cdns-20210426

Exhibit 99.01

Cadence Reports First Quarter 2021 Financial Results

SAN JOSE, Calif. — April 26, 2021 — Cadence Design Systems, Inc. (Nasdaq: CDNS) today announced results for the first quarter of 2021.

Cadence reported first quarter 2021 revenue of $736 million, compared to revenue of $618 million for the same period in 2020. On a GAAP basis, Cadence achieved operating margin of 28 percent and recognized net income of $187 million, or $0.67 per share on a diluted basis, in the first quarter of 2021, compared to operating margin of 23 percent and net income of $124 million, or $0.44 per share on a diluted basis for the same period in 2020.

Using the non-GAAP measure defined below, operating margin for the first quarter of 2021 was 38 percent and net income was $231 million, or $0.83 per share on a diluted basis, compared to operating margin of 32 percent and net income of $166 million, or $0.60 per share on a diluted basis, for the same period in 2020.

“Cadence delivered excellent financial results for the first quarter driven by strong execution and ongoing momentum in our core business and accelerating growth in our systems businesses” said Lip-Bu Tan, chief executive officer. “Innovation is foundational to our Intelligent System Design strategy and since the start of 2021 we introduced several exciting new products, including the Palladium Z2 emulation platform, Protium X2 prototyping platform and next-generation Sigrity X for systems analysis. We broadened our systems analysis portfolio with the successful completion of the NUMECA and Pointwise acquisitions, enabling us to provide more capabilities and value to our customers while increasing our TAM.”

“I am pleased to report that we exceeded all of our key operating metrics for the quarter,” said John Wall, senior vice president and chief financial officer. “We are raising our outlook for revenue, non-GAAP operating margin and non-GAAP earnings for the year while we continue to invest in our expanding multiphysics platform.”

CFO Commentary

Commentary on the first quarter 2021 financial results by John Wall, senior vice president and chief financial officer, is available at www.cadence.com/cadence/investor_relations.

Business Outlook

For the second quarter of 2021, the company expects total revenue in the range of $705 million to $725 million. Second quarter GAAP operating margin is expected to be approximately 22 percent and GAAP net income per diluted share is expected to be in the range of $0.44 to $0.48. Using the non-GAAP measure defined below, operating margin is expected to be approximately 36 percent and net income per diluted share is expected to be in the range of $0.74 to $0.78.

For 2021, the company expects total revenue in the range of $2.88 billion to $2.93 billion. On a GAAP basis, operating margin is expected to be in the range of 23 percent to 24 percent and GAAP net income per diluted share for 2021 is expected to be in the range of $2.01 to $2.09. Using the non-GAAP measure defined below, operating margin for 2021 is expected to be in the range of 35 percent to 36 percent and net income per diluted share for 2021 is expected to be in the range of $2.99 to $3.07.

Our fiscal years are 52- or 53-week periods ending on the Saturday closest to December 31. Fiscal 2021 will be a 52-week fiscal year. Fiscal 2020 was a 53-week fiscal year, with an additional week in our fourth quarter of 2020.

A schedule showing a reconciliation of the business outlook from GAAP operating margin, GAAP net income and diluted net income per share to non-GAAP operating margin and non-GAAP net income and diluted net income per share is included in this release.

Audio Webcast Scheduled

Lip-Bu Tan, chief executive officer, Anirudh Devgan, president and John Wall, senior vice president and chief financial officer, will host the first quarter 2021 financial results audio webcast today, April 26, 2021, at 2 p.m. (Pacific) / 5 p.m. (Eastern). Attendees are asked to register at the website at least 10 minutes prior to the scheduled webcast. An archive of the webcast will be available starting April 26, 2021 at 5 p.m. (Pacific) and ending June 18, 2021 at 5 p.m. (Pacific). Webcast access is available at www.cadence.com/cadence/investor_relations.

About Cadence

Cadence is a pivotal leader in electronic design, building upon more than 30 years of computational software expertise. The company applies its underlying Intelligent System Design strategy to deliver software, hardware and IP that turn design concepts into reality. Cadence customers are the world’s most innovative companies, delivering extraordinary electronic products from chips to boards to systems for the most dynamic market applications, including consumer, hyperscale computing, 5G communications, automotive, mobile, aerospace, industrial and healthcare. For seven years in a row, Fortune magazine has named Cadence one of the 100 Best Companies to Work For. Learn more at cadence.com.

© 2021 Cadence Design Systems, Inc. All rights reserved worldwide. Cadence, the Cadence logo and the other Cadence marks found at www.cadence.com/go/trademarks are trademarks or registered trademarks of Cadence Design Systems, Inc. All other trademarks are the property of their respective owners.

