Cadence Design Systems, Inc - Computational Software for Intelligent System Design Company Overview Presentation
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Cadence Design Systems, Inc. Computational Software for Intelligent System Design Company Overview Presentation Q2 2021
Safe Harbor Statement and Regulation G
Safe Harbor Statement
The following discussion contains forward-looking statements based on current expectations or beliefs, as well as a number of preliminary assumptions about
future events that are subject to factors and uncertainties that could cause our actual results to differ materially from those expectations or results described in
the forward-looking statements. You are cautioned not to put undue reliance on these forward-looking statements, which are not a guarantee of future
performance and are subject to a number of risks, uncertainties and other factors, many of which are outside Cadence’s control.
Additional information concerning factors that could cause such a difference can be found in our filings with the U.S. Securities and Exchange Commission,
which include our most recent reports on Form 10-K and Form 10-Q and future filings, and the cautionary statements regarding forward-looking statements in
our press release dated July 26, 2021 (including those relating to the COVID-19 pandemic). We expressly disclaim any duty to update the forward-looking
statements provided in the following discussion
Regulation G
In addition to financial results prepared in accordance with Generally Accepted Accounting Principles, or GAAP, this presentation will contain certain non-GAAP
financial measures. Cadence management believes that in addition to using GAAP results in evaluating our business, it can also be useful to measure results
using certain non-GAAP financial measures. Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures with
their most direct comparable GAAP financial results, including those set forth in our July 26, 2021 press release and our CFO Commentary for the quarter ended
July 03, 2021, both of which can be found in the quarterly earnings section of the investor relations portion of our website at cadence.com.
2 © 2021 Cadence Design Systems, Inc. All rights reserved.
Company Overview 3 © 2021 Cadence Design Systems, Inc. All rights reserved.
Cadence at a Glance
Computational technology for
designing today’s electronic systems
Culture
Innovation: Created
by engineers, for
$728M engineers
Employees
Q2 2021
>9,000
Leader Revenue
Worldwide
Computational
Software for Industry
Intelligent System Software and
Design™ programming
HQ
Silicon Valley
Very high customer renewal rates and loyalty
Nasdaq Ticker: CDNS; S&P 500 and Nasdaq 100 indices
Source: Cadence CFO Commentary, Q2 2021
https://www.cadence.com/content/dam/cadence-www/global/en_US/documents/company/investors/2q21-cfo-commentary.pdf
4 © 2021 Cadence Design Systems, Inc. All rights reserved.
Q2 Recent Business Highlights
Delivered revenue, YoY growth of
Generated non-GAAP operating margin
Dynamic Duo 2.0:
New machine learning (ML)-based tool that provides Palladium® Z2 and
up to 10X productivity and 20% better PPA for digital chip design Protium™ X2
Power, performance and area (PPA) revolution Delivering 2X capacity and
Automated RTL to GDS full flow optimization 1.5X performance improvements
on both systems
Scalable, distributed computing solution
AWR Design Environment® V16 Allegro® X Platform Clarity™ 3D Solver Cloud
Expands Cadence® workflows to speed design Offers unparalleled integration and technology Integrates on-premises
time for multi-technology integration, accelerating across multiple engineering domains, delivering simulation setup with cloud
RF to mmWave 5G system design and analysis up to 4X productivity improvements over computation and acceleration
at no additional cost
traditional design tools
Source: Cadence Earnings Press Release, July 26, 2021
https://www.cadence.com/en_US/home/company/newsroom/press-releases/pr-ir/2021/cadence-reports-second-quarter-2021-financial-results.html
5 © 2021 Cadence Design Systems, Inc. All rights reserved.
A Great Place to Work Around the Globe 6 © 2021 Cadence Design Systems, Inc. All rights reserved.
Developing and Deploying
Computational Software
5,600+ 1,900+ 1,500+ 9,000+ 23
GLOBAL
R&D FIELD PATENTS EMPLOYEES
ENGINEERS ENGINEERS WORLDWIDE DEVELOPMENT
CENTERS
7 © 2021 Cadence Design Systems, Inc. All rights reserved.
Corporate Social Responsibility
Pay Equity
Global salary pay parity based on gender and U.S. salary pay
parity based on race and ethnicity
Recognition
Ranked #3 in the software category and #7 overall on
Investor’s Business Daily List of the Top 50 ESG Companies
Carbon Emissions Reduction
Set a greenhouse gas reduction target of a 15% decrease for
Scope 1 and 2 emissions by 2025 over a 2019 baseline
Best Workplace Recognitions
23 best workplace recognitions across 14 countries
COVID-19 Response
Recognized as one of People Magazine’s Companies That
Care for our support of employees and the community during
the pandemic
Sustainability
Products that help customers realize sustainability
Source: Cadence Sustainability Report, 2020
https://www.cadence.com/en_US/home/company/csr.html
8 © 2021 Cadence Design Systems, Inc. All rights reserved.
Intelligent System Design Strategy 9 © 2021 Cadence Design Systems, Inc. All rights reserved.
