# EDGAR Filing Document

**Accession Number:** 0000813672
**File Stem:** 0000813672-23-000010
**Filing Date:** 2023-2
**Character Count:** 85523
**Document Hash:** b4dde282c1bbd4fba442c1f2a80949dc
**Contains OCR:** False
**Source Format:** 

## Filing Content

## Filing Summary
**0000813672-23-000010.hdr.sgml**: 20230213

**ACCESSION NUMBER**: 0000813672-23-000010

**CONFORMED SUBMISSION TYPE**: 8-K

**PUBLIC DOCUMENT COUNT**: 15

**CONFORMED PERIOD OF REPORT**: 20230213

**ITEM INFORMATION**: Results of Operations and Financial Condition

**ITEM INFORMATION**: Financial Statements and Exhibits

**FILED AS OF DATE**: 20230213

**DATE AS OF CHANGE**: 20230213

**FILER**: 

**COMPANY DATA:**
- **COMPANY CONFORMED NAME:** CADENCE DESIGN SYSTEMS INC
- **CENTRAL INDEX KEY:** 0000813672
- **STANDARD INDUSTRIAL CLASSIFICATION:** SERVICES-PREPACKAGED SOFTWARE [7372]
- **IRS NUMBER:** 770148231
- **STATE OF INCORPORATION:** DE
- **FISCAL YEAR END:** 1231

**FILING VALUES:**
- **FORM TYPE:** 8-K
- **SEC ACT:** 1934 Act
- **SEC FILE NUMBER:** 000-15867
- **FILM NUMBER:** 23618357

**BUSINESS ADDRESS:**
- **STREET 1:** 2655 SEELY AVENUE BLDG 5
- **CITY:** SAN JOSE
- **STATE:** CA
- **ZIP:** 95134
- **BUSINESS PHONE:** 4089431234

**MAIL ADDRESS:**
- **STREET 1:** 2655 SEELY AVENUE
- **CITY:** SAN JOSE
- **STATE:** CA
- **ZIP:** 95134

**FORMER COMPANY:**
- **FORMER CONFORMED NAME:** ECAD INC /DE/
- **DATE OF NAME CHANGE:** 19880609

?xml version="1.0" ? cdns-20230213

**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

**FORM 8-K** 

**CURRENT REPORT PURSUANT TO**

 **SECTION 13 OR 15(d) OF THE**

**SECURITIES EXCHANGE ACT OF 1934**

**Date of report (Date of earliest event reported): February 13, 2023** 

**CADENCE DESIGN SYSTEMS, INC.** 

**(Exact Name of Registrant as Specified in its Charter)**

---

| | | |
|:---|:---|:---|
| **Delaware** | **000-15867** | **00-0000000** |
| (State or Other Jurisdiction<br>of Incorporation) | (Commission File Number) | (I.R.S. Employer<br>Identification No.) |

---

**2655 Seely Avenue, San Jose, California 95134** 

(Address of Principal Executive Offices) (Zip Code)

**(408) 943-1234** 

(Registrant's telephone number, including area code)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:

---

| | | |
|:---|:---|:---|
| **Title of each class** | **Trading Symbol(s)** | **Name of each exchange on which registered** |
| **Common Stock, $0.01 par value per share** | **CDNS** | **Nasdaq Global Select Market** |

---

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

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**Item 2.02. Results of Operations and Financial Condition.**

On February 13, 2023, Cadence Design Systems, Inc. ("Cadence") issued a press release announcing its financial results for the quarter and fiscal year ended December 31, 2022.

A copy of the press release is attached hereto as Exhibit 99.01 and a copy of the commentary by the Chief Financial Officer of Cadence regarding Cadence's financial results for the quarter and fiscal year ended December 31, 2022 is attached hereto as Exhibit 99.02, and the press release and the commentary are incorporated herein by reference.

The information contained in this Current Report shall not be deemed "filed" for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.

**Item 9.01. Financial Statements and Exhibits.**

&nbsp;&nbsp;&nbsp;&nbsp;(d)Exhibits

---

| | |
|:---|:---|
| Exhibit No. | Description |
| <u>[99.01](cdns02132023ex9901.htm)</u> | <u>[Press Release issued by Cadence Design Systems, Inc. on February 13, 2023.](cdns02132023ex9901.htm)</u> |
| <u>[99.02](cfocommentary02132023ex9902.htm)</u> | <u>[CFO Commentary on Results of Quarter and Fiscal Year Ended December 31, 2022.](cfocommentary02132023ex9902.htm)</u> |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |

---

------

**SIGNATURES**

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated: February 13, 2023

---

| | |
|:---|:---|
| CADENCE DESIGN SYSTEMS, INC. | CADENCE DESIGN SYSTEMS, INC. |
| By: | /s/ John M. Wall |
|  | John M. Wall |
|  | Senior Vice President and Chief Financial Officer |

---

## Exhibit 99.01

**Exhibit 99.01**

**Cadence Reports Fourth Quarter and Fiscal Year 2022 Financial Results**

SAN JOSE, Calif. — February 13, 2023 — Cadence Design Systems, Inc. (Nasdaq: CDNS) today announced results for the fourth quarter and fiscal year 2022.

Cadence reported 2022 revenue of $3.562 billion, compared to revenue of $2.988 billion for 2021. On a GAAP basis, Cadence achieved operating margin of 30 percent and recognized net income of $849 million, or $3.09 per share on a diluted basis, in 2022, compared to operating margin of 26 percent and net income of $696 million, or $2.50 per share on a diluted basis for 2021. Revenue for the fourth quarter of 2022 totaled $900 million, compared to revenue of $773 million for the same period in 2021. Cadence achieved operating margin of 23 percent and recognized net income of $240 million, or $0.88 per share on a diluted basis, in the fourth quarter of 2022, compared to operating margin of 25 percent and net income of $177 million, or $0.63 per share on a diluted basis, for the same period in 2021.