This document includes forward-looking statements which are based on current expectations and preliminary assumptions that are subject to factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and other factors, many of which are outside Cadence’s control, including, among others: (i) Cadence’s ability to compete successfully in the highly competitive industries in which it operates; (ii) the success of Cadence’s efforts to maintain and improve operational efficiency and growth; (iii) the mix of products and services sold, the timing of orders and the ability to develop, install or deliver Cadence’s products or services; (iv) change in customer demands that could result in delays in purchases, development, installations or deliveries of Cadence's products or services, including those resulting from consolidation, restructurings and other operational efficiency improvements of Cadence’s customers; (v) economic and industry conditions, including that of the semiconductor and electronics industries, government regulations and trade restrictions; (vi) capital expenditure requirements, legislative or regulatory requirements, changes in tax laws, interest rates, currency exchange rate fluctuations and Cadence’s ability to access capital and debt markets; (vii) the acquisition of other companies or technologies or the failure to successfully integrate and operate them; (viii) events that affect cash flow, liquidity, or reserves, or settlement assumptions Cadence may take from time to time with respect to accounts receivable, taxes and tax examinations, litigation or other matters; (ix) the effects of any litigation or other proceedings to which Cadence is or may become a party; and (x) the duration, severity and effects of the COVID-19 pandemic and containment measures on Cadence, its employees, and its suppliers and customers, which may also have the effect of heightening the other risks described in this paragraph. In addition, the timing and amount of Cadence's repurchase of its common stock under the authorizations will be subject to business and market conditions, corporate and regulatory requirements, stock price, acquisition opportunities and other factors.

For a detailed discussion of these and other cautionary statements related to Cadence’s business, please refer to Cadence’s filings with the U.S. Securities and Exchange Commission, which include Cadence’s most recent reports on Form 10-K and Form 10-Q, including Cadence’s future filings.

GAAP to Non-GAAP Reconciliation

Non-GAAP financial measures should not be considered as a substitute for or superior to measures of financial performance prepared in accordance with generally accepted accounting principles, or GAAP. Investors are encouraged to review the reconciliation of non-GAAP financial measures contained within this press release with their most directly comparable GAAP financial results. Investors are also encouraged to look at the GAAP results as the best measure of financial performance.

To supplement Cadence’s financial results presented on a GAAP basis, Cadence management uses non-GAAP measures that it believes are helpful in understanding Cadence’s performance. One such measure is non-GAAP net income, which is a financial measure not calculated under GAAP. Non-GAAP net income is calculated by Cadence management by taking GAAP net income and excluding, as applicable, amortization of intangible assets, stock-based compensation expense, acquisition and integration-related costs including retention expenses, investment gains or losses, income or expenses related to Cadence’s non-qualified deferred compensation plan, restructuring, executive severance and other significant items not directly related to Cadence’s core business operations, and the income tax effect of non-GAAP pre-tax adjustments.

Cadence management uses non-GAAP net income because it excludes items that are generally not directly related to the performance of Cadence’s core business operations and therefore provides supplemental information to Cadence management and investors regarding the performance of the business operations, facilitates comparisons to the historical operating results and allows the review of Cadence's business from the same perspective as Cadence management, including forecasting and budgeting.

The following tables reconcile the specific items excluded from GAAP operating margin, GAAP net income and GAAP net income per diluted share in the calculation of non-GAAP operating margin, non-GAAP net income and non-GAAP net income per diluted share for the periods shown below:


Operating Margin Reconciliation	Three Months Ended
	April 3, 2021	March 28, 2020
	(unaudited)
GAAP operating margin as a percent of total revenue	28%	23%
Reconciling items to non-GAAP operating margin as a percent of total revenue:
Stock-based compensation expense	7%	7%
Amortization of acquired intangibles	2%	2%
Acquisition and integration-related costs	1%	1%
Restructuring and other credits	0%	0%
Non-qualified deferred compensation expenses (credits)	0%	(1)%
Special charges	0%	0%
Non-GAAP operating margin as a percent of total revenue	38%	32%


Net Income Reconciliation	Three Months Ended
	April 3, 2021		March 28, 2020
(in thousands)	(unaudited)
Net income on a GAAP basis	$	187,169	$	123,988
Stock-based compensation expense	52,596		46,482
Amortization of acquired intangibles	16,399		15,066
Acquisition and integration-related costs	5,510		3,970
Restructuring and other credits	(277)		(1,067)
Non-qualified deferred compensation expenses (credits)	1,898		(4,796)
Special charges	—		124
Other income or expense related to investments and non-qualified deferred compensation plan assets*	(3,332)		8,011

Income tax effect of non-GAAP adjustments	(28,782)		(25,483)
Net income on a non-GAAP basis	$	231,181	$	166,295


*			Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense.


Diluted Net Income Per Share Reconciliation	Three Months Ended
	April 3, 2021		March 28, 2020
(in thousands, except per share data)	(unaudited)
Diluted net income per share on a GAAP basis	$	0.67	$	0.44
Stock-based compensation expense	0.19		0.17
Amortization of acquired intangibles	0.06		0.05
Acquisition and integration-related costs	0.02		0.02
Restructuring and other credits	—		—
Non-qualified deferred compensation expenses (credits)	—		(0.02)
Special charges	—		—
Other income or expense related to investments and non-qualified deferred compensation plan assets*	(0.01)		0.03

Income tax effect of non-GAAP adjustments	(0.10)		(0.09)
Diluted net income per share on a non-GAAP basis	$	0.83	$	0.60
Shares used in calculation of diluted net income per share	280,140		279,265


*			Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense.

Cadence expects that its corporate representatives will meet privately during the quarter with investors, the media, investment analysts and others. At these meetings, Cadence may reiterate the business outlook published in this press release. At the same time, Cadence will keep this press release, including the business outlook, publicly available on its website.

Prior to the start of the Quiet Period (described below), the public may continue to rely on the business outlook contained herein as still being Cadence’s current expectations on matters covered unless Cadence publishes a notice stating otherwise.

