Cadence Design Systems, Inc.

Ladies and gentlemen, good afternoon. My name is Abby and I will be your conference operator today. At this time, I would like to welcome everyone to the Cadence first quarter 2026 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 and 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 first quarter of 2026 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 four 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 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 had a strong start to 2026. With accelerating AI demand and disciplined execution, delivering one of the best Q1s in company's history. Our record backlog of $8 billion was ahead of plan, reflecting strong customer confidence in our AI-driven portfolio and its pivotal role in enabling delivery of their increasingly complex chip and system design roadmaps. Given the accelerating momentum of our business, we are raising our 2026 revenue growth outlook to 17% and expect to achieve the rule of 60 for the first time. John will provide more details in a moment. Agendic AI era is here and Cadence is leading the transformation of semiconductor and system design. At Cadence Live Silicon Valley 2026, we took a major step towards fully autonomous chip design, pioneering the industry's most advanced and comprehensive agentic full flow platform. We introduced AgentStack, the head agent framework for our AI super agents, which enables knowledge sharing across the design flow and extend autonomous designs from chips to 3D IC to systems. Building on our revolutionary chip stack AI superagent for RTL design and verification, we introduced two new breakthrough AI superagents, VeraStack for analog and custom design, and InnoStack for digital implementation and sign-off. Together, these solutions span the entire chip design flow, creating a connected, continuous learning platform that brings the industry closer to comprehensive automation. As the industry begins transitioning to agentic AI, the need for physically accurate and highly mathematical EDA solutions become even more critical. Our agentic AI solutions are built on decades of domain expertise, proprietary data, and tightly integrated physically accurate engines. delivering high-fidelity results. We continue to view our platform as a three-layer cake, with accelerated compute and data as the base layer, principle simulation and optimization as the critical middle layer, and agentic AI as the top layer. As I've said before, we believe the greatest value comes from the tight coupling of these layers, reinforcing each other to deliver much better results. As these super agents invoke our simulation, verification, and implementation engines at scale, we expect them to materially expand EDA consumption and drive higher usage across our platforms. We announced a strategic collaboration with Google to optimize the chip stack AI super agent with Gemini on Google Cloud. By combining LLM reasoning with GCP scalable compute, this collaboration delivers a cloud-native platform for next-generation chip development. In Q1, we furthered our long-standing partnership with MediaTek through a wide-ranging expansion across our new agentic AI offerings and core EDA, 3DIC, and system analysis solutions. Physical AI is emerging as the next big wave of intelligence as AI moves into autonomous systems, autos, drones, and robotics. And Cadence is uniquely positioned to lead this transition. The addition of Hexagon's D&E leading structural and multi-body dynamics technologies transforms our system analysis portfolio to a leadership position in physical AI. enabling customers to build and train fundamentally new AI word models by narrowing the critical SIM to real gap. At Cadence Live Silicon Valley, we announced an expanded partnership on AI and robotics with NVIDIA. By combining our agentic AI-driven solutions with NVIDIA's advanced technologies, we are accelerating engineering workflows and boosting productivity across chip design, physical AI systems, and hyperscale AI factories. Now let me provide an update on our businesses. Our IP business continued its strong momentum with 22% year-over-year revenue growth driven by accelerating demand of AI, HPC, and automotive workloads. Growing complexity of advanced node designs and chiplet-based architectures is driving strong demands of our differentiated star IP portfolio across interface, memory, and foundation IP. We achieved meaningful competitive wins and customer expansions at marquee accounts, reflecting the breadth of our portfolio, and more importantly, the differentiated performance of our solutions. We closed a record deal with a leading global foundry marking our largest IP engagement with this customer to date and reinforcing our leadership at the most advanced nodes. With strong market tailwinds, focused strategy, and expanding customer proliferation, we remain very well positioned for continued growth in IP. Our core EDA business delivered another strong quarter with revenue growing 18% year over year, driven by increasing proliferation of our solutions at market-shaping customers. Our AI-driven solutions and increasingly our agentic offerings are becoming an important part of customer renewals and expansions. Demand for our hardware accelerated in Q1, resulting in our best quarter ever led by AI HPC customers, and increasing demand in automotive and robotics. Palladium Z3 continues to be the gold standard for emulation and drove multiple competitive displacement. Momentum on verification software grew, particularly in Excellium and Verisium SIM AI, and ChipStack generated tremendous customer interest. with a large number of evaluations underway. Led by AI-driven Cadence Cerebris solution, our digital platform continues to gain share, especially at the most advanced nodes. A global semiconductor design leader significantly increased their enormous usage and adopted our digital sign-off solutions. and a marquee AI infrastructure company expanded their usage of our sign-off solutions and their leading-edge ASIC designs. In custom and analog, our AI-driven Virtuoso Studio continued its strong momentum in design migration and layout automation as it gets increasingly deployed by analog and mixed signal leaders seeking greater productivity. Our system design analysis business delivered 18% year-over-year revenue growth as AI-driven multi-physics simulation and 3DIC become essential to addressing growing system challenges. We have strong momentum in 3DIC where our unified multi-die integrated design to analysis flow is helping customers address their rising chiplet and advanced packaging complexities. We also saw strong momentum in security and clarity, with multiple memory and advanced IC packaging customers expanding their deployments as they move to higher speed interfaces. Customer adoption is increasing as they look to address signal integrity, power integrity, and thermal challenges earlier in the design flow through deployment of a full-cadence sign-off flow. In closing, I'm pleased with our strong execution and the broad-based momentum of our business. As the agentic AI era unfolds, cadence is leading the charge to realizing much higher design productivity, increasing design complexity and the growing need for productivity is creating a compelling long-term opportunity for Cadence. With our differentiated solutions and expanding agentic AI portfolio, I believe we are very well positioned to lead this transition and continue delivering meaningful innovation and value to our customers. Now, I will turn it over to John to provide more details on the Q1 results and our updated 2026 Outlook.