Cadence Design Systems, Inc.

Good afternoon. My name is Mike and I will be your conference operator today. At this time, I would like to welcome everyone to the Cadence third 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. Thank you. I will now turn the call over to Alan Lindstrom, Senior Group Director of Investor Relations for Cadence. Please go ahead.

Thank you, Mike, and I would like to welcome everyone to our third quarter 2020 earnings conference call. I am joined today by Lipu Tong, 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 December 18, 2020. A copy of today's prepared remarks will also be available on our website at the conclusion of today's call. Please note that the discussion today will contain forward-looking statements and that actual results may differ materially from those expectations. For information on 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 we 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 October 19, 2020, for the quarter ended September 26, 2020. Related financial tables and the CFO commentary are also available on our website. Note that Cadence is continuing to adhere to social distancing practices, and therefore we are conducting today's earnings call from our respective remote locations. Apologies in advance if there are glitches or handoffs that take a little longer than usual.

Good afternoon, everyone, and thank you for joining us today. I'm pleased to report that Cadence achieved outstanding financial results for the third quarter of 2020. We exceeded our financial outlook on all key metrics as the Cadence team continues to successfully navigate through challenges posed by the pandemic. We also raised our outlook for the year. John will provide more details in a moment. The data-centric revolution led by AI, data analytics, hyperscale computing continues to fuel strong semiconductor and system design activity. And our intelligent system design strategy uniquely positioned us to enable our customers to accelerate their innovation. Now let us move on to the major highlights for the third quarter. Design excellence is the foundational layer of our strategy and includes our all EDA chip design solutions and IP portfolio. We significantly deepen our partnership with the global marquee customer. through a wide-ranging expansion of our EDA software and hardware portfolio. This customer is now accelerating the proliferation of our digital full-flow across their design teams. Momentum continues for our digital sign-off solutions. With nine full-flow wins and a major market-shaping automaker tip-out, They are highly innovative, complex, 7 nanometer design using our digital full flow. Our verification suite comprises of best in class core engines across simulation, formal analysis, simulation, and prototyping. It's particularly well suited to address our customers' mounting verification challenges. hardware at its highest-ever revenue quarter, with Palladium Z1 and Protium X1 continuing to get new design wins and significant expansions, particularly at AI and hyperscale customers. We introduced Exilium ML, which used machine learning to improve the regression throughput of our premier logic simulator by up to 5x. On IP front, the top vertical end markets for our design IPs in this quarter were hyperscale, enterprise, and automotive, with a major hyperscaler adopting our PCIe and high bandwidth memory IP for use in 3 nanometer design. and silica have strong loyalties and wins for true wireless stereo and functional safety applications and was adopted by an automotive company for ADAS. In system innovation, I'm very excited by the strong momentum of our new system products, both organically developed as well as those we obtain through the AWR and Integron acquisitions earlier this year. Earlier this month, we expanded our system analysis portfolio with the addition of the Curvity 3D function solver that delivers up to 10x faster system-level PMI simulation. Curvity and Celsius continue to ramp nicely with broadening adoption. particularly in verticals such as AI, mobile, and hyperscale segments. System companies like Paradigm and Rockley Photonics are deploying our Clarity EM simulator for production use. In the 5G millimeter wave area, integration of our AWR and integrand acquisitions continue smoothly And the business is tracking ahead of our internal expectations. In Q3, we added more than 15 new customers in the end market that included 5G, automotive, and aerospace and defense. Kaden has a long, successful history in advanced packaging, which has become a linchpin technology for many system companies, particularly automotive and hyperscalers, to deliver complex system-level chip designs. In Q3, our innovative Allegro technology was used by a market shipping automaker for their wafer-level system packaging needs. Now, let us turn it over to John to go over the results in more detail and to update our outlook.