Cadence Design Systems helps engineers pick up the development tempo. A leader in the market for electronic design automation (EDA) software, Cadence sells and leases software and hardware products used to design integrated circuits (ICs), printed circuit boards (PCBs), and other electronic systems. Semiconductor and electronics systems manufacturers use its products to build components for wireless devices, networking equipment, and other applications. The company also provides maintenance and support, and offers design and methodology consulting services. Customers have included Pegatron, Silicon Labs, and Texas Instruments. Cadence gets more than half of its sales from customers outside the US.
Globally headquartered in the US, Cadence Design has regional headquarters in China, India, and Japan. It has about 50 other sales offices, design centers, and research and development facilities; about 60% of which are located outside the US.
The US is its largest single market, accounting for almost 45% of sales. Customers in Asia (where most of the world’s electronics are made) account for 35% of sales, and Europe makes up the other 20%.
Sales and Marketing
Cadence Design Systems primarily uses a direct sales force, but certain products, such as its OrCAD or Incisive series, are sold by resellers. Due to the complex nature of EDA products and the electronic design process, the company’s sales cycle is generally long, averaging three to six months or more.
With its fortunes tied directly to the highly cyclical semiconductor industry, Cadence's operating results can vary from year to year, but the company has been on an upward trend. Overall sales increased 15% in 2012 to $1.3 billion. Sales growth was driven by a 30% increase in product revenues, primarily due to improvements in the global economy, gains in hardware sales and lease revenues, and an increase in sales related to acquisitions. Revenues from maintenance services were down 5% for the year, and other services -- consulting, training, and custom IC design – were down 2%.
Profits shot up more than 500%, going from $72 million in 2011 to $440 million in 2012 after the company was able to record a $250 million benefit for income taxes.
The company's product strategy is focused around design activities that include functional verification, digital IC design, custom IC design, and system interconnect. Cadence products include Incisive (functional verification), Encounter (digital IC design), Virtuoso (custom design), and Allegro (system interconnect platforms).
Mergers and Acquisitions
In 2013 the company made three acquisitions. It bought India-based Cosmic Circuits, a provider of analog and mixed signal IP cores, the IP business of Polish firm Evatronix, and California-based Tensilica, a provider of intellectual property cores for dataplane processing, for $380 million.
In 2012 it paid $80 million for Sigrity, which provided signal and power integrity technology. Its products help with design and analysis for semiconductor companies and systems manufacturers of such products as printed circuit boards and integrated circuit packages.