Beginning June 18, 2021, Cadence will observe a Quiet Period during which the business outlook as provided in this press release and the most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q no longer constitute Cadence’s current expectations. During the Quiet Period, the business outlook in these documents should be considered historical, speaking as of prior to the Quiet Period only and not subject to any update by Cadence. During the Quiet Period, Cadence’s representatives will not comment on Cadence’s business outlook, financial results or expectations. The Quiet Period will extend until Cadence’s second quarter 2021 earnings release is published, which is currently scheduled for July 26, 2021.

For more information, please contact:

Cadence Investor Relations

408-944-7100

[email protected]

Cadence Newsroom

408-944-7039

[email protected]

Cadence Design Systems, Inc.

Condensed Consolidated Balance Sheets

April 3, 2021 and January 2, 2021

(In thousands)

(Unaudited)


	April 3, 2021		January 2, 2021
Current assets:
Cash and cash equivalents	$	742,981	$	928,432
Receivables, net	388,666		338,487
Inventories	76,592		75,956
Prepaid expenses and other	141,490		135,712
Total current assets	1,349,729		1,478,587
Property, plant and equipment, net	305,089		311,125
Goodwill	912,603		782,087
Acquired intangibles, net	264,671		210,590
Deferred taxes	729,296		732,290
Other assets	437,571		436,106
Total assets	$	3,998,959	$	3,950,785
Current liabilities:

Accounts payable and accrued liabilities	$	271,241	$	349,951
Current portion of deferred revenue	521,100		446,857
Total current liabilities	792,341		796,808
Long-term liabilities:
Long-term portion of deferred revenue	92,574		107,064
Long-term debt	346,988		346,793
Other long-term liabilities	224,624		207,102
Total long-term liabilities	664,186		660,959
Stockholders’ equity	2,542,432		2,493,018
Total liabilities and stockholders’ equity	$	3,998,959	$	3,950,785

Cadence Design Systems, Inc.

Condensed Consolidated Income Statements

For the Three Months Ended April 3, 2021 and March 28, 2020

(In thousands, except per share amounts)

(Unaudited)


	Three Months Ended
	April 3, 2021		March 28, 2020
Revenue:
Product and maintenance	$	699,054	$	581,699
Services	36,974		36,258
Total revenue	736,028		617,957
Costs and expenses:
Cost of product and maintenance	64,906		55,446
Cost of services	19,061		19,017
Marketing and sales	132,826		125,744
Research and development	270,992		241,668
General and administrative	39,952		33,592
Amortization of acquired intangibles	4,631		4,206
Restructuring and other credits	(277)		(1,067)
Total costs and expenses	532,091		478,606
Income from operations	203,937		139,351
Interest expense	(4,217)		(4,637)
Other income (expense), net	2,701		(4,534)
Income before provision for income taxes	202,421		130,180
Provision for income taxes	15,252		6,192
Net income	$	187,169	$	123,988
Net income per share - basic	$	0.68	$	0.45
Net income per share - diluted	$	0.67	$	0.44
Weighted average common shares outstanding - basic	274,021		273,476
Weighted average common shares outstanding - diluted	280,140		279,265

Cadence Design Systems, Inc.

Condensed Consolidated Statements of Cash Flows

For the Three Months Ended April 3, 2021 and March 28, 2020

(In thousands)

(Unaudited)


	Three Months Ended
	April 3, 2021		March 28, 2020
Cash and cash equivalents at beginning of period	$	928,432	$	705,210
Cash flows from operating activities:
Net income	187,169		123,988
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	36,218		33,321
Amortization of debt discount and fees	264		254
Stock-based compensation	52,596		46,482
(Gain) loss on investments, net	(1,433)		3,215
Deferred income taxes	2,710		3,904
Provisions for losses (recoveries) on receivables	77		(77)
ROU asset amortization and change in operating lease liabilities	(2,136)		706
Other non-cash items	302		183
Changes in operating assets and liabilities, net of effect of acquired businesses:
Receivables	(45,927)		26,475
Inventories	(669)		(5,260)
Prepaid expenses and other	(3,014)		(4,964)
Other assets	6,260		(8,344)
Accounts payable and accrued liabilities	(80,769)		(84,839)
Deferred revenue	59,166		86,914
Other long-term liabilities	(2,372)		(4,239)
Net cash provided by operating activities	208,442		217,719
Cash flows from investing activities:




Purchases of property, plant and equipment	(16,968)		(22,179)
Cash paid in business combinations, net of cash acquired	(189,262)		(193,820)
Net cash used for investing activities	(206,230)		(215,999)
Cash flows from financing activities:
Proceeds from revolving credit facility	—		350,000




Proceeds from issuance of common stock	46,384		33,312
Stock received for payment of employee taxes on vesting of restricted stock	(56,385)		(37,528)
Payments for repurchases of common stock	(172,267)		(100,022)
Net cash provided by (used for) financing activities	(182,268)		245,762
Effect of exchange rate changes on cash and cash equivalents	(5,395)		(6,407)
Increase (decrease) in cash and cash equivalents	(185,451)		241,075
Cash and cash equivalents at end of period	$	742,981	$	946,285

Cadence Design Systems, Inc.

