Cadence Design Systems, Inc.

At that time, simply press the star key followed by the number one on your telephone keypad. Thank you. And I will now turn the call over to Richard Gu, Vice President of Investor Relations for Cadence. Please go ahead.

Thank you, operator. I would like to welcome everyone to our fourth quarter of 2024 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 four 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, CFO commentary, 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, all financial measures discussed on this call are non-GAAP unless otherwise specified. that non-GAAP measures should not be considered in isolation from or as a substitute for GAAP results. Reconciliations of GAAP to non-GAAP measures are included in today's earnings release. For the Q&A session today, we would ask that you observe a limit of one question only. If time permits, you can re-queue with additional questions. Now, I'll turn the call over to Anirudh.

Thank you, Richard. Good afternoon, everyone, and thank you for joining us today. I'm pleased to report that Cadence delivered exceptional results in the fourth quarter, capping off a strong 2024 with 13.5% revenue growth and 42.5% non-GAAP operating margin for the year. We exited 2024 with a record backlog of $6.8 billion, which is a testament to our compelling AI-driven chip-to-systems portfolio and its growing proliferation among marquee, system, and semi customers. The AI super cycle is entering a new phase with generative AI, agentic AI, and physical AI fueling an explosion in compute demand and semiconductor innovation. We see AI adoption unfolding in multiple phases, starting with the build-out of the AI infrastructure, where we are already deeply engaged. At the same time, we are actively integrating AI into our own products, and we are also exploring AI potential to create new markets. The infrastructure AI phase is well underway, and we have been closely collaborating with market leaders on their next generation AI designs across both training and inferencing. In Q4, we advance our longstanding partnership with NVIDIA through commitments across a range of our EDA, hardware, IP, and system software solutions. We are also using NVIDIA's latest NEMO and NEM microservices to build customized GenAI applications, delivering enhanced optimization and productivity. We deepened our collaboration with Qualcomm through a significant expansion of our EDA and system software solutions. Also, we meaningfully expanded our strategic partnership with Marvell through a broad proliferation of our portfolio of products. Our Cadence AI portfolio continued gaining strong momentum with market-shaping customers. Our AI-powered products, such as Cadence Cerebras, SimAI, and Allegro XAI are proliferating at scale. And our LLM-based design agents, powered by ZAI, data platform are showing promising results in early engagement. Cadence Cerebras is rapidly becoming an essential part of the design flow as it continues to deliver transformative PPA benefits to customers, with more than 750 tape-outs to date and over 300 in Q4 alone. Our Verisium AI-driven verification platform with its SIM AI and debug AI apps gain share at key competitive accounts as customers embrace the significant boost in verification quality and efficiency. Additionally, we are also applying AI to new market opportunities such as life sciences with our OpenEye drug discovery software. The growing Foundry ecosystem is driving increased design activity and creating significant opportunities for our products. In 2024, we strengthened our collaboration with existing Foundry partners and entered into new strategic engagement. We further our partnership with TSMC with AI optimized design flows certified for TSMC's N3 and N2P technologies. We strengthened our collaboration with Global Foundries and are partnering with Samsung on their SF2 gate all-around process. We also partnered with Intel Foundry to provide design software and leading IP solutions at multiple Intel advanced nodes and in Q4 entered into a strategic collaboration with Rapidus for two-nanometer enablement technology. We deepened our partnership with Arm through a broad expansion of our IP, hardware, and AI-driven design enablement solutions, and in Q4, successfully taped out industry's first Arm CSA standard-based system chiplet. Now let's talk about some of the specific product level highlights for Q4 and 2024. Our system design and analysis business delivered strong results, achieving over 40% growth in 2024. Our multi-physics analysis platform with AI-driven optimization is delivering superior results to a rapidly expanding customer base across multiple verticals, especially aerospace and defense, and automotive. Our Millennium CFD simulation platform ramped up over the year, closing two meaningful deals in Q4 in the aerospace and defense and energy verticals. With Beta CAE, we now provide a comprehensive multiphysics platform covering electromagnetics, electrothermal, CFD, and structural analysis. Beta CAE performed ahead of our expectations with major expansion at several marquee automakers, including at some of the fastest growing EV companies. Our Allegro X design platform with its significant productivity and next generation capabilities continued its momentum especially at aerospace and defense, hyperscale, and EV customers. Allegro XAI, the industry's first fully automated PCB design engine, is enabling customers to realize up to a 10X productivity gain. Our Integrity 3D IC platform, with its unified design, analysis, and sign-off capabilities for multi-chip-led architectures, expanded its footprint at hyperscale and memory customers, OSADs, and foundries. Our IP business drove a strong finish to the year, growing 28% year-over-year in Q4. Our AI HPC protocols, including our flagship HBM, DDR, PCIe, and UCIe solutions, propelled our business. with significant expansions and competitive displacement at top tier customers. We continue to broaden our IP portfolio with high growth star IP products and last month we entered into a definitive agreement to acquire SecureIC. The addition of their embedded security IP products will augment our rapidly expanding portfolio of leading edge silicon proven IP including interface, memory, AI, and DSP solutions. We announced a collaboration with Rapidus to provide a broad set of our advanced memory interface IP for their two nanometer backside power process node. And ASD Space Mobile committed to our AI-driven IP solutions and EDA tools on their AST5000ASIC, a custom low-power architecture for global space-based cellular broadband services. Our core EDA business comprising our digital, custom analog, and verification portfolios grew 15% year-over-year in Q4. Insatiable demand for more compute along with system complexity and the need for first-time right silicon continue to drive strong demand for our best-in-class palladium Z3 and protium X3 systems. Our hardware family delivered yet another record year, adding over 30 new customers and almost 200 repeat customers in 2024. with particularly strong demand from AI and hyperscale customers. Our digital portfolio had another strong year, gaining 36 new full-flow customers in 2024, including 17 in Q4. Cadence partnered with EqualOne on the development of its Alpha 5 quantum SOC that runs at cryogenic temperatures with our design and implementation tools being central to this revolutionary design. Our Virtuoso Inspector franchise solutions tackle the most complex design and simulation challenges in analog, mixed signal, and RF design. Virtuoso Studio, delivering industry's leading AI-powered layout automation and optimization, continued its strong ramp and is now deployed at over 450 customers. MediaTek adopted SpectreX running on NVIDIA's Hopper GPUs for its two nanometer designs, achieving up to a 6X performance boost while maintaining full accuracy. SpectreFX FastPy is now in production usage at more than 75 customers. including top memory vendors, as well as SOC and mixed signal companies. In closing, I'm pleased with our outstanding performance in 2024 and excited about the business momentum and opportunities ahead. As the AI era continues to unfold, our AI-driven EDA, SDA, and IP portfolio, powered by GenAI agents, and accelerated computing is delivering transformative results, uniquely positioning us to capitalize on these massive opportunities. Now I will turn it over to John to provide more details on the Q4 results and our 2025 outlook.