Cadence Design Systems, Inc. (NASDAQ:CDNS) Q1 2023 Earnings Call Transcript

Arsenije Matovic: Hi. This is Arsenije on for Josh. So, just a double click on the systems company strength. And I wanted to see if there was any kind of call-outs, in particular end markets, and how many dealerships the end markets have changed relative to last year, or any kind of outlook changing in terms of end market demand within those companies? Thanks, and then a quick follow-up.

Anirudh Devgan: Well, I would say that in system companies, data center is always a lot of activity driven by generative AI. And I think we mentioned also in our prepared remarks, automotive and A&D are definitely — we’re seeing a lot of design activity in those. So, I would — if you have to pick like a few verticals, so definitely data centers with AI and then automotive, AI, in general, but also electrification and more A&D, and we are seeing that in our own engagements with customers.

Arsenije Matovic: Got it. And then, if we could kind of think about some of the strength in hardware, how much of that is driven from refresh from existing large semi customers versus maybe new purchases from systems companies? If you kind of like quantify that from a high level would be helpful.

Anirudh Devgan: I think it’s a combination of both. It’s both like the system — the semi company has more designs, and newer designs require more and more hardware. And system companies, by its nature, also have software. That’s — otherwise there wouldn’t be system companies. So, in system companies, our dual dynamic view of Protium and Palladium really helps, because Protium is more for software bring-up and then Palladium for chip bring-up. So, I would say both are strong, but there is more software content by nature in the system company.

Arsenije Matovic: Thank you.

Operator: I will now turn the call back over to Anirudh Devgan for closing remarks.

Anirudh Devgan: Thank you all for joining us this afternoon. It’s an exciting time for Cadence with strong business momentum and growing opportunities in the semiconductor and systems industry. We are proud of the innovative and inclusive culture we have built at Cadence. And on behalf of our employees and our Board of Directors, we thank our customers, partners and investors for their continued trust and confidence in Cadence.

Operator: Thank you for participating in today’s Cadence First Quarter 2023 Earnings Conference Call. This concludes today’s call. You may now disconnect.