(Unaudited)

Revenue Mix by Geography (% of Total Revenue)


	2020										2021
GEOGRAPHY	Q1		Q2		Q3		Q4		Year		Q1
Americas	43	%	44	%	42	%	41	%	42	%	46	%
China	13	%	12	%	17	%	17	%	15	%	12	%
Other Asia	18	%	19	%	19	%	18	%	18	%	18	%
Europe, Middle East and Africa	19	%	18	%	16	%	17	%	18	%	18	%
Japan	7	%	7	%	6	%	7	%	7	%	6	%
Total	100	%	100	%	100	%	100	%	100	%	100	%

Revenue Mix by Product Category (% of Total Revenue)


	2020										2021
PRODUCT CATEGORY	Q1		Q2		Q3		Q4		Year		Q1
Custom IC Design and Simulation	25	%	24	%	24	%	26	%	25	%	23	%
Digital IC Design and Signoff	29	%	28	%	27	%	31	%	29	%	27	%
Functional Verification, including Emulation and Prototyping Hardware	23	%	24	%	23	%	19	%	22	%	26	%
IP	14	%	14	%	15	%	13	%	14	%	14	%
System Design and Analysis	9	%	10	%	11	%	11	%	10	%	10	%
Total	100	%	100	%	100	%	100	%	100	%	100	%

Cadence Design Systems, Inc.

Impact of Non-GAAP Adjustments on Forward Looking Operating Margin

As of April 26, 2021

(Unaudited)


	Three Months Ending July 3, 2021	Year Ending January 1, 2022
	Forecast	Forecast
GAAP operating margin as a percent of total revenue	~22%	23% - 24%
Reconciling items to non-GAAP operating margin as a percent of total revenue:
Stock-based compensation expense	7%	8%
Amortization of acquired intangibles	2%	2%
Acquisition and integration-related costs	1%	1%
Restructuring and other charges (credits)	0%	0%
Non-qualified deferred compensation expenses	0%	0%
Special charges*	4%	1%
Non-GAAP operating margin as a percent of total revenue†	~36%	35% - 36%


†			The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.


*			Comprised of cost related to a voluntary retirement program.

Cadence Design Systems, Inc.

Impact of Non-GAAP Adjustments on Forward Looking Diluted Net Income Per Share

As of April 26, 2021

(Unaudited)


	Three Months Ending July 3, 2021	Year Ending January 1, 2022
	Forecast	Forecast
Diluted net income per share on a GAAP basis	$0.44 to $0.48	$2.01 to $2.09
Stock-based compensation expense	0.19	0.79
Amortization of acquired intangibles	0.06	0.24
Acquisition and integration-related costs	0.02	0.08
Non-qualified deferred compensation expenses	—	0.01
Special charges*	0.09	0.09
Other income or expense related to investments and non-qualified deferred compensation plan assets**	—	(0.01)
Income tax effect of non-GAAP adjustments	(0.06)	(0.22)
Diluted net income per share on a non-GAAP basis†	$0.74 to $0.78	$2.99 to $3.07

Cadence Design Systems, Inc.

Impact of Non-GAAP Adjustments on Forward Looking Net Income

As of April 26, 2021

(Unaudited)


	Three Months Ending April 3, 2021	Year Ending January 1, 2022
($ in millions)	Forecast	Forecast
Net income on a GAAP basis	$122 to $133	$563 to $586
Stock-based compensation expense	53	222
Amortization of acquired intangibles	17	67
Acquisition and integration-related costs	6	21
Non-qualified deferred compensation expenses	—	2
Special charges*	26	26
Other income or expense related to investments and non-qualified deferred compensation plan assets**	—	(3)
Income tax effect of non-GAAP adjustments	(17)	(60)
Net income on a non-GAAP basis†	$207 to $218	$838 to $861


†			The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.


*			Comprised of cost related to a voluntary retirement program.


**			Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense.

Exhibit 99.02

CADENCE REPORTS FIRST QUARTER
2021

CADENCE DESIGN SYSTEMS, INC.

CFO COMMENTARY

Key Takeaways

• Q1 exceeded our expectations for key operating metrics, resulting in a raise to our 2021 outlook.

• 2021 outlook includes recent NUMECA and Pointwise acquisitions, as we continue to invest in our expanding multiphysics platform.

• Repurchased $172 million of Cadence stock in Q1.

Q2 2021 Outlook

• Revenue : $705 - $725 million.

• GAAP operating margin: approximately 22%.

• Non-GAAP operating margin: approximately 36%.

• GAAP EPS: $0.44 - $0.48

• Non-GAAP EPS: $0.74 - $0.78

Q1 2021 KEY METRICS

• Revenue $736 million

• GAAP operating margin 28%

• Non-GAAP operating margin 38%

• GAAP EPS $0.67

• Non-GAAP EPS $0.83

• Operating cash flow $208 million

FY 2021 Outlook

• Revenue: $2.88 - $2.93 billion.

• GAAP operating margin: 23% - 24%.

• Non-GAAP operating margin: 35% - 36%.

• GAAP EPS: $2.01 - $2.09

• Non-GAAP EPS $2.99 - $3.07

• Operating cash flow: $900 - $950 million.

• Expect to use at least 50% of free cash flow for the year to repurchase Cadence shares.

Financial Results Webcast

Our Q1 2021 financial results webcast will begin April 26, 2021 at 2:00 p.m. (Pacific). The webcast may be accessed at www.cadence.com/cadence/investor_relations. An archive of the webcast will be available on April 26, 2021 until 5:00 p.m. (Pacific) on June 18, 2021.