Using the non-GAAP measures defined below, operating margin for 2022 was 40 percent and net income was $1.173 billion, or $4.27 per share on a diluted basis, compared to operating margin of 37 percent and net income of $918 million, or $3.29 per share on a diluted basis, for the same period in 2021. For the fourth quarter of 2022, operating margin was 36 percent and net income was $262 million, or $0.96 per share on a diluted basis, compared to operating margin of 36 percent and net income of $227 million, or $0.82 per share on a diluted basis, for the same period in 2021.

"Cadence delivered record results for 2022 driven by our innovative solutions and strong execution to our Intelligent System Design™ strategy," said Anirudh Devgan, president and chief executive officer. "I remain confident in the long-term secular mega-trends that continue to fuel robust design activity across semi and system companies. As we start off 2023, I'm excited about our momentum and look forward to driving further innovation and customer success."

"We delivered another year of strong financial results," said John Wall, senior vice president and chief financial officer. "I am pleased that we exceeded all key operating metrics for 2022, and look forward to building on that strength in 2023."

**CFO Commentary**

Commentary on the fourth quarter and fiscal year 2022 financial results by John Wall, senior vice president and chief financial officer, is available at www.cadence.com/cadence/investor_relations.

**Business Outlook**

For the first quarter of 2023, the company expects total revenue in the range of $1.00 billion to $1.02 billion. First quarter GAAP operating margin is expected to be in the range of 31 percent to 32 percent and GAAP net income per diluted share is expected to be in the range of $0.84 to $0.88. Using the non-GAAP measures defined below, operating margin is expected to be in the range of 41 percent to 42 percent and net income per diluted share is expected to be in the range of $1.23 to $1.27.

For fiscal year 2023, the company expects total revenue in the range of $4.00 billion to $4.06 billion. On a GAAP basis, operating margin for 2023 is expected to be in the range of 30.5 percent to 32.0 percent and GAAP net income per diluted share for 2023 is expected to be in the range of $3.24 to $3.34. Using the non-GAAP measures defined below, operating margin for 2023 is expected to be in the range of 40.5 percent to 42.0 percent and net income per diluted share for 2023 is expected to be in the range of $4.90 to $5.00.

The company utilizes a long-term projected non-GAAP tax rate, which reflects currently available information, as well as other factors and assumptions. The non-GAAP tax rate could be subject to change for a variety of reasons, including the rapidly evolving global tax environment, significant changes in the company's geographic earnings mix, or other changes to the company's strategy or business operations. The company expects to use this

------

normalized non-GAAP tax rate through fiscal 2025 but will re-evaluate this rate periodically for significant items that may materially affect its projections.

A schedule showing reconciliations of the business outlook from GAAP operating margin, GAAP net income and GAAP diluted net income per share to non-GAAP operating margin, non-GAAP net income and non-GAAP diluted net income per share, respectively, is included in this press release.

**Audio Webcast Scheduled**

Anirudh Devgan, president and chief executive officer, and John Wall, senior vice president and chief financial officer, will host the fourth quarter and fiscal year 2022 financial results audio webcast today, February 13, 2023, at 2 p.m. (Pacific) / 5 p.m. (Eastern). Attendees are asked to register at the website at least 10 minutes prior to the scheduled webcast. An archive of the webcast will be available starting February 13, 2023 at 5 p.m. (Pacific) and ending March 17, 2023 at 5 p.m. (Pacific). Webcast access is available at www.cadence.com/cadence/investor_relations.

**About Cadence**

Cadence is a pivotal leader in electronic systems design, building upon more than 30 years of computational software expertise. The company applies its underlying Intelligent System Design strategy to deliver software, hardware and IP that turn design concepts into reality. Cadence customers are the world's most innovative companies, delivering extraordinary products from chips to boards to complete systems for the most dynamic market applications, including hyperscale computing, 5G communications, automotive, mobile, aerospace, consumer, industrial and healthcare. For eight years in a row, Fortune magazine has named Cadence one of the 100 Best Companies to Work For. Learn more at <u>www.cadence.com</u>.

***© 2023 Cadence Design Systems, Inc. All rights reserved worldwide. Cadence, the Cadence logo and the other Cadence marks found at <u>www.cadence.com/go/trademarks</u> are trademarks or registered trademarks of Cadence Design Systems, Inc. All other trademarks are the property of their respective owners.***

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This press release contains forward-looking statements, including Cadence's outlook on future operating results, strategic objectives, business prospects, technology and product developments, industry trends and other statements using words such as "anticipates," "believes," "expects," "intends," "plans," "will," and words of similar import and the negatives thereof. Forward-looking statements are subject to a number of risks, uncertainties and other factors, many of which are outside Cadence's control, and which may cause actual results to differ materially from expectations expressed or implied in the forward-looking statements, including, among others: (i) Cadence's ability to compete successfully in the highly competitive industries in which it operates; (ii) the success of Cadence's efforts to maintain and improve operational efficiency and growth; (iii) the mix of products and services sold, the timing of orders and deliveries and the ability to develop, install or deliver Cadence's products or services; (iv) change in customer demands or supply constraints that could result in delays in purchases, development, installations or deliveries of Cadence's products or services, including those resulting from consolidation, restructurings and other operational efficiency improvements of Cadence's customers; (v) economic, geopolitical and industry conditions, including that of the semiconductor and electronics industries, government regulations and trade restrictions; (vi) capital expenditure requirements, legislative or regulatory requirements, changes in tax laws, interest rates, currency exchange rate fluctuations, inflation rates and Cadence's ability to access capital and debt markets; (vii) the acquisition of other companies, businesses or technologies or the failure to successfully integrate and operate them; (viii) events that affect cash flow, liquidity, or reserves, or settlement assumptions Cadence may take from time to time with respect to accounts receivable, taxes and tax examinations, litigation, regulatory or other matters; (ix) the effects of any litigation, regulatory or other proceedings to which Cadence is or may become a party or to which Cadence or its products, services or properties are subject; and (x) the duration, severity, volatility and effects of the COVID-19 pandemic and containment measures on Cadence, its employees, and its suppliers and customers, which may also have the effect of heightening the other risks described in this paragraph. In addition, the timing and amount of Cadence's repurchases of its common stock are subject to business and market conditions, corporate and regulatory requirements, stock price, acquisition opportunities and other factors.

