Cadence Design Systems Inc at Berenberg Thematic Software Conference Transcript

The following is excerpted from the question-and-answer section of the transcript.

Question: Andrew Lodovico DeGasperi - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Great. So maybe just 2 topics that investors, I believe, really want to hear about in terms of your company is resiliency in the current environment and margins, right? So maybe let's touch on the first bit. How resilient is your company, given your industry has been seen as cyclical in the past, but clearly in favor, there's been supply chain issues. So that's probably helped you a bit on your end. Can you elaborate why you're not as exposed to the up and downs of the semis industry and maybe in what ways the business is insulated?

Question: Andrew Lodovico DeGasperi - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : That's great. So the arms dealer essentially. I know it's a bad word. But like either way, it's great when you have the other side of shovel. Just on a question in terms of what was the average tenure of your biggest customer? Like how long have they been customers of Cadence? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 15, 2022 / 8:00AM, CDNS.OQ - Cadence Design Systems Inc at Berenberg Thematic Software Conference

Question: Andrew Lodovico DeGasperi - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Interesting. Okay. And I'll touch on Synopsys in a little bit, but maybe on the second topic of margins. Your margin profile has been strong for a long time, I think. And what is the long-term potential for the business?

Question: Andrew Lodovico DeGasperi - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Interesting. And how do you leverage the R&D spend? I know you have a partnership with Dassault. Does that help on this line item or...

Question: Andrew Lodovico DeGasperi - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Yes.

Question: Andrew Lodovico DeGasperi - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Everyone is. Yes.

Question: Andrew Lodovico DeGasperi - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : You have to tell me one day how you do that, but maybe just shifting to secular trends, right, in the market. You mentioned -- I think you alluded to this earlier, the growth trends are shifting between leading edge and the system design and analysis companies, which probably will provide more growth, I guess, going forward? And what do you expect in the next 2 to 3 years to look like?

Question: Andrew Lodovico DeGasperi - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : How much runway are we looking at in terms of logos generally?

Question: Andrew Lodovico DeGasperi - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Interesting. And then in terms of the core business, the one you're known for, like, how is that -- is it still growing according to historical trends. This is all, in other words, the systems side and these other growth opportunities are on top of that?

Question: Andrew Lodovico DeGasperi - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Right. Maybe just following up on that. You mentioned Synopsys went into IP more strongly. Why wasn't that attractive to you?

Question: Andrew Lodovico DeGasperi - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Yes.

Question: Andrew Lodovico DeGasperi - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Interesting. And then on simulation, I mean assuming it's your most profitable product, right? Just based on ANSYS and Altair, actually, you can see how they have evolved. Just on that topic and maybe benching ANSYS, you mentioned them twice, I believe. I mean, do you see them as a competitor on simulation at this point? And are there any other emergents?

Question: Andrew Lodovico DeGasperi - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Okay.

Question: Andrew Lodovico DeGasperi - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Just a follow-up on the fact that simulation generally tends to be viewed as more resilient, it kind of fits your model, right? Do you provide any services like high-performance computing to your customers, like maybe they have some models they wanted like they really need a lot of processing power. Do you provide that kind of service? Altair does that a bit, so -- yes. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 15, 2022 / 8:00AM, CDNS.OQ - Cadence Design Systems Inc at Berenberg Thematic Software Conference

Question: Andrew Lodovico DeGasperi - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : No, no. I was just curious in terms of the high-performance computing side.

Question: Andrew Lodovico DeGasperi - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Great. Maybe I want to talk about your international opportunities. I mean, in terms of where do you see the greatest upside? Is it APAC? Is EMEA? Just maybe touch on that a bit. And then are there any challenges? I know you work in China, for example. Are there any challenges they face there? Are there any potentially emerging competitors that you might see there on EDA?

Question: Andrew Lodovico DeGasperi - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : I guess -- yes, that's great. One question I have is like how easy it is for an engineer to adopt Cerebrus and AI-driven chip bus?

Question: Andrew Lodovico DeGasperi - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Have you maybe -- it sounds like this is a key pillar for your growth going forward. So have you disclosed like how penetration rates of any kind or how big the market could be for this?

Question: Andrew Lodovico DeGasperi - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : That's great. Maybe just one on partnerships. You alluded earlier to Dassault. I think you have one with Schneider Electric you signed in 2021. Is that right? What -- just maybe why did those vendors choose Cadence, first? And then -- because they're big companies. And then second, why -- what was the rationale behind those partnerships from your perspective?

Question: Andrew Lodovico DeGasperi - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Excellent. We have about 5 minutes left. I don't know if there's any questions from the audience. Yes, in the back, sorry. Unidentified Analyst

Question: Andrew Lodovico DeGasperi - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Sorry, in the back, all the way in the back. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 15, 2022 / 8:00AM, CDNS.OQ - Cadence Design Systems Inc at Berenberg Thematic Software Conference Unidentified Analyst (inaudible) what was that?

Question: Andrew Lodovico DeGasperi - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Yes. Sorry, last question. I think you had one at the front. Unidentified Analyst The recent Harvard Business -- there was a recent Harvard Business Review article on labor costs (inaudible) saying that on the chip itself the labor costs have enormously reduced. (inaudible) not had any major efficiency (inaudible) and now the industry is depressing that. That is a major tailwind to your business? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JUNE 15, 2022 / 8:00AM, CDNS.OQ - Cadence Design Systems Inc at Berenberg Thematic Software Conference

Question: Andrew Lodovico DeGasperi - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : I think we're out of time. I'm sorry, but I appreciate the questions, and thanks very much, John and Richard, for coming.