cadence design systems, inc.€¦ · 3 © 2019 cadence design systems, inc. all rights reserved....
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Confidential
Cadence Design Systems, Inc.
February/March 2019
© 2019 Cadence Design Systems, Inc. All rights reserved.2
Safe Harbor Statement
The following discussion contains forward looking statements, and our actual results may differ materially from those expectations discussed here.
Additional information concerning factors that could cause such a difference can be found in our Form 10-Q for the quarter ended September 29, 2018, our Form 10-K for the year ended December 29, 2018, the company’s future filings with the Securities and Exchange Commission and the cautionary statements regarding forward-looking statements in our February 19, 2019 earnings press release for the quarter ended December 29, 2018.
Regulation G
In addition to financial results prepared in accordance with Generally Accepted Accounting Principles, or GAAP, this presentation will also 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 February 19, 2019 press release and our CFO Commentary for the quarter ended December 29, 2018, both of which can be found in the quarterly earnings section of the investor relations portion of our website at cadence.com.
Safe Harbor Statement and Regulation G
© 2019 Cadence Design Systems, Inc. All rights reserved.3
• Leading provider of system design enablement (SDE) solutions – software, hardware, and IP
• Mission critical technology for designing today’s electronic systems
• Culture of innovation - more than 20 significant new products in last 3 years
• Subscription software model with very high customer renewal rates and loyalty
• Revenue: ~$2.14B • Headquarters in Silicon Valley
~7500 employees worldwide
Cadence-at-a-glance
NASDAQ: CDNS; S&P 500 & Nasdaq 100 indexes
© 2019 Cadence Design Systems, Inc. All rights reserved.4
Financial summary
Revenue1
$2.14B
Non-GAAPoperatingmargin1
30%
Freecash flow$543M
2018
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.
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$0.00$0.25$0.50$0.75$1.00$1.25$1.50$1.75$2.00
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Non-GAAP EPS1
© 2019 Cadence Design Systems, Inc. All rights reserved.5
Industry landscape
Cadence and its peers develop highly specialized software, hardware, and IP solutions for the automated design and verification of electronic products and systems
Our technology is critical to semiconductors, and is increasingly deployed by a variety of systems companies
SDE/EDA economics within the 2017 electronics framework
SDE/EDA & IP
$9.8B
Semi $445B
Electronic Systems$1.50T
Applications
Source: The McClean Report, 2018, ESD Alliance Market Survey Service Q4 2017, Cadence analysis
© 2019 Cadence Design Systems, Inc. All rights reserved.6
Data-driven economy (DDE) drives growth opportunities
DataCreation
DataStorage
DataTransmission
DataAnalytics
© 2019 Cadence Design Systems, Inc. All rights reserved.7
Key technology waves propel DDE
Machine learning
Mobile
Automotive Datacenter
Edge computing
© 2019 Cadence Design Systems, Inc. All rights reserved.8
System Design Enablement (SDE) strategy
SYSTEM INTEGRATION
PACKAGE AND BOARD
CHIP (Core EDA)
Partnerships with Ecosystem Leaders
IP
System analysis * HW-SW verification * Software applications
PCB design * Package design * PCB and package analysis
Design and implementation * IP/SoC verification * Software drivers
MOBILE AUTOMOTIVEDATACENTER EDGE COMPUTING AERO & DEFENSE AND MORE…
SECU
RITY
© 2019 Cadence Design Systems, Inc. All rights reserved.9
SDE – expanding beyond traditional EDA
Strategy takes end-product view and provide tools and content that enable system development
Core EDA at the heart of the SDE strategy− Deliver innovative, differentiated core products & flows− Tight partnerships with top customers and key ecosystem players
Provide comprehensive printed circuit board and IC package design solutions
Offer focused and differentiated IP portfolio
Expand to system level through solutions for HW/SW integration, software development and system analysis
Gear solutions to specific vertical markets
© 2019 Cadence Design Systems, Inc. All rights reserved.10
Innovation – engine of growth
Tensilica®
Vision Q6 DSP
Legato™
Reliability
Liberate™
Trio
Cadence Cloud
112G SerDes IP
TSMC VDE
TensilicaDNA 100
2018
Virtuoso®
RF Solution
Next GenJasper GoldStratus™ HLS
Innovus™
ImplementationSystem
TensilicaFusion DSP
Indago™
DebugPlatform
Genus™
SynthesisSolution
Joules™
RTL PowerSolution
TensilicaVision P5
DSP
Palladium® Z1EnterpriseEmulationPlatform
Modus™
DFT SoftwareSolution
Next-GenVirtuoso ADE
Tensilica®
Vision P6DSP
TensilicaFusion G3
DSP
OrCAD®
Capture Cloud
Allegro Pulse
Allegro PCBDesignTrue
ConformalSmart LEC
JasperGoldRTL Signoff
LegatoMemorySolution
TensilicaHiFi 3z DSP
VirtuosoSystem Design
Platform
CCIX VIPand DIP
TensilicaVision C5
DSP
PegasusVerification
System
Protium S1Prototyping
Platform
XceliumParallel
Simulator
USB Type-CIP
2015 - 2017
More than 20 significant new products in past 3 years
© 2019 Cadence Design Systems, Inc. All rights reserved.11
Recurring revenue model
High visibility software revenue stream
~90% of total revenue recognized over time
Backlog: $2.8B (Q4’18)
Revenue growth
10% (2018/2017)
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© 2019 Cadence Design Systems, Inc. All rights reserved.12
Diversified business across products and regions
24%
29%26%
9%
12%VerificationDigitalAnalogPCB/PkgIP 45%
28%
19%
8%Americas
Asia
EMEA
Japan
Revenue mix for 2018
© 2019 Cadence Design Systems, Inc. All rights reserved.13
Driving profitable growth
Strong operating profitability:
Focus on growth and disciplined ROI-centric resource allocation Non-GAAP operating margin 30%1 (2018)
0%
5%
10%
15%
20%
25%
30%
35%
2012 2013 2014 2015 2016 2017 2018
Non-GAAP Operating Margin1
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.
© 2019 Cadence Design Systems, Inc. All rights reserved.14
Cash flow, capital structure and uses of cash
Free cash flow generation $543M (2018)
Capital structure (Q4‘18)
Cash: $533M LT Debt: $450M
Credit facility: $350M ($100M drawn)
Capital allocation Internal investment M&A Repurchase stock
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Free cash flow
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Stock repurchase
© 2019 Cadence Design Systems, Inc. All rights reserved.15
In summary
Mission critical solutions for designing semiconductors and electronic systems
Data-driven economy and supporting technology waves drive growth
Culture of innovation creates the products for growth
Growth, focus and discipline drive financial performance
© 2019 Cadence Design Systems, Inc. All rights reserved worldwide. Cadence, the Cadence logo, and the other Cadence marks found at www.cadence.com/go/trademarksare trademarks or registered trademarks of Cadence Design Systems, Inc. All other trademarks are the property of their respective owners.