CADENCE REPORTS THIRD QUARTER 2017 CADENCE DESIGN SYSTEMS, INC. - PDF document

CADENCE REPORTS THIRD QUARTER 2017 CADENCE DESIGN SYSTEMS, INC. CFO COMMENTARY October 26, 2017 Q4 2017 Outlook Q3 2017 KEY METRICS • Revenue : $490 - $500 million. • Revenue $485 million, +9% y/y. Q3 2017 Key Takeaways • GAAP operating margin: • Strong, consistent financial results • GAAP operating margin 17%. approximately 20%. for Q3 with key metrics meeting • Non-GAAP operating margin: • Non-GAAP operating margin 28%. or exceeding expectations. approximately 30%. • Increasing our Outlook for • GAAP EPS $0.29. • GAAP EPS: $0.26 - $0.28. revenue, earnings per share and • Non-GAAP EPS $0.35, +17% y/y. • Non-GAAP EPS: $0.38 - $0.40. cash flow for fiscal 2017. • Repurchased 1.3 million shares of • Operating cash flow $89 million. stock for $50 million. $475 million remains on current authorization. FY 2017 Outlook Financial Results Webcast • Revenue: $1.931 - $1.941 billion. Our Q3 2017 financial results webcast will begin October 26, • GAAP operating margin: 17% to 2017 at 2:00 p.m. (Pacific). The 18%. webcast may be accessed at • Non-GAAP operating margin: 27% cadence.com/cadence/ to 28%. investor_relations. • GAAP EPS: $1.04 - $1.06. An archive of the webcast will be • Non-GAAP EPS $1.39 - $1.41. available on October 26, 2017 until 5:00 p.m. (Pacific) on • Operating cash flow: $450 - $480 million. December 15, 2017. October 26, 2017 Cadence Q3 2017 Financial Results 1

Cadence Design Systems, Inc. Fiscal Year 2017 Financial Outlook Previous Current FY 2016A FY 2017E FY 2017E Recurring Revenue >90% >90% >90% Total Revenue ($ Billion) $1.816 $1.910 - $1.950 $1.931 - $1.941 Y/Y Growth 7% 5% - 7% 6% - 7% Revenue from Beginning Backlog ~70% ~70% ~70% GAAP Operating Margin 13.5% ~ 17% 17% to 18% Non-GAAP Operating Margin 25.8% ~27% 27% to 28% Non-GAAP Other Income & Exp ($ Million) $(12.4) ($28) - ($20) ($26) - ($22) Non-GAAP Tax Rate 23% 23% 23% Weighted Average Diluted Shares Outstanding (Million) 291.3 276 - 284 278 - 282 GAAP EPS $0.70 $0.98 - $1.04 $1.04 - $1.06 Non-GAAP EPS $1.21 $1.36 - $1.42 $1.39 - $1.41 Y/Y Growth 11% 12% - 17% 15% - 17% Cash Flow from Operations ($ Million) $444.9 $430 - $470 $450 - $480 DSO 33 ~35 ~35 Capital Expenditures ($ Million) $53.7 ~$50 ~$55 Fourth Quarter 2017 Financial Outlook Current Q4 2016A Q3 2017A Q4 2017E Total Revenue ($ Million) $469.0 $485.4 $490 - $500 Q/Q Growth 5% 1% 1% - 3% Y/Y Growth 6% 9% 4% - 7% GAAP Operating Margin 11% 17% ~ 20% Non-GAAP Operating Margin 27% 28% ~30% GAAP EPS $0.14 $0.29 $0.26 - $0.28 Non-GAAP EPS $0.34 $0.35 $0.38 - $0.40 Q/Q Growth 13% 3% 9% - 14% Y/Y Growth 10% 17% 12% - 18% October 26, 2017 Cadence Q3 2017 Financial Results 2

Cadence Design Systems, Inc. Third Quarter Financial Results Revenue (In Thousands) Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Product & Maintenance $415,370 $436,694 $451,407 $443,847 $451,229 Services 30,850 32,286 25,504 35,154 34,169 Total Revenue $446,220 $468,980 $476,911 $479,001 $485,398 Y/Y Growth 3% 6% 6% 6% 9% Revenue Mix by Geography (% of Total Revenue) Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Americas 46% 48% 45% 45% 45% Asia 27% 25% 26% 28% 27% Europe, Middle East and Africa 19% 19% 20% 19% 19% Japan 8% 8% 9% 8% 9% Total 100% 100% 100% 100% 100% Revenue Mix by Product Group (% of Total Revenue) Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Functional Verification 24% 25% 23% 23% 21% Digital IC Design and Signoff 28% 30% 29% 30% 30% Custom IC Design 27% 25% 26% 26% 28% System Interconnect and Analysis 10% 9% 10% 10% 10% IP 11% 11% 12% 11% 11% Total 100% 100% 100% 100% 100% Total Costs and Expenses (In Thousands) Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Total GAAP Costs & Expenses $379,378 $415,863 $397,309 $396,311 $405,013 Y/Y Growth 7% 16% 2% 3% 7% Total Non-GAAP Costs & Expenses $332,035 $343,839 $354,601 $350,647 $351,787 Y/Y Growth 5% 9% 6% 4% 6% Operating Margin Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 GAAP Operating Margin 15.0% 11.3% 16.7% 17.3% 16.6% Non-GAAP Operating Margin 25.6% 26.7% 25.6% 26.8% 27.5% October 26, 2017 Cadence Q3 2017 Financial Results 3

Cadence Design Systems, Inc. Earnings Per Share Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 GAAP Net Income Per Share $0.23 $0.14 $0.25 $0.25 $0.29 Y/Y Growth (8)% (46)% 47% 47% 26% Non-GAAP Net Income Per Share $0.30 $0.34 $0.32 $0.34 $0.35 Y/Y Growth 7% 10% 14% 17% 17% Total DSO Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 DSO 34 33 37 31 34 Balance Sheet and Cash Review Cash Flow from Operating Activities (In Thousands) Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Net Cash from Operating Activities $84,460 $196,862 $92,430 $162,140 $89,314 Capital Expenditures (In Thousands) Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Capital Expenditures $14,165 $11,260 $14,843 $12,645 $12,188 Cash and Short-Term Investments (In Thousands) Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Cash and Short-Term Investments $532,836 $468,289 $547,607 $659,227 $682,419 • Approximately 27 percent of our cash and short-term investments were in the U.S. at quarter-end. Stock Repurchase (In Thousands, Except Share Price) Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Share Repurchase $240,096 $240,093 — — $50,013 Number of Shares 9,596 9,315 — — 1,331 Average Share Price $25.02 $25.77 — — $37.58 Employees Q3 2016 Q4 2016 Q1 2017 Q2 2017 Q3 2017 Headcount 7,113 7,094 7,101 7,190 7,233 October 26, 2017 Cadence Q3 2017 Financial Results 4