Cadence Design Systems, Inc.

Good afternoon. My name is Josh, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cadence First Quarter 2020 Earnings Conference Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. I will now turn the call over to Alan Lindstrom, Senior Group Director of Investor Relations for Cadence. Please go ahead.

Thank you, Josh, and I would like to welcome everyone to our first quarter 2020 earnings conference call. I am joined today by Lip Bhutan, Chief Executive Officer, and John Wall, Senior Vice President and Chief Financial Officer. The webcast of this call is available through our website, cadence.com, and will be archived through June 12, 2020. A copy of today's prepared remarks will also be available on our website, at the conclusion of the call today. Please note that the discussion today will contain forward-looking statements and that actual results may differ materially from those expectations. For information on the factors that could cause a difference in our results, please refer to our filings with the Securities and Exchange Commission. These include Cadence's most recent reports on Form 10-K and Form 10-Q, including the company's future filings and the cautionary comments regarding forward-looking statements in the earnings press release issued today. In addition to financial results prepared in accordance with generally accepted accounting principles, or GAAP, we will also present certain non-GAAP financial measures today. Cadence Management believes that in addition to using GAAP results in evaluating our business, It can also be useful to review results using certain non-GAAP financial measures. Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures with their most direct, comparable GAAP financial results. The reconciliations are available at the Investor Relations section of Cadence.com. Copies of today's press release, dated April 20, 2020, For the quarter ended March 28, 2020, related financial tables and the CFO commentary are also available on our website. I would also like you to note that we are adhering to social distancing practices and therefore are conducting today's earnings call from remote locations. Apologies in advance if there are glitches or handoffs take a little longer than usual. And now I'll turn it over to Lipu.

Good afternoon, everyone, and thank you for joining us today. I am pleased to report that in a difficult environment, we didn't achieve excellent financial results for the first quarter of 2020. We are all going through truly unprecedented times, and I hope that you and your families are safe and healthy. I will start by commenting on the rapidly evolving COVID-19 situation. Our first priority continues to be ensuring the safety and well-being of our employees, customers, and communities. At this time, the vast majority of our global employee base is working from home, and that transition has gone very smoothly. From the business continuity perspective, Our infrastructure collaboration of platform and tight communication have enabled us to maintain a high level of productivity. And our R&D innovation projects and customer deliverables continue to track well. Our sales and application engineering teams have also adapted well to this new work model. and have continued engaging productively with customers on the business, training, and support front. As I stated earlier, there has been a silicon renaissance in the industry, with strong design activity being driven by generational technology drivers, such as 5G, AI, hyperscale computing, and industrial IoT. So far, even in the current environment, we do not see any slowdown in design activity. And I do believe this period is to be an opportunity, especially for market-shaping customers, to further invest in R&D and accelerate their innovation. Our business is predominantly tied to semiconductor R&D, and in addition, our broadly diversified customer base, over $3.7 billion of backlog, and highly reputable business model all serve to highlight the resiliency of the business, particularly in challenging times. Very resilient of our business, particularly in challenging times. After careful accessing the situation, at this time we feel comfortable reaffirming our revenue guidance for the year. In a few moments, John will provide more details and commentary on our Q1 results and guidance for Q2 and the year. Our intelligent system design strategy enabled us to maximize these opportunities by tripling our TAM to proliferation in our foundation design excellence segment and expanding beyond EDA into system innovation and pervasive intelligence. Now, let us look at some of the design excellence highlights for the quarter, starting with digital and sign-off. Our Kaizen digital workflow, which has been proven through hundreds of advanced node tape-outs, have significantly enhanced to further optimize power, performance, and area, or TPA, results across multiple application areas. The new full flow featuring our innovative iSpecial technology, which includes unified placement and physical optimization engines, plus machine learning capabilities, delivers up to three times faster throughput and up to 20% improved . The new full flow is being used by several leading customers and was endorsed by MediaTek and Samsung Electronics. Additional digital and sign-off highlights for the quarter include a major Asian hyperscale company successfully used Aden's digital full flow to tape out a machine learning inferencing chip, and is deploying full flow at seven and five nanometers. A marquee Asian electronic system company completed its first production Aden digital full flow tape out on five nanometer low power process, beating its power targets. and a market-shaping semiconductor automotive customer committed to Cadence as its primary EDA vendor for digital design. Our Cadence Verification Suite wins in the marketplace because it delivers the best verification throughput, driven by its four best-of-class engines, Axelium, Jasper, Palladium, and Proteum. In Q1, we had multiple verification wins across various verticals, including cloud, data center, automotive, and networking. Our hardware family had a banner quarter, with Palladium Z1 adding four new customers and nine major expansions. Our Proteum SDGA-based prototyping platform Continuo is strong momentum, adding six new customers and six repeat orders, as the X1 is increasingly deployed in Palladium accounts. Sodium X1's strong momentum is a result of its unique differentiation in having a common front-end compiler with the Palladium Z1, but also provides superior performance and opacity scalability for earlier software development and hardware regression. Both the Z1 and X1 platforms show particular strength at hyperscale system companies, in addition to momentum at market-shaping semiconductor customers. Our IT business delivers double-digit revenue growth as our compelling offerings continue to benefit from the ongoing IP outsourcing trend with design wins and expansions at several top-tier companies as well as startups. PanSilica did particularly well and was adopted for multiple audio applications as well as by surveillance and mobile customers. In design IP, There was a strong demand for our DDR portfolio, as well as our high-speed service and PCIe IP, particularly in data center, AI, and high-performance computing segments. Now I will highlight our progress in system innovation segment of our intelligent system design strategy. Earlier this year, we completed the acquisitions of AWR and Integrin, and we have received very positive response to the acquisitions from many of our partners and potential new customers. The integration is progressing well on all fronts, and we are combining this technology with our Virtuoso and Allegro platforms, which will enable us to offer a comprehensive platform for designing high-frequency RF millimeter wave products. Our system analysis tools carry forward their strong momentum into the new year, and we now have more than 30 customers, including Venasys, Roam, and NFrame, in addition to providing significant better performance and capacity without compromising accuracy. Verity and Celsius also provide a tighter integration with our flagship Virtuoso and Allegro design platform. With that, I will now turn the call over to John to review the financial results and provide an updated outlook.