Cadence Design Systems Inc at Goldman Sachs Communacopia & Technology Conference Transcript

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

Question: James Schneider - Goldman Sachs & Co LLC - Analyst : I'm sure we're going to be hearing a lot about artificial intelligence this week. We already heard about it yesterday and today. I think the EDA space is a place where AI is already being used. It can be even more beneficial to users. Maybe talk to us about how you use AI internally and what your AI offerings are? And when customers use a tool like Cadence's, what are the improvements they're seeing in either time to market, designer hours, or other metrics?

Question: James Schneider - Goldman Sachs & Co LLC - Analyst : Yes, okay. Interesting. I think you have a really good and maybe it's even a unique view into your customers' roadmaps. And maybe by proxy and the health of those roadmaps, what are you seeing where the levels of chip design activity in terms of design starts or tape-outs? And do you see it slowing down anytime soon or even accelerating?

Question: James Schneider - Goldman Sachs & Co LLC - Analyst : Very good. I think at a very high level, most investors understand that your revenue is generally tied to your customers' R&D levels at a very high level. But give us a sense about how much incremental wallet share you can drive within your customers, whether that's headcount and your ability to price over time for the value you're creating with AI or otherwise?

Question: James Schneider - Goldman Sachs & Co LLC - Analyst : Hopefully, you can get a bigger slice of that.

Question: James Schneider - Goldman Sachs & Co LLC - Analyst : I mean, one thing that I -- that's interesting. One thing I thought I wanted to talk a little bit about is China, because that's been an area where there's been a lot of noise, both with respect to the US export control restrictions but also sort of your forecast. I think you now think that your China revenue can grow just a little bit this year, I believe. But maybe talk about sort of the impact of those export control regulations. Was there anything agreed to by -- between you and the government in terms of your restrictions on your business going forward? And what impact are you seeing from your customers in China going forward? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 09, 2025 / 8:45PM, CDNS.OQ - Cadence Design Systems Inc at Goldman Sachs Communacopia & Technology Conference

Question: James Schneider - Goldman Sachs & Co LLC - Analyst : Yes, yes. So no long-term impact but just sort of an overall stable profile?

Question: James Schneider - Goldman Sachs & Co LLC - Analyst : Great. I want to talk about sort of physical design for a second and that sort of overlap with your business been topical. One of your competitors bought ANSYS recently. In terms of physical design simulation, you've done some tuck-ins in the space over time. And last week, you bought the design engineering unit from Hexagon. Maybe talk about your overall capabilities in physical design and simulation on a competitive basis, and sort of how you expect to kind of drive that business going forward and the importance of the synergies you see between sort of EDA and the physical simulation design.

Question: James Schneider - Goldman Sachs & Co LLC - Analyst : Fair enough. You talked about EDA and the core growth there. So maybe you want to build on that because I think EDA growth has been quite good, quite solid. But I think you point into some things, whether that's AI or otherwise, that could at least theoretically accelerate that growth rate. So I'm kind of curious, what do you see the levers of your core EDA software growth being? And do you think that growth rate can accelerate in the next few years?

Question: James Schneider - Goldman Sachs & Co LLC - Analyst : Makes sense. Now competitively, you and Synopsys have had different advantages and different steps in the process flow and design across different tools. Where do you feel you're ahead -- most ahead today and sort of what are the areas you're continuing to focus on and sort of the core EDA flow to continue driving innovation?

Question: James Schneider - Goldman Sachs & Co LLC - Analyst : Very fair. On the point about IP, maybe talk about how you expect to do better. Is it you're going to do more M&A to the extent it's available? Are you get a new more organic development of IP and just sort of think about kind of like how much you think the overall IP growth rate can lift long term?

Question: James Schneider - Goldman Sachs & Co LLC - Analyst : Fair. Maybe just to sort of ask you, you talked about systems -- sorry, system simulation, physical design, and simulation. Longer term, if you think about the 10-year-plus time horizon for the company, do you think it's going to be more of a kind of a systems design company over the long term rather than a semiconductor design company?

Question: James Schneider - Goldman Sachs & Co LLC - Analyst : Yes. I mean do you think you're actually enabling a lot of your systems companies to do more vertical integration?

Question: James Schneider - Goldman Sachs & Co LLC - Analyst : Yes. Maybe kind of just close on your System Design and Analysis business for a second. You've talked about enabling that business, enabling companies like aerospace, defense, OEMs, to simulate entire systems. So if you think about Boeing or an automaker, how is selling to one of those customers different from selling to an NVIDIA or an AMD. Do they want the same kinds of models? And just sort of how is the overall business process different? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 09, 2025 / 8:45PM, CDNS.OQ - Cadence Design Systems Inc at Goldman Sachs Communacopia & Technology Conference

Question: James Schneider - Goldman Sachs & Co LLC - Analyst : Then maybe kind of to wrap up, I mean, if you think about the synergies you see between the EDA and the FDA businesses long term, can you sort of flow chip design into thermal electromagnetic models directly? And how do you think about how a customer would use both those in concert to sort of develop the broader system from chip all the way up to the system level?

Question: James Schneider - Goldman Sachs & Co LLC - Analyst : Fair enough. And maybe I have time for one last quick question, which is you meet with a lot of investors who ask you questions about Cadence. I'm kind of curious, what do you think is the one thing that is most overlooked by investors about your company and the story? And then if we get up on stage five years from now and we look back, what do you think investors will be most surprised by?

Question: James Schneider - Goldman Sachs & Co LLC - Analyst : Sounds great. With that, a great place to wrap. Thanks very much, Anirudh, for being with us today. We appreciate it.