April 26, 2021	Cadence Q1 2021 Financial Results	1


Cadence Design Systems, Inc.

Financial Metrics


(In Millions, except per share data)	2016		2017*		2018		2019		2020*		2021E

Revenue	$	1,816	$	1,943	$	2,138	$	2,336	$	2,683	$2,880- $2,930
Revenue growth*	7%		7%		10%		9%		15%		7% - 9%
3-year CAGR	8%		7%		8%		9%		11%		~11%
3-year CAGR without 53rd week impact			8%						11%

GAAP operating expenses	$	1,571	$	1,619	$	1,742	$	1,845	$	2,037	~$2,212

Non-GAAP operating expenses	$	1,348	$	1,409	$	1,491	$	1,587	$	1,739	~$1,874
Non-GAAP operating expense growth			5%		6%		6%		10%		~8%

GAAP operating margin	13%		17%		19%		21%		24%

Implied GAAP operating margin**											~23.5%

Non-GAAP operating margin	26%		28%		30%		32%		35%

Implied Non-GAAP operating margin**											~35.5%

GAAP earnings per share	$	0.70	$	0.73	$	1.23	$	3.53	$	2.11	$2.01 - $2.09

Non-GAAP earning per share	$	1.21	$	1.40	$	1.87	$	2.20	$	2.80	$2.99 - $3.07

Weighted average shares diluted outstanding	291.3		280.2		281.1		280.5		279.6		279 - 281

Cash flow from operations	445		471		605		730		905		$900 - $950

Capital expenditures	54		58		62		75		95		~$100

* Fiscal 2014 and 2020 were 53-week years, compared to all other years which are 52 week years. 2020 included approximately $45 million revenue impact for the extra week. 2014 revenue (which impacts the 3 year CAGR in 2017) included approximately $27 million revenue impact for the extra week.

** At midpoint of guidance.

Non-GAAP Operating Margin Adjusted for Stock-Based Compensation


	2016		2017		2018		2019		2020		2021E

Non-GAAP operating margin	26	%	28	%	30	%	32	%	35	%	35% - 36%
Stock-based compensation	(6)	%	(7)	%	(8)	%	(8)	%	(7)	%	~(8)%
Net	20	%	21	%	22	%	24	%	28	%	27% - 28%


April 26, 2021			Cadence Q1 2021 Financial Results			2


Cadence Design Systems, Inc.

Second Quarter 2021 Financial Outlook


	Q2 2020A		Q1 2021		Q2 2021E

Total Revenue ($ Millions)	$	638	$	736	$705 - $725
Q/Q Growth			(3)%		(4)% - (1)%
Y/Y Growth			19%		11% - 14%

GAAP Operating Margin	24%		28%		~22%

Non-GAAP Operating Margin	35%		38%		~36%

GAAP EPS	$	0.47	$	0.67	$0.44 - $0.48



Non-GAAP EPS	$	0.66	$	0.83	$0.74 - $0.78
Q/Q Growth			0%		(11)% - (6)%
Y/Y Growth			38%		12% - 18%

Fiscal Year 2021 Financial Outlook


			Previous	Current
	FY 2020*		FY 2021E	FY 2021E






Recurring Revenue	85% - 90%		85% - 90%	85% - 90%

Total Revenue ($ Millions)	$	2,683	$2.860 - $2.920	$2,880 - $2,930
Y/Y Growth*	15%		7% - 9%	7% - 9%

Revenue from Beginning Backlog	~70%		~75%	~75%

GAAP Operating Margin	24.1%		24.5% - 26%	23% - 24%

Non-GAAP Operating Margin	35.2%		34.5% - 36%	35% - 36%

GAAP Other Income & Expense ($ Millions)	$	(13)	$(13) - $(21)	$(13) - $(19)

Non-GAAP Other Income & Expense ($ Millions)	$	(13)	$(13) - $(21)	$(16) - $(22)

GAAP Tax Rate	7%		~14%	~15%

Non-GAAP Tax Rate	16%		16%	16%

Weighted Average Diluted Shares Outstanding (Millions)	279.6		279 - 282	279 - 281

GAAP EPS	$	2.11	$2.09 - $2.19	$2.01 - $2.09


Non-GAAP EPS	$	2.80	$2.95 - $3.05	$2.99 - $3.07
Y/Y Growth	27%		5% - 9%	7% - 10%

Cash Flow from Operations ($ Millions)	$	905	$900 - $950	$900 - $950

DSO	44		~45	~45

Capital Expenditures ($ Millions)	$	95	~$100	~$100

* Fiscal 2020 was a 53-week year.


April 26, 2021			Cadence Q1 2021 Financial Results			3


Cadence Design Systems, Inc.

First Quarter Financial Results

Backlog


(In Billions)	2018		2019		2020		Q1 2021


Backlog	$	3.0	$	3.6	$	3.9	$	3.6

Revenue


(In Millions)	Q1 2020		Q2 2020		Q3 2020		Q4 2020*		Q1 2021

Product and Maintenance	$	582	$	601	$	631	$	723	$	699
Services	36		37		36		37		37
Total Revenue	$	618	$	638	$	667	$	760	$	736

* Q4 2020 was a 14-week quarter.

