Cadence Design Systems Inc Q4 2020 Earnings Call Transcript

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

Question: Mitchell Toshiro Steves - RBC Capital Markets, Research Division - Analyst : Can you hear me?

Question: Mitchell Toshiro Steves - RBC Capital Markets, Research Division - Analyst : Okay, yes. So the first one is just on the 45% systems exposure now. I'm just sort of curious about why that's trending up so quickly. About 3 years ago, I think it was closer to like low 40s or 40% which is kind of metric, but now we're suddenly at 45%. And it sounds like that might even go higher. So maybe -- can you help us understand what exactly is going on with that business that's causing it to spike up? And then secondarily, regarding your 50% flow-through in the operating margin, clearly, that's what you've been doing. But is there any difference between the systems and semis onboarding in terms of profitability for you guys? Those are my 2 questions.

Question: Mitchell Toshiro Steves - RBC Capital Markets, Research Division - Analyst : Okay. That's perfect. Just to clarify, make sure I understand this correctly, systems analysis. It sounds to me, and maybe I'm reading too much into this, you're seeing like a step function in your 3D Clarity business. Or am I reading too much into this?

Question: Jackson Edmund Ader - JPMorgan Chase & Co, Research Division - Analyst : Great. The first question is on the 175 cloud customers. What does that mix in terms of systems versus semiconductor companies look like?

Question: Jackson Edmund Ader - JPMorgan Chase & Co, Research Division - Analyst : Okay. And then John, you mentioned that not expecting China to be as active in upfront revenue in 2021. So any particular reason? I mean was it kind of politically driven why that particular geography had a bigger mix of hardware and IP in 2020?

Question: Gal Munda - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : The first one, I just wanted to follow up briefly on NUMECA and more generally on your ambitions within the kind of mechanical simulation space. If you think about the convergence that's happening with NUMECA, now you said you have the CFD, you have the finite element analysis as well. So like how far do you think your portfolio is, based on what you have to be able to take it where you want it to be, say, in R&D terms versus potentially doing more of those tuck-ins in the CAE space?

Question: Gal Munda - Joh. Berenberg, Gossler & Co. KG, Research Division - Analyst : Makes sense. And then just as a follow-up, maybe just expanding a little bit on the growth drivers of the businesses, Lip-Bu, you mentioned, there's Moore's Law-based growth at the leading edge customers, and there is more than Moore's, which is kind of the system side. Considering the investments you're making on the system side, can you just comment a little bit on the growth, how it -- maybe 2020, how it corresponded between the leading edge and the systems companies in terms of that contribution to get you to, whatever we want to say, 13% or 15%, depending on which number we're looking at?