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About Cadence Design Systems, Inc.

You can get into a rhythm when designing an integrated circuit or an entire device with Cadence Design Systems. The company makes system design enablement (SDE) and electronic design automation (EDA) software as well as hardware for putting together electronic systems. Customers use Cadence products to design integrated circuits (ICs), printed circuit boards (PCBs), smartphones, laptop computers, gaming systems, and more. The company also provides maintenance and support, and design and methodology consulting services. Its verification tools test designs before production. Customers have included AMD, Xilinx, and Texas Instruments. International customers account for more than half of the company's sales.

Operations

Cadence Design Systems has five product areas, each making a robust contribution to total revenue. Digital IC Design and Signoff delivers about 30% of the company’s revenue with Functional Verification (including hardware for emulation and prototyping) and Custom IC Design and Verification each accounting for about 25% of revenue. System Interconnect and Analysis and Intellectual Property evenly split the other 20% of revenue.

The company sells hardware for emulation and prototyping and it relies on contractors to make, assemble, and test those products. Contractors also handle system integration and testing of Cadence’s prototyping products based on Field-Programmable Gate Array (FPGA) technology.

Geographic Reach

With its main headquarters in the US, Cadence Design Systems has placed regional headquarters near customers in China, India, UK, and Japan. It has about 50 other sales offices, design centers, and research and development facilities, mostly outside the US.

The US is Cadence's largest single market, accounting for almost 45% of sales. Customers in Asia (including Japan) account for a third of sales, and European customers account for about 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 can take three to six months or more.

Customers include Fujitsu, Polycom, Cavium, STM, Ricoh, NXP, and Faraday Technology.

Financial Performance

Cadence Design Systems made it nine straight years of increasing revenue in 2017, hitting a new high of $1.9 billion, a 7% rise from 2016. The company reported growth in its software and IP businesses, while it garnered less revenue from emulation and prototyping hardware (which reduced sales in the US).

Net income was flat year-to-year at about $204 million in 2017. The company's tax provision was $110 million in 2017, up from $34 million in 2016, due to the US Tax Cuts and Jobs Act of 2017.

Cadence had about $688 million in cash on hand in 2017, up from $465 million in 2016. An increase in cash from operations came from the timing of cash receipts from customers and disbursements made to vendors and higher profits.

Strategy

Cadence Design Systems expanded beyond its software and hardware for designing computer chips and printed circuit boards with its offerings for designing complete systems, from smartphones to cars. The company's focus on system design enablement (SDE) broadens the technologies it addresses and the markets it sells to. New technologies include augmented reality, virtual reality, internet-of-things, deep learning, and autonomous vehicle sub-systems. Cadence expects customers to increase their spending in those areas and it has increased its R&D spending, in turn. Its R&D budget rose to about $800 million in 2017 from $735 million the year before. Cadence has teamed up with Arrow Electronics, MathWorks, Northrup Grumman, and BAE Systems on projects that expand the ecosystem of its SDE efforts.

With more than half of its revenue originating from overseas customers, Cadence could be affected by rising trade tensions around the world. The company gets about 20% of revenue from Europe and Asia, two regions with ongoing trade issues with the US.

Mergers and Acquisitions

In 2017 Cadence Design Systems acquired nusemi inc, a developer of ultra-high-speed Serializer/Deserializer (SerDes) communications IP. The deal expanded Cadence's intellectual property for its System Design Engineering technologies. Terms were not disclosed.

Cadence Design Systems bought Rocketick Technologies, an Israel-based provider of chip-testing and simulation technologies. The deal was made to strengthen Cadence's System Design Enablement strategy by delivering ultra-high-performance simulation to accelerate the development of complete systems with the end-product in mind.

Company Background

Cadence Design Systems arose from the 1988 merger of software firms ECAD (formed in 1982) and SDA Systems (founded 1983). The stock market crash of 1987 helped propel SDA Systems, an EDA company that gave up its planned IPO in the wake of the crash, into its merger with ECAD, which was publicly held, to form Cadence Design. Private venture capital investor and SDA chairman Donald Lucas became chairman of Cadence. Joe Costello, the young, charismatic, and tall (6-foot-7) president and COO of SDA, was named president and CEO of Cadence. It became the world's leading electronic design automation (EDA) software supplier by enlarging and improving the range of software it developed in-house and via such acquisitions as Tangent Systems (1989) and Valid Logic Systems (1991).

The company grew through a series of acquisitions. Cadence concluded long-running litigation with Avant! (after Avant! was acquired by Synopsys) with a $265 million payment to Cadence.

Cadence Design Systems, Inc.

2655 SEELY AVE BLDG 5
San Jose, CA 95134-1931
Phone: 1 (408) 943-1234

Stats

Employer Type: Publicly Owned
Stock Symbol: CDNS
Stock Exchange: , NASDAQ
Chairman: John B. Shoven
President and CEO: Lip-Bu Tan
SVP Worldwide Field Operations: Neil Zaman
Employees (This Location): 700
Employees (All Locations): 7,500

Major Office Locations

San Jose, CA

Other Locations

Berkeley, CA
Irvine, CA
Pleasanton, CA
San Jose, CA
Denver, CO
Chelmsford, MA
Rochester, MN
Saint Paul, MN
Cary, NC
Portland, OR
Pittsburgh, PA
Austin, TX
Plano, TX
Sandy, UT
Bellevue, WA
Bengaluru, India
Ghaziabad, India
Hyderabad, India
Mumbai, India
New Delhi, India
Noida, India

Competitors