Revenue Mix by Geography


(% of Total Revenue)	Q1 2020		Q2 2020		Q3 2020		Q4 2020		Q1 2021


Americas	43	%	44	%	42	%	41	%	46	%
China	13	%	12	%	17	%	17	%	12	%
Other Asia	18	%	19	%	19	%	18	%	18	%
Europe, Middle East and Africa	19	%	18	%	16	%	17	%	18	%
Japan	7	%	7	%	6	%	7	%	6	%
Total	100	%	100	%	100	%	100	%	100	%

Revenue Mix by Product Category


(% of Total Revenue)	Q1 2020		Q2 2020		Q3 2020		Q4 2020		Q1 2021


Custom IC Design and Simulation	25	%	24	%	24	%	26	%	23	%
Digital IC Design and Signoff	29	%	28	%	27	%	31	%	27	%
Functional Verification	23	%	24	%	23	%	19	%	26	%
IP	14	%	14	%	15	%	13	%	14	%
System Design and Analysis	9	%	10	%	11	%	11	%	10	%
Total	100	%	100	%	100	%	100	%	100	%

Gross Margin


	Q1 2020		Q2 2020		Q3 2020		Q4 2020		Q1 2021


GAAP Gross Margin	88.0	%	88.2	%	87.7	%	90.3	%	88.6	%
Non-GAAP Gross Margin	89.9	%	90.3	%	89.6	%	92.2	%	90.4	%

Total Costs and Expenses


(In Millions)	Q1 2020		Q2 2020		Q3 2020		Q4 2020*		Q1 2021


Total GAAP Costs and Expenses	$	479	$	486	$	497	$	575	$	532

Total Non-GAAP Costs and Expenses	$	419	$	415	$	428	$	478	$	456

* Q4 2020 was a 14-week quarter.


April 26, 2021			Cadence Q1 2021 Financial Results			4


Cadence Design Systems, Inc.

Operating Margin


	Q1 2020		Q2 2020		Q3 2020		Q4 2020		Q1 2021


GAAP Operating Margin	22.6	%	23.8	%	25.4	%	24.3	%	27.7	%
Non-GAAP Operating Margin	32.2	%	35.1	%	35.9	%	37.1	%	38.1	%

Earnings Per Share


	Q1 2020		Q2 2020		Q3 2020		Q4 2020		Q1 2021


GAAP Net Income Per Share	$	0.44	$	0.47	$	0.58	$	0.62	$	0.67

Non-GAAP Net Income Per Share	$	0.60	$	0.66	$	0.70	$	0.83	$	0.83

Total DSO


	Q1 2020	Q2 2020	Q3 2020	Q4 2020	Q1 2021


DSO	42	45	41	44	48

Balance Sheet and Cash Review

Free Cash Flow


(In Millions)	Q1 2020		Q2 2020		Q3 2020		Q4 2020		Q1 2021


Net Cash from Operating Activities	$	218	$	345	$	206	$	136	$	208
Capital Expenditures	22		22		20		31		17
Free Cash Flow	$	196	$	323	$	186	$	105	$	191

Cash and Cash Equivalents


(In Millions)	Q1 2020		Q2 2020		Q3 2020		Q4 2020		Q1 2021


Cash and Cash Equivalents	$	946	$	1,189	$	1,307	$	928	$	743

•Approximately 40 percent of our cash and cash equivalents were in the U.S. at quarter-end.

Stock Repurchase


(In Millions, Except Share Price)	Q1 2020		Q2 2020		Q3 2020		Q4 2020		Q1 2021


Share Repurchase	$	100	$	75	$	75	$	130	$	172
Number of Shares	1.488		0.920		0.717		1.123		1.323
Average Share Price	$	67.22	$	81.54	$	104.62	$	115.78	$	130.01

Employees


	Q1 2020	Q2 2020	Q3 2020	Q4 2020	Q1 2021


Headcount	8,205	8,375	8,674	8,746	8,990


April 26, 2021			Cadence Q1 2021 Financial Results			5


Cadence Design Systems, Inc.

Forward Looking Statements

The statements in this CFO Commentary contain forward-looking statements which are based on current expectations and preliminary assumptions that are subject to factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. These forward-looking statements are subject to a number of risks, uncertainties and other factors, many of which are outside Cadence’s control, including, among others: (i) Cadence’s ability to compete successfully in the highly competitive industries in which it operates; (ii) the success of Cadence’s efforts to maintain and improve operational efficiency and growth; (iii) the mix of products and services sold, the timing of orders and the ability to develop, install or deliver Cadence’s products or services; (iv) change in customer demands that could result in delays in purchases, development, installations or deliveries of Cadence's products or services, including those resulting from consolidation, restructurings and other operational efficiency improvements of Cadence’s customers; (v) economic and industry conditions, including that of the semiconductor and electronics industries, government regulations and trade restrictions; (vi) capital expenditure requirements, legislative or regulatory requirements, changes in tax laws, interest rates, currency exchange rate fluctuations and Cadence’s ability to access capital and debt markets; (vii) the acquisition of other companies or technologies or the failure to successfully integrate and operate them; (viii) events that affect cash flow, liquidity, or reserves, or settlement assumptions Cadence may take from time to time with respect to accounts receivable, taxes and tax examinations, litigation or other matters; (ix) the effects of any litigation or other proceedings to which Cadence is or may become a party; and (x) the duration, severity and effects of the COVID-19 pandemic and containment measures on Cadence, its employees, and its suppliers and customers, which may also have the effect of heightening the other risks described in this paragraph. In addition, the timing and amount of Cadence's repurchase of its common stock under the authorizations will be subject to business and market conditions, corporate and regulatory requirements, stock price, acquisition opportunities and other factors.

