Cadence Design Systems, Inc.

Good afternoon. My name is Erica, and I will be your conference operator today. At this time, I would like to welcome everyone to the Cadence First Quarter 2022 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 Richard. Vice President of Investor Relations for Cadence. Please go ahead.

Thank you, operator. I would like to welcome everyone to our first quarter of fiscal year 2022 earnings conference call. I'm joined today by Anirudh Devgn, President and Chief Executive Officer, and John Wall, Senior Vice President and Chief Financial Officer. The webcast of this call and a copy of today's prepared remarks will be available on our website, cadence.com. Today's discussion will contain forward-looking statements, including our outlook on future business and operating results. Due to risks and uncertainties, actual results may differ materially from those projected or implied in today's discussion. For information on factors that could cause actual results to differ, please refer to our SEC filings, including our most recent forms, 10-K and 10-Q, and today's earnings release. All forward-looking statements during this call are based on estimates and information available to us as of today, and we disclaim any obligation to update them. In addition, we will present certain non-GAAP measures which should not be considered in isolation from or as a substitute for GAAP results. Reconciliation of GAAP to non-GAAP measures are included in today's earnings release. Today's earnings release for the first quarter of fiscal 2022 related financial tables, and CFO commentary are also available on our website. For the Q&A session today, we would ask that you observe a limit of one question and one follow-up. You may re-queue if you would like to ask additional questions and time permits. Now, I'll turn the call over to Anirudh.

Good afternoon, everyone, and thank you for joining us today. I'm pleased to report that Cadence delivered exceptional results for the first quarter of 2022 with broad-based demand for innovative solutions, driving solid double-digit growth across all business groups. In view of the strong start to the year and the continuing momentum of our business, we are raising our financial outlook for the year. John will provide more details on that in a moment. Generational trends such as hyperscale computing, 5G, autonomous driving, and AI ML are creating an explosion of data that in turn is driving the need for next generation compute, connectivity, storage, and data analytics solutions. Along with accelerating digital transformation of multiple end markets, these trends continue to fuel robust design activity creating rich market opportunities for our differentiated end-to-end EDA, IP, and system solutions. Now let's talk about our key highlights for Q1. A key element of our approach has been to closely collaborate with our ecosystem partners and focus on market shaping customers. We are very excited to have built upon our successful engagement with a marquee U.S. semiconductor company, and in Q1, signed one of the largest contracts in company history to enable the broad proliferation of our EDA, hardware, and system solutions. Additionally, in Q1, we expanded our long-standing partnership with Arm, who is using a comprehensive set of Cadence EDA solutions and Cadence, who is using ARM's latest IP to jointly provide implementation reference flows and optimize processor IP to accelerate customer innovation. Rapidly increasing challenges in system verification and software bring-up continue to be a strong pull for our verification business, which delivered 30% year-over-year revenue growth. On the heels of a record year, our hardware business had its biggest quarter by far, with unabating demand for our best-in-class Palladium Z2 and Proteum X2 hardware platforms. With 10 new customers and over 50 repeat customers, more than half the orders during the quarter included both the platforms. Demand for hardware was broad-based, with particular strengths seen in hyperscale, 5G communication, and AI ML segments. Our digital and sign-off business had another strong quarter with 23% year-over-year revenue growth. Deployment of our digital full flow delivering industry-leading quality of results at the most advanced nodes continued to accelerate with more than 15 new wins in Q1. Our innovative Cadence Cerebras solution uses unique reinforcement learning ML technologies to explore the entire design space and intelligently optimize the digital full flow in a fully automated manner. Several market-shaping customers have successfully deployed Cadence Cerebras. and realized remarkable productivity and power performance and area benefits, including a marquee Asia Pacific system company used Cadence Cerebras to achieve 5X engineering productivity and nearly 10% power gain on a critical advanced node subsystem. And a leading Asia Pacific hyperscaler used Cadence Cerebras with our digital full flow to tape out a chip with nearly 2 billion instances, reducing power by 5% compared to the alternative flow. Our system design and analysis business, which is driving our expansion beyond EDA, continued its strong momentum in Q1, delivering 22% year-over-year revenue growth. There is growing interest in our Integrity 3D IC solution, the industry's most advanced multi-die platform with tightly integrated system planning, implementation, and analysis technology. A large U.S. data infrastructure company successfully deployed Integrity to take out the 2.5 DIC And LightElegent used 3D, integrated 3D IC, which also innovates in development of their fully integrated optical computer system. In system analysis, we continued executing to our strategy of building out our multi-physics platform, offering best-in-class engines, delivering superior results compared to legacy solutions. We are pleased with the new wins and growing repeat orders for our organically developed Clarity and Celsius products, as well as our recently acquired CFD technologies. Over the past year, our CFD solutions have continued to proliferate, especially in the aerospace and defense arena with market shaping customers such as Lockheed Martin. In Q1, Juniper Networks renewed their commitment to cadence technology, including comprehensive access to our systems portfolio across PCB, packaging, and system analysis solutions. And last week, we introduced Fidelity CFD, a comprehensive CFD platform that includes enhanced meshing technologies as well as a next-generation, massively parallel high-order solver. that dramatically improves the performance and accuracy of complex CFD application across multiple vertical end markets. Fidelity CFD software machine capabilities have been used by Toyota Motor Europe to be their standard workflow for CFD preprocessing. And the winning America's Cup Team New Zealand relies on Fidelity Marine Solver for their hull hydrodynamic modeling. Lastly, in addition to our outstanding business results, I'm also proud of our high-performance inclusive culture and thrilled that we have been selected by Fortune and Great Place to Work as one of the 2022 100 best companies to work for for the eighth consecutive year. Now I will turn it over to John to provide more details on the Q&A results and our updated 2022 Outlook.