For a detailed discussion of these and other cautionary statements related to Cadence's business, please refer to Cadence's filings with the U.S. Securities and Exchange Commission, including its most recent reports on Form 10-K and Form 10-Q and future filings.

------

**GAAP to Non-GAAP Reconciliation**

Non-GAAP financial measures should not be considered as a substitute for or superior to measures of financial performance prepared in accordance with generally accepted accounting principles, or GAAP. Investors are encouraged to review the reconciliation of non-GAAP measures contained within this press release with their most directly comparable GAAP results. Investors are also encouraged to look at the GAAP results as the best measure of financial performance.

To supplement Cadence's financial results presented on a GAAP basis, Cadence management uses non-GAAP measures that it believes are helpful in understanding Cadence's performance. One such measure is non-GAAP net income, which is a financial measure not calculated under GAAP. Non-GAAP net income is calculated by Cadence management by taking GAAP net income and excluding, as applicable, amortization of intangible assets, stock-based compensation expense, acquisition and integration-related costs including retention expenses, investment gains or losses, income or expenses related to Cadence's non-qualified deferred compensation plan, restructuring and other significant items not directly related to Cadence's core business operations, and the income tax effect of non-GAAP pre-tax adjustments.

Cadence management uses non-GAAP net income because it excludes items that are generally not directly related to the performance of Cadence's core business operations and therefore provides supplemental information to Cadence management and investors regarding the performance of the business operations, facilitates comparisons to the historical operating results and allows the review of Cadence's business from the same perspective as Cadence management, including forecasting and budgeting.

The following tables reconcile the specific items excluded from GAAP operating margin, GAAP net income and GAAP net income per diluted share in the calculation of non-GAAP operating margin, non-GAAP net income and non-GAAP net income per diluted share for the periods shown below:

---

| | | |
|:---|:---|:---|
| Operating Margin Reconciliation | Three Months Ended | Three Months Ended |
|  | December 31, 2022 | January 1, 2022 |
|  | (unaudited) | (unaudited) |
| GAAP operating margin as a percent of total revenue | 23% | 25% |
| &nbsp;&nbsp;&nbsp;Reconciling items to non-GAAP operating margin as a percent of total revenue: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense | 8% | 7% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of acquired intangibles | 2% | 2% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acquisition and integration-related costs | 2% | 1% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restructuring | 0% | 0% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-qualified deferred compensation expenses | 1% | 1% |
| Non-GAAP operating margin as a percent of total revenue | 36% | 36% |

---

------

---

| | | |
|:---|:---|:---|
| Operating Margin Reconciliation | Years Ended | Years Ended |
|  | December 31, 2022 | January 1, 2022 |
|  | (unaudited) | (unaudited) |
| GAAP operating margin as a percent of total revenue | 30% | 26% |
| &nbsp;&nbsp;&nbsp;Reconciling items to non-GAAP operating margin as a percent of total revenue: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense | 8% | 7% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of acquired intangibles | 2% | 2% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acquisition and integration-related costs | 1% | 1% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restructuring | 0% | 0% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-qualified deferred compensation expenses (credits) | (1)% | 0% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Special charges\* | 0% | 1% |
| Non-GAAP operating margin as a percent of total revenue | 40% | 37% |

---

\* Includes costs related to a voluntary retirement program in the second quarter of 2021.

---

| | | |
|:---|:---|:---|
| Net Income Reconciliation | Three Months Ended | Three Months Ended |
|  | December 31, 2022 | January 1, 2022 |
| (in thousands) | (unaudited) | (unaudited) |
| Net income on a GAAP basis | $240392 | $176579 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense | 73249 | 54230 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of acquired intangibles | 15369 | 16781 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acquisition and integration-related costs | 17510 | 5946 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restructuring | 13 | (80) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-qualified deferred compensation expenses | 3233 | 2205 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other income or expense related to investments and non-qualified deferred compensation plan assets\* | (2584) | (2454) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax effect of non-GAAP adjustments | (85397) | (25834) |
| Net income on a non-GAAP basis | $261785 | $227373 |

---

\* Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense.

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---

| | | |
|:---|:---|:---|
| Net Income Reconciliation | Years Ended | Years Ended |
|  | December 31, 2022 | January 1, 2022 |
| (in thousands) | (unaudited) | (unaudited) |
| Net income on a GAAP basis | $848952 | $695955 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense | 270439 | 210090 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of acquired intangibles | 59818 | 67216 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acquisition and integration-related costs | 41103 | 22413 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restructuring | 55 | (1048) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-qualified deferred compensation expenses (credits) | (8744) | 6163 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Special charges\* |  | 26832 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other income or expense related to investments and non-qualified deferred compensation plan assets\*\* | 14171 | (6745) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax effect of non-GAAP adjustments | (52475) | (102456) |
| Net income on a non-GAAP basis | $1173319 | $918420 |

---

\* Includes costs related to a voluntary retirement program in the second quarter of 2021.

\*\* Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense.

