Cadence Design Systems (CDNS) Nasdaq 54th Investor Conference summary

Business overview and growth drivers

• Plays a foundational role in the semiconductor ecosystem, supporting advanced chip and system design across industries from AI to aerospace.

• Achieved 17% year-over-year revenue growth and expects non-GAAP margins to reach 44%, surpassing the rule of 60.

• AI is a major inflection point, with benefits from both designing AI chips and embedding AI into its own tools.

• Collaborates closely with major foundries and technology partners, recently announcing a partnership with Intel on its 14A process.

• Secular trends such as AI, custom silicon, and robust demand from hyperscalers and traditional semiconductor firms drive volume and pricing power.

AI strategy and monetization

• AI is leveraged both as a design target (design for AI) and as a tool (AI for design), with agentic AI products like ChipStack delivering significant productivity gains.

• New agentic AI tools expand the total addressable market by shifting R&D budgets from labor to automation, with a subscription-plus-consumption pricing model.

• Early customer feedback is positive, with willingness to allocate up to one-third of R&D budgets to these AI tools, far above current EDA spend.

• AI-driven automation addresses the growing gap between design complexity and engineering resources, supporting long-term growth.

IP and system design business

• IP business is growing above 23% annually, driven by demand for high-value connectivity and memory IP in disaggregated AI architectures.

• Strategic focus on high-growth IP segments and leadership hires have strengthened product offerings and market share.

• Expansion of the foundry ecosystem, including new partnerships and global foundry developments, creates additional IP opportunities.

• System Design and Analysis (SDA) business targets packaging, 3D IC, and physical AI, bolstered by acquisitions like Hexagon D&E.