.

Anirudh Devgan

these nodes. it’s very if digital, we several business. go to and analog years, the but you signal go the not has performed look to continues has And that because back to newer well grow, to advanced nodes, in …with as just business

and traditional more few I a have good and things expect from well than slower so, verification, is the done has helping I in years few grown and think the continue RF that also maybe to a I are design, we are Now pretty that has more and market analog that there there last the there design. mean, slightly mean, digital I apart it still but pretty position over

more and And integrated well Virtuoso. a activity and nodes. the So recent of XD-IC mainstream RF our lot at into there’s move more, of still that with AWR, acquisition with is with

business we to and also So fairly very profitable pretty for I overall, rate growth business us. has a a pleased continues are and still healthy it’s that with think, be

Ruben Roy

Understood. Okay.

As next of your that if deals, whether customers there on the for of even traction is customers, you a the or some the over to cetera. to are these customers cloud given of and not to to to of how quick et figure some situation big think move sort the what’s -- Anirudh, or out you am on. large seeing business more going as cloud, Is just products I update that’s the think, a or it hear, your move of your cloud the to an great marquee kind your is follow-up, hybrid It’s be, larger the a still majority get years? we vast of few be going trying do initiative still to going for on-prem? about

Anirudh Devgan

this for done think and I cloud Absolutely. a have Oh! mean, key several years. we I initiative, is

and terms first company or to cloud customers both cloud think variety of primarily probably the flexibility the a managed models, a usage for because more a of and I in our cloud managed models. also business heavily in really cloud business we from right? invest Cadence So, and customer were allows

you that we our several platform customers some have of and kinds give and kind we of really they of we big the internally cloud more a then to possibilities. centers our have cases, with use hybrid for startups they to cloud the utilization in especially and own in like cases And data a choices are to they may go a years peak whereas customers to okay. it’s done important they some cases, are in a of hybrid, already partners if some -- for like newer open their our platform, cloud offering. use the they said, in use work completely use some all a customers So, cloud, this good SaaS And the smaller

our use market the are how solutions do we smaller see the But we with all models business So see I but the do or how and ready those of kinds evolves, companies I service up think customers models go to these yeah. are cloud. customer, the solutions. will cloud and we in the go But companies full any more more towards newer to for set -- all traditional case customers our of and hybrid towards

Operator

Capital from Markets. final with Devin KeyBanc Au Our comes question

Devin Au

Thanks for Hi, Anirudh. Yeah. John. questions. my taking Hi,

the was customers just verification due macro Did inflation, given Some any and of term areas these whole double click of see to maybe backdrop? on any the buy ahead China. or you strength in trying to perceived price increases

John Wall

a demand, we have for right waiting strong demand that now list there’s our Yeah. I such there mean very hardware. strong but is

as building quickly can. are hardware the we We as

pre-QX in orders year. that hardware China many were in were the of So QX they delivered we from last those

many as supply. We that have but right out to flat to systems more we we we many, as the deliver are later now, outstrip our quickly trying QX will build can continues to in booked demand that in orders we those ability year,

Devin Au

more if lower operating the mix bit Got you. backend is at margins that’s Where XX% mainly to right in on the full it math hiring us Got margin look maybe half. driving a with guidance what’s around timing XX%, to operating second more the it. my range. Is half Nice or remind Can the one mainly Maybe year. shift? it, you for of for loaded? margin, raise John. The investments just first little suggests due it’s you

John Wall

in as we the the into delivering But the summer. until the second take second half guide start the outlook At a in the lots a quickly We to in confident of as a second expected second with extrapolate of out that as very, have pipeline. external the playing characterize would we can, we at when will hardware. we systems want start of to we the I sometime the -- we we that Yeah. factors and year saw There’s -- the the are those highlighted half visibility half that year, have half better we we look strong pipeline are outlook. very into at prudent. hardware the summer year didn’t the moment

Devin Au

it. helpful. you. super Thank Got That’s it. Got

John Wall

Thanks.

Operator

I’d now like to turn the call back over to Cadence for closing remarks.

Anirudh Devgan

joining afternoon. Cadence market business a this Thank us offering you semiconductor and all thriving with time exciting tremendous systems It’s strong opportunity. an and industry for for momentum

we and Board and of And Directors, and confidence inclusive at Thank are proud employees our the Cadence. our we for you. on built and behalf culture have We in partners thank our innovative of their trust customers continued Cadence. of

Operator

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

You may now disconnect.

Cadence Design Systems (CDNS) 26 Apr 222022 Q1 Earnings call transcript