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| | | |
|:---|:---|:---|
| Diluted Net Income Per Share Reconciliation | Three Months Ended | Three Months Ended |
|  | December 31, 2022 | January 1, 2022 |
| (in thousands, except per share data) | (unaudited) | (unaudited) |
| Diluted net income per share on a GAAP basis | $0.88 | $0.63 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense | 0.27 | 0.20 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of acquired intangibles | 0.06 | 0.06 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acquisition and integration-related costs | 0.06 | 0.02 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restructuring |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-qualified deferred compensation expenses | 0.01 | 0.01 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other income or expense related to investments and non-qualified deferred compensation plan assets\* | (0.01) | (0.01) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax effect of non-GAAP adjustments | (0.31) | (0.09) |
| Diluted net income per share on a non-GAAP basis | $0.96 | $0.82 |
| Shares used in calculation of diluted net income per share | 272997 | 278253 |

---

\* Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense.

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---

| | | |
|:---|:---|:---|
| Diluted Net Income Per Share Reconciliation | Years Ended | Years Ended |
|  | December 31, 2022 | January 1, 2022 |
| (in thousands, except per share data) | (unaudited) | (unaudited) |
| Diluted net income per share on a GAAP basis | $3.09 | $2.50 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense | 0.98 | 0.75 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of acquired intangibles | 0.22 | 0.24 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acquisition and integration-related costs | 0.15 | 0.08 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restructuring |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Non-qualified deferred compensation expenses (credits) | (0.03) | 0.02 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Special charges\* |  | 0.10 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other income or expense related to investments and non-qualified deferred compensation plan assets\*\* | 0.05 | (0.03) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax effect of non-GAAP adjustments | (0.19) | (0.37) |
| Diluted net income per share on a non-GAAP basis | $4.27 | $3.29 |
| Shares used in calculation of diluted net income per share | 275011 | 278858 |

---

\* Includes costs related to a voluntary retirement program in the second quarter of 2021.

\*\* Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense.

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Cadence expects that its corporate representatives will meet privately during the quarter with investors, the media, investment analysts and others. At these meetings, Cadence may reiterate the business outlook published in this press release. At the same time, Cadence will keep this press release, including the business outlook, publicly available on its website.

Prior to the start of the Quiet Period (described below), the public may continue to rely on the business outlook contained herein as still being Cadence's current expectations on matters covered unless Cadence publishes a notice stating otherwise.

Beginning March 17, 2023, Cadence will observe a Quiet Period during which the business outlook as provided in this press release and the most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q no longer constitute Cadence's current expectations. During the Quiet Period, the business outlook in these documents should be considered historical, speaking as of prior to the Quiet Period only and not subject to any update by Cadence. During the Quiet Period, Cadence's representatives will not comment on Cadence's business outlook, financial results or expectations. The Quiet Period will extend until Cadence's first quarter 2023 earnings release is published, which is currently scheduled for April 24, 2023.

For more information, please contact:

Cadence Investor Relations

408-944-7100

<u>investor_relations@cadence.com</u>

Cadence Newsroom

408-944-7039

<u>newsroom@cadence.com</u>

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**Cadence Design Systems, Inc.**

**Condensed Consolidated Balance Sheets**

**December 31, 2022 and January 1, 2022** 

**(In thousands)**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
| | **December 31, 2022** | **January 1, 2022** |
| Current assets: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash and cash equivalents | $882325 | $1088940 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Receivables, net | 486710 | 337596 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories | 128005 | 115721 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other | 209727 | 173512 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current assets | 1706767 | 1715769 |
| Property, plant and equipment, net | 371451 | 305911 |
| Goodwill | 1374268 | 928358 |
| Acquired intangibles, net | 354617 | 233265 |
| Deferred taxes | 853691 | 763770 |
| Other assets | 476277 | 439226 |
| Total assets | $5137071 | $4386299 |
| Current liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revolving credit facility | $100000 | $— |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities | 557158 | 417283 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current portion of deferred revenue | 690538 | 553942 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total current liabilities | 1347696 | 971225 |
| Long-term liabilities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long-term portion of deferred revenue | 91524 | 101148 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Long-term debt | 648078 | 347588 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other long-term liabilities | 304660 | 225663 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total long-term liabilities | 1044262 | 674399 |
| Stockholders' equity | 2745113 | 2740675 |
| Total liabilities and stockholders' equity | $5137071 | $4386299 |

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**Cadence Design Systems, Inc.**

**Condensed Consolidated Income Statements**

**For the Three Months and Years Ended December 31, 2022 and January 1, 2022** 

**(In thousands, except per share amounts)**

**(Unaudited)**

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| | | | | |
|:---|:---|:---|:---|:---|
| | **Three Months Ended** | **Three Months Ended** | **Years Ended** | **Years Ended** |
| | **December 31, 2022** | **January 1, 2022** | **December 31, 2022** | **January 1, 2022** |
| Revenue: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Product and maintenance | $845880 | $719849 | $3340197 | $2812947 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Services | 53997 | 53187 | 221521 | 175297 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total revenue | 899877 | 773036 | 3561718 | 2988244 |
| Costs and expenses: |  |  |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of product and maintenance | 69702 | 47714 | 273565 | 222647 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of services | 23813 | 21979 | 98058 | 84359 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Marketing and sales | 171817 | 148068 | 604224 | 560262 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Research and development | 350423 | 288953 | 1251544 | 1134277 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;General and administrative | 68065 | 65743 | 242116 | 189018 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of acquired intangibles | 4927 | 4979 | 18470 | 19640 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Restructuring | 13 | (80) | 55 | (1048) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Total costs and expenses | 688760 | 577356 | 2488032 | 2209155 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income from operations | 211117 | 195680 | 1073686 | 779089 |
| Interest expense | (9082) | (4251) | (22934) | (16980) |
| Other income (expense), net | 8490 | 2625 | (5389) | 6326 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income before provision (benefit) for income taxes | 210525 | 194054 | 1045363 | 768435 |
| Provision (benefit) for income taxes | (29867) | 17475 | 196411 | 72480 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income | $240392 | $176579 | $848952 | $695955 |
| Net income per share - basic | $0.89 | $0.65 | $3.13 | $2.54 |
| Net income per share - diluted | $0.88 | $0.63 | $3.09 | $2.50 |
| Weighted average common shares outstanding - basic | 269709 | 273066 | 271198 | 273504 |
| Weighted average common shares outstanding - diluted | 272997 | 278253 | 275011 | 278858 |