GAAP to Non-GAAP Reconciliation

Non-GAAP financial measures should not be considered as a substitute for or superior to measures of financial performance prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of non-GAAP financial measures contained within this CFO Commentary with their most directly comparable GAAP financial results. Investors are also encouraged to look at the GAAP results as the best measure of financial performance. See our earnings press release issued today for further discussion of our non-GAAP financial measures, as well as the reconciliation provided in the Appendix to this CFO Commentary.

Cadence’s management uses non-GAAP net income because it excludes items that are generally not directly related to the performance of the company’s core business operations and therefore provides supplemental information to Cadence’s management and investors regarding the performance of the business operations, facilitates comparisons to the historical operating results and allows the review of Cadence’s business from the same perspective as Cadence’s management, including forecasting and budgeting.


April 26, 2021			Cadence Q1 2021 Financial Results			6


Cadence Design Systems, Inc.

APPENDIX I

Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited)

Reconciliation of GAAP Total Expenses to Non-GAAP Total Expenses


(In Millions)	Q1 2020		Q2 2020		Q3 2020		Q4 2020*		Q1 2021


GAAP total costs and expenses	$	479	$	486	$	497	$	575	$	532

Reconciling items to non-GAAP total costs and expenses
Stock-based compensation expense	(47)		(47)		(45)		(59)		(53)
Amortization of acquired intangibles	(15)		(16)		(16)		(17)		(16)
Acquisition and integration-related costs	(4)		(5)		(6)		(7)		(5)
Restructuring and other (charges) credits	1		1		—		(10)		—
Non-qualified deferred compensation (expenses) credits	5		(4)		(2)		(4)		(2)
Special charges	—		—		—		—		—
Non-GAAP total costs and expenses †	$	419	$	415	$	428	$	478	$	456

* Q4 2020 was a 14-week quarter.

† The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.

Reconciliation of GAAP Total Expenses to Non-GAAP Total Expenses


(In Millions)	2017		2018		2019		2020*		2021E


GAAP total costs and expenses	$	1,619	$	1,742	$	1,845	$	2,037	$2,212

Reconciling items to non-GAAP total costs and expenses
Stock-based compensation expense	(130)		(168)		(182)		(197)		~(222)
Amortization of acquired intangibles	(57)		(53)		(53)		(64)		~(67)
Acquisition and integration-related costs	(8)		(20)		(8)		(23)		~(21)
Restructuring and other charges	(9)		(11)		(9)		(9)		—
Non-qualified deferred compensation (expenses) credits	(6)		1		(5)		(5)		~(2)
Special charges **	—		—		(1)		—		~(26)
Non-GAAP total costs and expenses †	$	1,409	$	1,491	$	1,587	$	1,739	~$1,874

* Fiscal 2020 was a 53-week year.

** 2021 includes costs related to a voluntary retirement program.

† The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.


April 26, 2021			Cadence Q1 2021 Financial Results			7


Cadence Design Systems, Inc.

Reconciliation of GAAP Gross Margin as a Percent of Total Revenue to Non-GAAP Gross Margin as a Percent of Total Revenue


	Q1 2020	Q2 2020	Q3 2020	Q4 2020	Q1 2021


GAAP gross margin as a percent of total revenue	88%	88%	88%	90%	89%

Reconciling items to non-GAAP gross margin as a percent of total revenue
Stock-based compensation expense	0%	0%	0%	0%	0%
Amortization of acquired intangibles	2%	2%	2%	2%	1%
Non-qualified deferred compensation expenses (credits)	0%	0%	0%	0%	0%

Non-GAAP gross margin as a percent of total revenue †	90%	90%	90%	92%	90%

† The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.


April 26, 2021			Cadence Q1 2021 Financial Results			8


Cadence Design Systems, Inc.

Reconciliation of GAAP Operating Margin as a Percent of Total Revenue to Non-GAAP Operating Margin as a Percent of Total Revenue


	Q1 2020	Q2 2020	Q3 2020	Q4 2020	Q1 2021	Q2 2021E


GAAP operating margin as a percent of total revenue	23%	24%	25%	24%	28%	~22%

Reconciling items to non-GAAP operating margin as a percent of total revenue
Stock-based compensation expense	7%	7%	7%	8%	7%	7%
Amortization of acquired intangibles	2%	2%	3%	2%	2%	2%
Acquisition and integration-related costs	1%	1%	1%	1%	1%	1%
Restructuring and other charges (credits)	0%	0%	0%	1%	0%	0%
Non-qualified deferred compensation expenses (credits)	(1)%	1%	0%	1%	0%	0%
Special charges *	0%	0%	0%	0%	0%	4%
Non-GAAP operating margin as a percent of total revenue †	32%	35%	36%	37%	38%	~36%

* Q2 2021 includes costs related to a voluntary retirement program.

† The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.