Major Electronics Industry Trends
Data Science and 5G
Machine Learning Hyperscale Communications
Computing
Autonomous Industrial
Vehicles IoT
10 © 2021 Cadence Design Systems, Inc. All rights reserved.Drivers of Convergence in Computational Software
Explosion of Data and AI
Computational Needs
System Design AI / ML
Algorithm, HW, SW, Data Analytics
Multiphysics, PCB
Growing Cost, Complexity of Lack of Moore, CPU and
Mechanical and Silicon Design
IP and Chip EDA Software Performance Scaling
Digital, Custom,
Verification, and
Packaging
11 © 2021 Cadence Design Systems, Inc. All rights reserved.Cadence Is Leading the Computational Software Convergence
INTELLIGENT
System Design AI / ML
Algorithm, HW, SW, Data Analytics SYSTEM
Multiphysics, PCB
DESIGN
IP and Chip EDA
Digital, Custom,
Verification, and
Packaging
Intelligent System Design™
Merger of EDA, system design, AI Pervasive intelligence throughout design Grounded in computational engineering
Co-optimizing system, hardware, software Spanning multiple system domains
12 © 2021 Cadence Design Systems, Inc. All rights reserved.Intelligent
• The Intelligent System Design™ strategy drives
System Design – growth in our core EDA and IP business, broadens
Expanding Beyond our reach in system companies and targeted
verticals, and guides expansion into newer
Traditional EDA adjacent areas.
• The foundation of the strategy continues to be
delivering semiconductor device design
excellence via our core EDA and IP business. In
addition, we are building upon our core
competency in computational software to expand
into two new areas:
o System innovation, where we are expanding
into new system domains, and
o Pervasive intelligence, where we will apply AI
and our algorithmic know-how to our core
business and specific verticals.
13 © 2021 Cadence Design Systems, Inc. All rights reserved.Cadence Intelligent System Design Strategy
Computational Software as a Core Competency
PERVASIVE
INTELLIGENCE Develop AI and algorithmic solutions
SYSTEM
INNOVATION
Expand into new system domains
DESIGN
EXCELLENCE
Execute on core EDA + key IP
14 © 2021 Cadence Design Systems, Inc. All rights reserved.Cadence Strategy
Consumer Hyperscale Mobile Communications Automotive Aero / Defense Industrial Health
PERVASIVE • Machine learning (ML) technology
INTELLIGENCE • Data analytics platform
• Artificial intelligence (AI) enablement
SYSTEM
INNOVATION
• Multi-level, multiphysics analysis platform
• 3D-IC, high-speed RF design and analysis platforms
DESIGN
• System and embedded software partnerships
EXCELLENCE
• Custom IC design and simulation platforms
• Digital IC design and signoff platforms
• Functional verification platform
• Enterprise intellectual property (IP)
Cloud Enabled — Partnerships with Ecosystem Leaders
15 © 2021 Cadence Design Systems, Inc. All rights reserved.Cadence
Recent product news
Product Innovations and News
Pervasive Intelligence
• Cerebrus™ Intelligent Chip Explorer 10X productivity and 20% better PPA for digital
chip design
• Tensilica® Vision Q8 and P1 DSPs for high-end and always-on applications
PERVASIVE • Xcelium™ ML for up to 5X faster verification regression throughput
INTELLIGENCE
• Data Analytics System Innovation
Platform
• Next-generation Allegro X® Platform for up to 4X faster system analysis
SYSTEM • ML Enabled
INNOVATION Tools and Flows • AWR Design Environment® V16 expands Cadence® workflows to speed design time for
multi-technology integration accelerating RF to mmWave 5G system design and analysis
• System Analysis
• Clarity™ Cloud integrates on-premises simulation setup with cloud computation and
• Embedded SW acceleration at no additional cost
DESIGN • Security
EXCELLENCE Design Excellence
• Dynamic Duo 2.0: Palladium® Z2 and Protium™ X2 for 2X capacity and 1.5X
Core
(EDA and IP) performance
• Spectre® X Simulator for high-speed, high-capacity circuit simulation
• Low-power design IP for PCI Express® 5.0 for 5nm
Only with Cadence
16 © 2021 Cadence Design Systems, Inc. All rights reserved.Introducing Cerebrus: Productivity and Power, Performance
The Future of Intelligent and Area (PPA) Revolution
Chip Design • Unique reinforcement ML
• Delivers up to 10X better productivity and 20%
PPA improvements
Automated RTL to GDS
Full Flow Optimization
• Delivers better PPA more quickly
• Improves engineering team productivity
Scalable, Distributed Computing Solution
• On-premises or cloud computing resources
New machine learning (ML)-based • Efficient, scalable solution as design size and
tool that automates and scales complexity grow
digital chip design
17 © 2021 Cadence Design Systems, Inc. All rights reserved.NUMECA is now Cadence
To expand system analysis capabilities with computational fluid dynamics
Automotive & Aerospace & Marine / Energy &
Transportation Defense Naval Power Generation
• Leader in CFD, mesh generation, multi-physics
simulation and optimization
• Extends Cadence systems capability beyond
electronic subsystems to include top-level system
designs
• Next generation OMNIS™ environment inclusive
of pre-processing, solving and post-processing 3D
MCAD models
• Digital prototypes explore full design envelope and
identify optimal geometry configuration
18 © 2021 Cadence Design Systems, Inc. All rights reserved.Cadence Acquires Pointwise to Expand System Analysis Offerings
Addressing CFD mesh generation and pre-processing technology
CFD Meshing for Aerospace Applications
Aerospace &
Defense
• Leader in CFD mesh generation
• Expands Cadence multiphysics systems analysis
capabilities
• High-fidelity discretization of aircraft geometries
for aerospace industry
• Send mesh for external aerodynamics simulations
to the Cadence OMNIS™ CFD platform
• Export mesh data to 40 leading CAE formats for
best-in-class workflow
19 © 2021 Cadence Design Systems, Inc. All rights reserved.Financial Performance 20 © 2021 Cadence Design Systems, Inc. All rights reserved.