---

------

**Cadence Design Systems, Inc.**

**Condensed Consolidated Statements of Cash Flows**

**For the Years Ended December 31, 2022 and January 1, 2022**

**(In thousands)**

**(Unaudited)** 

---

| | | |
|:---|:---|:---|
| | **Years Ended** | **Years Ended** |
| | **December 31, 2022** | **January 1, 2022** |
| Cash and cash equivalents at beginning of year | $1088940 | $928432 |
| Cash flows from operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;Net income | 848952 | 695955 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Adjustments to reconcile net income to net cash provided by operating activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Depreciation and amortization | 132088 | 142308 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of debt discount and fees | 1134 | 1219 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation | 270439 | 210090 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;(Gain) loss on investments, net | 5425 | (580) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes | (107606) | (43178) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Provisions for losses on receivables | 204 | 525 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;ROU asset amortization and change in operating lease liabilities | 3342 | (11606) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other non-cash items | 371 | 427 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Changes in operating assets and liabilities, net of effect of acquired businesses: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Receivables | (138471) | 2014 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Inventories | (23073) | (39027) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prepaid expenses and other | (38927) | (34342) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other assets | (933) | (7133) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts payable and accrued liabilities | 113945 | 67356 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred revenue | 131462 | 100731 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other long-term liabilities | 43542 | 16199 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash provided by operating activities | 1241894 | 1100958 |
| Cash flows from investing activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchases of non-marketable investments | (1000) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from the sale of non-marketable investments | 366 | 128 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchases of property, plant and equipment | (123215) | (65298) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Purchases of intangible assets | (1000) | (1583) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash paid in business combinations, net of cash acquired | (613785) | (226201) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used for investing activities | (738634) | (292954) |
| Cash flows from financing activities: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from revolving credit facility | 585000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payments on revolving credit facility | (485000) |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from term loan | 300000 |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payment of debt issuance costs | (425) | (1285) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Proceeds from issuance of common stock | 105331 | 87772 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock received for payment of employee taxes on vesting of restricted stock | (111864) | (117982) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Payments for repurchases of common stock | (1050091) | (612297) |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net cash used for financing activities | (657049) | (643792) |
| Effect of exchange rate changes on cash and cash equivalents | (52826) | (3704) |
| Increase (decrease) in cash and cash equivalents | (206615) | 160508 |
| Cash and cash equivalents at end of year | $882325 | $1088940 |

---

------

**Cadence Design Systems, Inc.**

**(Unaudited)**

**Revenue Mix by Geography (% of Total Revenue)**

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **2021** | **2021** | **2021** | **2021** | **2021** | **2022** | **2022** | **2022** | **2022** | **2022** |
| **GEOGRAPHY** | **Q1** | **Q2** | **Q3** | **Q4** | **Year** | **Q1** | **Q2** | **Q3** | **Q4** | **Year** |
| &nbsp;&nbsp;&nbsp;Americas | 46% | 44% | 46% | 43% | **45%** | 47% | 45% | 45% | 46% | **46%** |
| &nbsp;&nbsp;&nbsp;China | 12% | 14% | 13% | 12% | **13%** | 16% | 13% | 17% | 13% | **15%** |
| &nbsp;&nbsp;&nbsp;Other Asia | 18% | 19% | 18% | 21% | **19%** | 18% | 18% | 17% | 18% | **18%** |
| &nbsp;&nbsp;&nbsp;Europe, Middle East and Africa | 18% | 17% | 17% | 18% | **17%** | 14% | 18% | 16% | 17% | **16%** |
| &nbsp;&nbsp;&nbsp;Japan | 6% | 6% | 6% | 6% | **6%** | 5% | 6% | 5% | 6% | **5%** |
| **Total** | **100%** | **100%** | **100%** | **100%** | **100%** | **100%** | **100%** | **100%** | **100%** | **100%** |

---

**Revenue Mix by Product Category (% of Total Revenue)**

---

| | | | | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|:---|
| | **2021** | **2021** | **2021** | **2021** | **2021** | **2022** | **2022** | **2022** | **2022** | **2022** |
| **PRODUCT CATEGORY** | **Q1** | **Q2** | **Q3** | **Q4** | **Year** | **Q1** | **Q2** | **Q3** | **Q4** | **Year** |
| &nbsp;&nbsp;&nbsp;Custom IC Design and Simulation | 23% | 23% | 23% | 24% | **23%** | 22% | 23% | 22% | 22% | **22%** |
| &nbsp;&nbsp;&nbsp;Digital IC Design and Signoff | 27% | 28% | 29% | 29% | **29%** | 27% | 27% | 29% | 28% | **28%** |
| &nbsp;&nbsp;&nbsp;Functional Verification, including Emulation and Prototyping Hardware | 26% | 25% | 23% | 21% | **24%** | 28% | 24% | 25% | 25% | **26%** |
| &nbsp;&nbsp;&nbsp;IP | 14% | 13% | 14% | 14% | **13%** | 13% | 14% | 12% | 12% | **12%** |
| &nbsp;&nbsp;&nbsp;System Design and Analysis | 10% | 11% | 11% | 12% | **11%** | 10% | 12% | 12% | 13% | **12%** |
| **Total** | **100%** | **100%** | **100%** | **100%** | **100%** | **100%** | **100%** | **100%** | **100%** | **100%** |

