Cadence Design Systems, Inc.

Ladies and gentlemen, good afternoon. My name is Abby and I'll be your conference operator today. At this time, I would like to welcome everyone to the Cadence second quarter 2025 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 that time, simply press star then 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'd like to welcome everyone to our second quarter of 2025 earnings conference call. I'm joined today by Anir 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, as well as the impact of our DOJ and BIS settlements. 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. 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. Cadence delivered Exceptional financial results for the second quarter of 2025, exceeding our Q2 revenue and EPS guidance, driven by ongoing broad-based strength across our AI-driven product portfolio. Bookings were stronger than expected, highlighting the strategic relevance of our AI-driven portfolio and the depth of our customer relationships. Demand for our technologies continues to grow, driven by customers embracing our products at scale, and we are raising our financial outlook for the year to 13% revenue growth and 16% EPS growth for 2025. John will provide more details on both our Q2 results and the updated outlook. We continue executing to our intelligent system design strategy initiated in 2018, which remains a clear differentiator in a rapidly evolving landscape. Our early investments delivering to our vision of unified EDA, IP, 3DIC, PCB, and system analysis are paying off. These capabilities are enabling us to lead through the accelerating waves of the AI super cycle, from AI infrastructure build out to physical AI in autonomous systems to the emerging frontier of sciences AI. Customer R&D investments remain robust, particularly as AI drives exponential design complexity, such as in advanced node design and complex system architectures. And this is translating into broad-based demand across our portfolio. Embedding agentic AI into our design platforms across core EDA system design and system simulation workflows enables the evolution from a traditional tool-based flows to autonomous goal-driven agents. Our Cadence AI portfolio, powered by multiple autonomous silicon agents and built on our unified JEDI platform with NVIDIA accelerated compute, is delivering optimized design and massive efficiency gains for our customers. At Cadence Live 2025, we introduced the new Millennium M2000 AI supercomputer featuring NVIDIA Blackwell, delivering AI accelerated simulation at unprecedented speed and scale across engineering and science workloads. This tightly co-optimized hardware software full system stack delivers up to 80x higher performance and up to 20x lower power versus traditional CPU-based systems. Multiple customers provided endorsements, including Ascendance, MediaTek, and Treeline Biosciences. In Q2, we furthered our longstanding partnership with ADI through a broad proliferation of our core EDS software, including AI-driven Cadence Cerebras and Verisium solutions, as well as system software across PCB, advanced packaging, and system analysis. Also in Q2, We deepened our partnership with SK Hynix through a broad expansion of our EDA software, system software, and design IP solutions. And a major semiconductor company meaningfully expanded its relationship with Cadence in Q2 through a broad proliferation of our EDA, IP, and SDA portfolio. We furthered our longstanding collaboration with TSMC to accelerate time to silicon for customer designs using 3D IC and advanced node technologies, such as TSMC's A16 and N2P. Through certified design flows, silicon-proven IP, and ongoing technology collaboration. We continued the strong momentum in our IP business, delivering more than 25% year-over-year growth in Q2, driven by product strength and a broadening silicon solutions portfolio. AI and HPC use cases spearheaded the strong demand for our IP offerings with advanced technologies such as HBM4, and 224 gig-thirties, notching key wins for scale up and scale out in the AI infrastructure space. We built on our strategic collaboration with the emerging advanced foundry as they awarded us a large deal in Q2 for our leading HBM4 solution. We introduced the industry's first LPDDR6 memory IP. offering up to 50% higher performance to meet the growing memory and capacity needs of AI LLMs and agentic AI workloads. At Cadence Live 2025, we launched the Cadence Tensilica NeuroEdge 130 AI coprocessor to accelerate physical AI applications. And in Q2, A market shaping wireless technology company selected Tensilica HiFi 5S as the standardized audio solution for its music and voice platforms. Our core EDA revenue grew 16% year over year in Q2. Further proliferation of our digital full flow at the most advanced nodes continued. And more than 50% of advanced nodes designs using our implementation solutions are now using Cadence Cerebrus. In Q2, we launched Cadence Cerebrus AI Studio, the industry's first agentic AI multi-block and multi-user SOC design platform. This technology delivering up to 20% PPA improvement while accelerating chip delivery time by 5 to 10X was endorsed by Samsung and ST Microelectronics at launch. And Renesas successfully used our Pegasus physical verification solution to sign off an advanced node SOC after it demonstrated a significant throughput advantage. Our industry-leading Palladium Z3 and Protium X3 platforms accelerated their momentum, delivering outstanding results, with Q2 being the best revenue quarter ever for our hardware systems. Demand for hardware was strong and broad-based, driven by AI, HPC, and automotive customers. Our verification software suite that includes Verifium, Exelium, and Jasper and leverages big data and AI to optimize verification workloads saw continued expansion with 27 new logos in Q2. Building upon 30 years of industry leadership, we launched the Virtuoso Studio 25.1 release, offering broad support for RF, photonics, mixed signal, and advanced heterogeneous design. Our leading Spectrex circuit simulator closed several deals with strong growth, while our FastPy SpectreFX platform has now been adopted by the top three memory companies. Our system design and analysis business delivered another standout quarter with 35% year-over-year revenue growth. On the packaging front, there was strong customer uptake of our 3D IC technology, and top foundries and semi-customers embraced our AI-driven advanced substrate router, which provides tremendous productivity benefits. Our AI-driven Allegro X PCB design platform saw continued proliferation as multiple aerospace and defense, hyperscale, and EV customers took advantage of the platform's meaningful productivity and next-generation capabilities. Our Clarity and Celsius solvers saw significant expansion at a major hyperscaler, and Clarity secured a key win at a marquee AI company, while our Reality data center digital twin drove strong growth at a top hyperscaler. Beta CAE technology integrations with our CFD thermal and electromagnetic products were released as Beta CAE solutions continued to score key competitive wins, particularly in the automotive segment. Finally, I'm pleased to share that we have entered into a settlement with the U.S. Department of Justice and the U.S. Department of Commerce's Bureau of Industry and Security that resolved the previously disclosed investigations into certain transactions with customers in China that occurred between 2015 and 2021. The settlement represents a mutually acceptable path forward for all parties. and we believe are in the best interest of our customers, partners, and shareholders. I want to emphasize that Cadence is deeply committed to the highest standards of compliance, and we have significantly enhanced our compliance processes over the last few years and continue to implement improvement measures to proactively address evolving trade restrictions. We remain focused on delivering for our customers and shareholders and executing the clear strategy we have laid out to drive innovation and enhanced value creation. In summary, I'm delighted with our Q2 results and the continued momentum across our broad and innovative portfolio. The AI-driven era presents tremendous opportunities the co-optimization of our comprehensive eda and sda portfolio with accelerated computing and gen ai uniquely positioned us to deliver breakthrough solutions across a wide range of markets now i will turn it over to john to provide more details on the q2 results and our updated 2025 outlook