Cadence Design Systems, Inc.

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 Gu, Vice President of Investor Relations for Cadence. Please go ahead.

Thank you, Operator. I would like to welcome everyone to our first quarter of 2025 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, 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. or financial measures discussed on this call are non-GAAP unless otherwise specified. The 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 excellent results for the first quarter of 2025. The robust ongoing customer demand for innovative technologies. We exceeded our guidance on all key financial metrics achieving 23% year-over-year revenue growth and 34% increase in non-GAAP EPS. Given this outperformance and the continued strength of our business, we are raising our financial outlook for the year. John will provide more details in a moment. Before diving in, I would like to share my perspective on the prevailing macroeconomic uncertainty. Semiconductors remain foundational to realizing transformative technologies such as hyperscale computing, 5G, and autonomous systems, all fueled by the AI megatrend. We haven't seen any shifts in customer behavior at this time. as they continue investing in their next generation designs, recognizing that today's R&D efforts are critical to deliver the groundbreaking products of tomorrow. Additionally, our ratable software business model, strong Q and exit backlog, and a predominantly recurring revenue mix provide resilience and excellent visibility. customers are increasingly relying on our product as we execute our intelligent system design strategy and expand our differentiated end-to-end portfolio to serve a growing and diversified customer base. As the fast evolving AI landscape expands the market opportunities and reshapes the entire chip and system development process, our Cadence AI portfolio delivers unparalleled PPA, productivity, and time-to-market benefits. At GTC, we announced an expanded partnership with NVIDIA on their latest Grace Blackwell architecture. In addition to enabling up to an ADX acceleration of Cadence solvers, We are collaborating on developing a full-stack agentic AI solution for engineering and science using the new LAMA and Nemotron reasoning model. We are also one of the first adopters of NVIDIA Omniverse Blueprint for AI factory digital twins, advancing data center design and operational efficiency. In Q1, we expanded our footprint at several top tier customers and further our relationship with key ecosystem partners. Last quarter, we announced a collaboration with Rapidus on two nanometer IP development. And this quarter, we are pleased to share that Rapidus has made a wide ranging commitment to our core EDS software portfolio. across digital, custom analog, and verification solutions. In Q1, we deepened our partnership with SocioNext through a broad expansion of our EDS software, particularly AI-driven digital solutions, along with our system software. We furthered our partnership with a marquee hyperscaler through a broad proliferation of our digital and verification software, particularly our AI-driven Cadence Cerebras and Verisium solutions. We expanded our collaboration with Intel Foundry by officially joining the Intel Foundry Accelerator Design Services Alliance. From systems on chip to advanced IP for AI and HPC applications, Cadence's inclusion in the alliance helps Intel Foundry customer remain at the forefront of innovation. Now let's talk about key product highlights for Q1. Our IP business grew 40% year over year in Q1. As we continue to benefit from the strong market opportunities offered by AI, chiplet-based architectures, and the Foundry ecosystem build-out. We secured a major expansion at a global marquee system company for our AI HPC design IP and deepened our partnership with the major Foundry through their commitment to our memory and interface IP. Following our pending acquisition of Secure IC last quarter, we continued to build out our design IP portfolio. And earlier this month, we entered into a definite agreement to acquire Arms Artisan Foundation IP business. A tensilica DSP is the de facto choice for automotive ADAS and infotainment systems and continued being widely integrated into vision, radar, lidar, and audio systems for the autonomous driving as well as emerging robotics use cases. Our core EDA revenue grew 16% year over year in Q1. With further proliferation of our digital full flow at the most advanced nodes. Cadence Cerberus AI solution continued its strong momentum with nearly 50 new logos in Q1 and well over 1,000 tape-outs till date. Engineering change orders, or ECOs, are a critical part of any design process. AI is particularly suitable to dramatically improve ECOs. Using the new cadence conformal AI ECO flows, MediaTek saw early positive results, generating 83% smaller ECO patches in nearly half the runtime. MediaTek also improved runtime and memory by 100x through its deployment of conformal AI low power. Our collection of new smart ECO technologies has sped up Renes' automated functional ECO runtimes by more than 50% while improving quality. Our flagship Virtuoso platform, the industry's gold standard for advanced node custom analog, and mixed signal design continue to expand into new areas, such as photonics and circuit and yield optimization. Ever-increasing complexities in system verification and software bring-up continue to drive secular demand for market-leading Palladium Z3 and Protium X3 platforms. Demand for hardware was broad-based, with particular strength driven by AI, HPC, and hyperscaler customers. Our hardware products continue to proliferate at existing customers, especially top hyperscalers, while gaining notable competitive wins, including a market-shaping semiconductor company. Our verification software suite that includes Verisium, Exelium, and Jasper, leverages big data and AI to optimize verification workloads, and saw continued expansion across aerospace and defense, electronics, and automotive segments. Our system design and analysis business delivered more than 50% year-over-year revenue growth in Q1. As our AI-driven optimization solutions, integrated with our physics-based simulation platforms, continue to deliver superior results across multiple end markets. Our digital twin reality data center product gained momentum, signing multiple deals with large hyperscaler and cloud service providers in Q1. Beta CAE delivered a strong quarter and is opening up tremendous opportunities for us in the automotive vertical. Allegro X's omniverse integration was highlighted at GTC with photo-realistic 3D views of a full multi-board system designed in Allegro X. Our AI-driven subset router the industry's premier solution for full package routing of complex 3D IC designs saw strong customer interest and engagement during the early adopter program. In summary, I'm pleased with our Q1 results and the continued momentum of our business. The growing complexity of chip and system design coupled with the transformative potential of AI-driven automation, creates significant opportunities for our products to enable and empower our customers. In addition to our strong business results, I'm proud of our high-performance inclusive culture and thrilled that Cadence was recently named by Fortune and Great Place to Work yet again as one of the 100 best companies to work for, ranking number 11. Now I will turn it over to John to provide more details on the Q1 results and our updated 2025 outlook.