---

------

**Cadence Design Systems, Inc.**

**Impact of Non-GAAP Adjustments on Forward Looking Operating Margin**

**As of February 13, 2023**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
| | **Three Months Ending<br>March 31, 2023** | **Year Ending<br>December 31, 2023** |
| | **Forecast** | **Forecast** |
| GAAP operating margin as a percent of total revenue | **31% - 32%** | **30.5% - 32.0%** |
| Reconciling items to non-GAAP operating margin as a percent of total revenue: |  |  |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense | 8% | 8% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of acquired intangibles | 1% | 1% |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acquisition and integration-related costs | 1% | 1% |
| Non-GAAP operating margin as a percent of total revenue† | 41% - 42% | 40.5% - 42.0% |

---

**†** **The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.**

------

**Cadence Design Systems, Inc.**

**Impact of Non-GAAP Adjustments on Forward Looking Diluted Net Income Per Share**

**As of February 13, 2023**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
| | **Three Months Ending<br>March 31, 2023** | **Year Ending<br>December 31, 2023** |
| | **Forecast** | **Forecast** |
| Diluted net income per share on a GAAP basis | **$0.84 to $0.88** | **$3.24 to $3.34** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense | 0.28 | 1.21 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of acquired intangibles | 0.05 | 0.21 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acquisition and integration-related costs | 0.05 | 0.15 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax effect of non-GAAP adjustments | 0.01 | 0.09 |
| Diluted net income per share on a non-GAAP basis† | $1.23 to $1.27 | $4.90 to $5.00 |

---

**Cadence Design Systems, Inc.**

**Impact of Non-GAAP Adjustments on Forward Looking Net Income**

**As of February 13, 2023**

**(Unaudited)**

---

| | | |
|:---|:---|:---|
| | **Three Months Ending<br>March 31, 2023** | **Year Ending<br>December 31, 2023** |
| **($ in millions)** | **Forecast** | **Forecast** |
| Net income on a GAAP basis | **$230 to $241** | **$886 to $913** |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock-based compensation expense | 77 | 330 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Amortization of acquired intangibles | 15 | 58 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Acquisition and integration-related costs | 13 | 40 |
| &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Income tax effect of non-GAAP adjustments | 1 | 24 |
| Net income on a non-GAAP basis† | $336 to $347 | $1,338 to $1,365 |

---

---

| | |
|:---|:---|
| † | **The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP**. |

---

## Exhibit 99.02

**Exhibit 99.02**

![image0a22.jpg](image0a22.jpg)