	2016	2017	2018	2019	2020	2021E


GAAP operating margin as a percent of total revenue	13%	17%	19%	21%	24%	23% - 24%

Reconciling items to non-GAAP operating margin as a percent of total revenue
Stock-based compensation expense	6%	7%	8%	8%	7%	8%
Amortization of acquired intangibles	4%	3%	2%	2%	3%	2%
Acquisition and integration-related costs	1%	0%	1%	0%	1%	1%
Restructuring and other charges	2%	1%	0%	1%	0%	0%
Non-qualified deferred compensation expenses (credits)	0%	0%	0%	0%	0%	0%
Special charges *	0%	0%	0%	0%	0%	1%
Non-GAAP operating margin as a percent of total revenue †	26%	28%	30%	32%	35%	35% - 36%

* 2021 includes costs related to a voluntary retirement program.

† The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.


April 26, 2021			Cadence Q1 2021 Financial Results			9


Cadence Design Systems, Inc.

Reconciliation of GAAP Diluted Net Income Per Share to Non-GAAP Diluted Net Income Per Share


(In Thousands, Except Per Share Data)	Q1 2020		Q2 2020		Q3 2020		Q4 2020		Q1 2020		Q2 2021E


Diluted net income per share on a GAAP basis	$	0.44	$	0.47	$	0.58	$	0.62	$	0.67	$0.44 - $0.48
Stock-based compensation expense	0.17		0.17		0.16		0.21		0.19		0.19
Amortization of acquired intangibles	0.05		0.06		0.06		0.06		0.06		0.06
Acquisition and integration-related costs	0.02		0.02		0.02		0.02		0.02		0.02
Restructuring and other charges (credits)	—		—		—		0.04		—		—
Non-qualified deferred compensation expenses (credits)	(0.02)		0.01		—		0.01		—		—
Special charges *	—		—		—		—		—		0.09
Other income or expense related to investments and non-qualified deferred compensation plan assets **	0.03		(0.01)		—		(0.02)		(0.01)		—

Income tax effect of non-GAAP adjustments	(0.09)		(0.06)		(0.12)		(0.11)		(0.10)		(0.06)
Diluted net income per share on a non-GAAP basis †	$	0.60	$	0.66	$	0.70	$	0.83	$	0.83	$0.74 - $0.78

Shares used in calculation of diluted net income per share	279,265		279,080		280,024		280,173		280,140

† The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.

* Q2 2021 includes costs related to a voluntary retirement program.

** Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense.


April 26, 2021			Cadence Q1 2021 Financial Results			10


Cadence Design Systems, Inc.

Reconciliation of GAAP Diluted Net Income Per Share to Non-GAAP Diluted Net Income Per Share


(In Thousands, Except Per Share Data)	2016		2017		2018		2019		2020		2021E


Diluted net income per share on a GAAP basis	$	0.70	$	0.73	$	1.23	$	3.53	$	2.11	$2.01 - $2.09
Stock-based compensation expense	0.37		0.46		0.60		0.65		0.71		0.79
Amortization of acquired intangibles	0.21		0.20		0.19		0.19		0.23		0.24
Acquisition and integration-related costs	0.04		0.03		0.07		0.03		0.08		0.08
Restructuring and other charges	0.14		0.03		0.04		0.03		0.03		—
Non-qualified deferred compensation expenses (credits)	0.01		0.02		(0.01)		0.02		0.02		0.01
Special charges*	—		—		—		—		—		0.09
Other income or expense related to investments and non-qualified deferred compensation plan assets**	(0.02)		(0.05)		—		(0.01)		—		(0.01)
Income tax benefit related to intercompany transfers of certain intellectual property rights	—		—		—		(2.05)		—		—
Income tax related to transition tax	—		0.24		—		—		—		—
Income tax related to tax rate change	—		0.09		—		—		—		—
Income tax effect of non-GAAP adjustments	(0.24)		(0.35)		(0.25)		(0.19)		(0.38)		(0.22)
Diluted net income per share on a non-GAAP basis †	$	1.21	$	1.40	$	1.87	$	2.20	$	2.80	$2.99 - $3.07

Shares used in calculation of diluted net income per share	291,256		280,221		281,144		280,515		279,641		279 - 281M

† The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.

* 2021 includes costs related to a voluntary retirement program.


April 26, 2021			Cadence Q1 2021 Financial Results			11


Cadence Design Systems, Inc.

Reconciliation of GAAP Total Other Income and Expense to Non-GAAP Total Other Income and Expense



(In Millions)	FY 2019		FY 2020		FY 2021E


GAAP total other income and expense	$	(12.8)	$	(12.8)	$(13) - $(19)

Reconciling items to non-GAAP total income and expense
Other income or expense related to investments and non-qualified deferred compensation plan assets*	(1.3)		(0.5)		(3)
Non-GAAP total other income and expense†	$	(14.1)	$	(13.3)	$(16) - $(22)

† The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.

* Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense.


April 26, 2021			Cadence Q1 2021 Financial Results			12


☐			Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐			Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐			Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐			Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))


Exhibit No.						Description

99.01						Press Release issued by Cadence Design Systems, Inc. on April 26, 2021.
99.02						CFO Commentary on Results of Quarter Ended April 3, 2021.
104						Cover Page Interactive Data File (embedded within the Inline XBRL document).


CADENCE DESIGN SYSTEMS, INC.

By:						/s/ John M. Wall
						John M. Wall
						Senior Vice President and Chief Financial Officer