Financial Summary
2020 Revenue Non-GAAP EPS1
2,500 $3.00
$2.75
$2.50
2,000
Revenue $2.25
($ millions) $2.00
1,500 $1.75
$1.50
1,000 $1.25
$1.00
Non-GAAP $0.75
operating 500
$0.50
margin1 $0.25
0 $0.00
2016 2017 2018 2019 2020 2016 2017 2018 2019 2020
Free
cash flow Notes:
1. Non-GAAP operating margin and non-GAAP EPS (excludes amortization of acquired intangibles, stock-based compensation, non-qualified deferred compensation
expenses and certain non-recurring cash expenses). See quarterly earnings releases and CFO Commentary for reconciliations to GAAP measures.
21 © 2021 Cadence Design Systems, Inc. All rights reserved.Recurring Revenue Model
High visibility software revenue stream 800 Revenue2
700
• Recurring revenue mix: 85 - 90% for 2021 600
500
($ millions)
• Backlog1: $3.9B (Q2 2021)
400
300
200
100
0
2016 2017 2018 2019 2020 2021
• 14% (Q2’21/Q2’20)
Notes:
1. Backlog = Remaining Performance Obligations + IP Access Agreements
2. Q4 2020 was a 14-week quarter
22 © 2021 Cadence Design Systems, Inc. All rights reserved.Diversified Business Across Products and Regions
Functional Verification Americas
13% 6%
25% 17%
China
Digital IC Design and 11%
Signoff
44%
Other Asia
Custom IC Design and
Simulation 19%
23% EMEA
System Design and 28%
Analysis 14%
Japan
IP
23 © 2021 Cadence Design Systems, Inc. All rights reserved.Driving Profitable Growth
Non-GAAP Operating Margin1
40%
35%
30%
25%
• Focus on growth and disciplined ROI-centric 20%
15%
resource allocation
10%
• Non-GAAP operating margin 39%1 (Q2 2021) 5%
0%
2016 2017 2018 2019 2020 TTM
Q2'21
Notes:
1. Non-GAAP operating margin and non-GAAP EPS (excludes amortization of acquired intangibles, stock-based compensation, non-qualified deferred compensation expenses
and certain non-recurring cash expenses). See quarterly earnings releases and CFO Commentary for reconciliations to GAAP measures.
24 © 2021 Cadence Design Systems, Inc. All rights reserved.Cash Flow, Capital Structure, and Capital Allocation
Free cash flow generation
• $810M (2020)
Capital structure (Q2 2021) Free cash flow Stock repurchase
1200
1000
• Cash: $847M 1000
($ millions)
800
($ millions)
800
• ST credit facility: $700M 600 600
• LT debt: $350M 400 400
200 200
Capital allocation 0
2016 2017 2018 2019 2020 TTM
0
2016 2017 2018 2019 2020 TTM
Q2'21 Q2'21
• Internal investment
• M&A
• Repurchase stock
25 © 2021 Cadence Design Systems, Inc. All rights reserved.In Summary
Mission-critical Data-driven Culture of innovation Growth, focus, and
solutions for economy and its creates the products discipline drive
designing supporting for category financial
semiconductors and technology waves leadership and performance
electronic systems combined with our growth
Intelligent System
Design™ strategy
expand TAM
26 © 2021 Cadence Design Systems, Inc. All rights reserved.© 2021 Cadence Design Systems, Inc. All rights reserved worldwide. Cadence, the Cadence logo, and the other Cadence marks found at https://www.cadence.com/go/trademarks are trademarks or registered trademarks of Cadence Design Systems, Inc. Accellera and SystemC are trademarks of Accellera Systems Initiative Inc. All Arm products are registered trademarks or trademarks of Arm Limited (or its subsidiaries) in the US and/or elsewhere. All MIPI specifications are registered trademarks or service marks owned by MIPI Alliance. All PCI-SIG specifications are registered trademarks or trademarks of PCI-SIG. All other trademarks are the property of their respective owners.
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