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| **CADENCE REPORTS FOURTH QUARTER<br>AND FISCAL YEAR 2022** | **CADENCE REPORTS FOURTH QUARTER<br>AND FISCAL YEAR 2022** | **CADENCE REPORTS FOURTH QUARTER<br>AND FISCAL YEAR 2022** |  |  |  |
| CADENCE DESIGN SYSTEMS, INC. | CADENCE DESIGN SYSTEMS, INC. | CADENCE DESIGN SYSTEMS, INC. |  |  |  |
| **CFO COMMENTARY** |  |  |  |  |  |
| **Key Takeaways for 2022**<br>• All businesses performing well; 3-year revenue CAGR > 15%.<br>• Non-GAAP Operating Margin >40%; GAAP Operating Margin >30%.<br>• Non-GAAP EPS up ~30%; GAAP EPS up ~24%. | **Q1 2023 Outlook** <br>• Revenue : $1.00 - $1.02 billion.<br>• GAAP operating margin: 31% - 32%.<br>• Non-GAAP operating margin: 41%- 42%. <br>• GAAP EPS: $0.84 - $0.88<br>• Non-GAAP EPS: $1.23 - $1.27<br>• Expect to repurchase approximately $125 million of Cadence shares in Q1. | &nbsp;&nbsp;&nbsp;**Q4 2022 KEY METRICS** |  |  |  |
| **Key Takeaways for 2022**<br>• All businesses performing well; 3-year revenue CAGR > 15%.<br>• Non-GAAP Operating Margin >40%; GAAP Operating Margin >30%.<br>• Non-GAAP EPS up ~30%; GAAP EPS up ~24%. | **Q1 2023 Outlook** <br>• Revenue : $1.00 - $1.02 billion.<br>• GAAP operating margin: 31% - 32%.<br>• Non-GAAP operating margin: 41%- 42%. <br>• GAAP EPS: $0.84 - $0.88<br>• Non-GAAP EPS: $1.23 - $1.27<br>• Expect to repurchase approximately $125 million of Cadence shares in Q1. | **• Revenue $900 million**<br>**• GAAP operating margin 23%**<br>**• Non-GAAP operating margin 36%**<br>**• GAAP EPS $0.88**<br>**• Non-GAAP EPS $0.96**<br>**• Operating cash flow $264 million** |  |  |  |
| **Key Takeaways for 2022**<br>• All businesses performing well; 3-year revenue CAGR > 15%.<br>• Non-GAAP Operating Margin >40%; GAAP Operating Margin >30%.<br>• Non-GAAP EPS up ~30%; GAAP EPS up ~24%. | **Q1 2023 Outlook** <br>• Revenue : $1.00 - $1.02 billion.<br>• GAAP operating margin: 31% - 32%.<br>• Non-GAAP operating margin: 41%- 42%. <br>• GAAP EPS: $0.84 - $0.88<br>• Non-GAAP EPS: $1.23 - $1.27<br>• Expect to repurchase approximately $125 million of Cadence shares in Q1. | **• Revenue $900 million**<br>**• GAAP operating margin 23%**<br>**• Non-GAAP operating margin 36%**<br>**• GAAP EPS $0.88**<br>**• Non-GAAP EPS $0.96**<br>**• Operating cash flow $264 million** | **FY 2023 Outlook**<br>• Revenue: $4.00 - $4.06 billion.<br>• GAAP operating margin: 30.5% - 32.0%.<br>• Non-GAAP operating margin: 40.5% - 42.0%.<br>• GAAP EPS: $3.24 - $3.34<br>• Non-GAAP EPS $4.90 - $5.00<br>• Operating cash flow: $1.3 - $1.4 billion.<br>• Expect to use approximately 50% of free cash flow to repurchase Cadence shares for the year. | **Financial Results Webcast** | **FY 2022 KEY METRICS** |
| **Key Takeaways for 2022**<br>• All businesses performing well; 3-year revenue CAGR > 15%.<br>• Non-GAAP Operating Margin >40%; GAAP Operating Margin >30%.<br>• Non-GAAP EPS up ~30%; GAAP EPS up ~24%. | **Q1 2023 Outlook** <br>• Revenue : $1.00 - $1.02 billion.<br>• GAAP operating margin: 31% - 32%.<br>• Non-GAAP operating margin: 41%- 42%. <br>• GAAP EPS: $0.84 - $0.88<br>• Non-GAAP EPS: $1.23 - $1.27<br>• Expect to repurchase approximately $125 million of Cadence shares in Q1. | **• Revenue $900 million**<br>**• GAAP operating margin 23%**<br>**• Non-GAAP operating margin 36%**<br>**• GAAP EPS $0.88**<br>**• Non-GAAP EPS $0.96**<br>**• Operating cash flow $264 million** | **FY 2023 Outlook**<br>• Revenue: $4.00 - $4.06 billion.<br>• GAAP operating margin: 30.5% - 32.0%.<br>• Non-GAAP operating margin: 40.5% - 42.0%.<br>• GAAP EPS: $3.24 - $3.34<br>• Non-GAAP EPS $4.90 - $5.00<br>• Operating cash flow: $1.3 - $1.4 billion.<br>• Expect to use approximately 50% of free cash flow to repurchase Cadence shares for the year. | &nbsp;&nbsp;Our Q4 2022 financial results webcast will begin February 13, 2023 at 2:00 p.m. (Pacific). The webcast may be accessed at www.cadence.com/cadence/investor_relations. An archive of the webcast will be available on February 13, 2023 until 5:00 p.m. (Pacific) on March 17, 2023. | **• Revenue $3.562 billion**<br>**• GAAP operating margin 30%**<br>**• Non-GAAP operating margin 40%**<br>**• GAAP EPS $3.09**<br>**• Non-GAAP EPS $4.27**<br>**• Operating cash flow $1.242 billion** |
| **Key Takeaways for 2022**<br>• All businesses performing well; 3-year revenue CAGR > 15%.<br>• Non-GAAP Operating Margin >40%; GAAP Operating Margin >30%.<br>• Non-GAAP EPS up ~30%; GAAP EPS up ~24%. | **Q1 2023 Outlook** <br>• Revenue : $1.00 - $1.02 billion.<br>• GAAP operating margin: 31% - 32%.<br>• Non-GAAP operating margin: 41%- 42%. <br>• GAAP EPS: $0.84 - $0.88<br>• Non-GAAP EPS: $1.23 - $1.27<br>• Expect to repurchase approximately $125 million of Cadence shares in Q1. | **• Revenue $900 million**<br>**• GAAP operating margin 23%**<br>**• Non-GAAP operating margin 36%**<br>**• GAAP EPS $0.88**<br>**• Non-GAAP EPS $0.96**<br>**• Operating cash flow $264 million** | **FY 2023 Outlook**<br>• Revenue: $4.00 - $4.06 billion.<br>• GAAP operating margin: 30.5% - 32.0%.<br>• Non-GAAP operating margin: 40.5% - 42.0%.<br>• GAAP EPS: $3.24 - $3.34<br>• Non-GAAP EPS $4.90 - $5.00<br>• Operating cash flow: $1.3 - $1.4 billion.<br>• Expect to use approximately 50% of free cash flow to repurchase Cadence shares for the year. | &nbsp;&nbsp;Our Q4 2022 financial results webcast will begin February 13, 2023 at 2:00 p.m. (Pacific). The webcast may be accessed at www.cadence.com/cadence/investor_relations. An archive of the webcast will be available on February 13, 2023 until 5:00 p.m. (Pacific) on March 17, 2023. | **• Revenue $3.562 billion**<br>**• GAAP operating margin 30%**<br>**• Non-GAAP operating margin 40%**<br>**• GAAP EPS $3.09**<br>**• Non-GAAP EPS $4.27**<br>**• Operating cash flow $1.242 billion** |
| **Key Takeaways for 2022**<br>• All businesses performing well; 3-year revenue CAGR > 15%.<br>• Non-GAAP Operating Margin >40%; GAAP Operating Margin >30%.<br>• Non-GAAP EPS up ~30%; GAAP EPS up ~24%. | **Q1 2023 Outlook** <br>• Revenue : $1.00 - $1.02 billion.<br>• GAAP operating margin: 31% - 32%.<br>• Non-GAAP operating margin: 41%- 42%. <br>• GAAP EPS: $0.84 - $0.88<br>• Non-GAAP EPS: $1.23 - $1.27<br>• Expect to repurchase approximately $125 million of Cadence shares in Q1. | **• Revenue $900 million**<br>**• GAAP operating margin 23%**<br>**• Non-GAAP operating margin 36%**<br>**• GAAP EPS $0.88**<br>**• Non-GAAP EPS $0.96**<br>**• Operating cash flow $264 million** | **FY 2023 Outlook**<br>• Revenue: $4.00 - $4.06 billion.<br>• GAAP operating margin: 30.5% - 32.0%.<br>• Non-GAAP operating margin: 40.5% - 42.0%.<br>• GAAP EPS: $3.24 - $3.34<br>• Non-GAAP EPS $4.90 - $5.00<br>• Operating cash flow: $1.3 - $1.4 billion.<br>• Expect to use approximately 50% of free cash flow to repurchase Cadence shares for the year. | &nbsp;&nbsp;Our Q4 2022 financial results webcast will begin February 13, 2023 at 2:00 p.m. (Pacific). The webcast may be accessed at www.cadence.com/cadence/investor_relations. An archive of the webcast will be available on February 13, 2023 until 5:00 p.m. (Pacific) on March 17, 2023. | **• Revenue $3.562 billion**<br>**• GAAP operating margin 30%**<br>**• Non-GAAP operating margin 40%**<br>**• GAAP EPS $3.09**<br>**• Non-GAAP EPS $4.27**<br>**• Operating cash flow $1.242 billion** |
| **Key Takeaways for 2022**<br>• All businesses performing well; 3-year revenue CAGR > 15%.<br>• Non-GAAP Operating Margin >40%; GAAP Operating Margin >30%.<br>• Non-GAAP EPS up ~30%; GAAP EPS up ~24%. | **Q1 2023 Outlook** <br>• Revenue : $1.00 - $1.02 billion.<br>• GAAP operating margin: 31% - 32%.<br>• Non-GAAP operating margin: 41%- 42%. <br>• GAAP EPS: $0.84 - $0.88<br>• Non-GAAP EPS: $1.23 - $1.27<br>• Expect to repurchase approximately $125 million of Cadence shares in Q1. | **• Revenue $900 million**<br>**• GAAP operating margin 23%**<br>**• Non-GAAP operating margin 36%**<br>**• GAAP EPS $0.88**<br>**• Non-GAAP EPS $0.96**<br>**• Operating cash flow $264 million** | **FY 2023 Outlook**<br>• Revenue: $4.00 - $4.06 billion.<br>• GAAP operating margin: 30.5% - 32.0%.<br>• Non-GAAP operating margin: 40.5% - 42.0%.<br>• GAAP EPS: $3.24 - $3.34<br>• Non-GAAP EPS $4.90 - $5.00<br>• Operating cash flow: $1.3 - $1.4 billion.<br>• Expect to use approximately 50% of free cash flow to repurchase Cadence shares for the year. | &nbsp;&nbsp;Our Q4 2022 financial results webcast will begin February 13, 2023 at 2:00 p.m. (Pacific). The webcast may be accessed at www.cadence.com/cadence/investor_relations. An archive of the webcast will be available on February 13, 2023 until 5:00 p.m. (Pacific) on March 17, 2023. | **• Revenue $3.562 billion**<br>**• GAAP operating margin 30%**<br>**• Non-GAAP operating margin 40%**<br>**• GAAP EPS $3.09**<br>**• Non-GAAP EPS $4.27**<br>**• Operating cash flow $1.242 billion** |
| **Key Takeaways for 2022**<br>• All businesses performing well; 3-year revenue CAGR > 15%.<br>• Non-GAAP Operating Margin >40%; GAAP Operating Margin >30%.<br>• Non-GAAP EPS up ~30%; GAAP EPS up ~24%. | **Q1 2023 Outlook** <br>• Revenue : $1.00 - $1.02 billion.<br>• GAAP operating margin: 31% - 32%.<br>• Non-GAAP operating margin: 41%- 42%. <br>• GAAP EPS: $0.84 - $0.88<br>• Non-GAAP EPS: $1.23 - $1.27<br>• Expect to repurchase approximately $125 million of Cadence shares in Q1. | **• Revenue $900 million**<br>**• GAAP operating margin 23%**<br>**• Non-GAAP operating margin 36%**<br>**• GAAP EPS $0.88**<br>**• Non-GAAP EPS $0.96**<br>**• Operating cash flow $264 million** | **FY 2023 Outlook**<br>• Revenue: $4.00 - $4.06 billion.<br>• GAAP operating margin: 30.5% - 32.0%.<br>• Non-GAAP operating margin: 40.5% - 42.0%.<br>• GAAP EPS: $3.24 - $3.34<br>• Non-GAAP EPS $4.90 - $5.00<br>• Operating cash flow: $1.3 - $1.4 billion.<br>• Expect to use approximately 50% of free cash flow to repurchase Cadence shares for the year. | &nbsp;&nbsp;Our Q4 2022 financial results webcast will begin February 13, 2023 at 2:00 p.m. (Pacific). The webcast may be accessed at www.cadence.com/cadence/investor_relations. An archive of the webcast will be available on February 13, 2023 until 5:00 p.m. (Pacific) on March 17, 2023. | **• Revenue $3.562 billion**<br>**• GAAP operating margin 30%**<br>**• Non-GAAP operating margin 40%**<br>**• GAAP EPS $3.09**<br>**• Non-GAAP EPS $4.27**<br>**• Operating cash flow $1.242 billion** |

---

 <br> February 13, 2023 Cadence Q4 and Fiscal Year 2022 Financial Results 1

------

Cadence Design Systems, Inc. <br>

**Financial Metrics**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| (In Millions, except per share data) | **2017\*** | **2018** | **2019** | **2020\*** | **2021** | **2022** | **2023E\*** |
| Revenue | $1943 | $2138 | $2336 | $2683 | $2988 | $3562 | $4000- $4060 |
| Revenue growth\* | **7%** | **10%** | **9%** | **15%** | **11%** | **19%** | **12% - 14%** |
| 3-year CAGR | 7% | 8% | 9% | 11% | 12% | 15% | ~15% |
| 3-year CAGR without 53rd week impact | **8%** |  |  | **11%** |  |  | **~15%** |
| **GAAP operating expenses** | $**1619** | $**1742** | $**1845** | $**2037** | $**2209** | $**2488** | **~$2,796** |
| **GAAP operating expense growth** | **3%** | **8%** | **6%** | **10%** | **8%** | **13%** | **~12%** |
| Non-GAAP operating expenses | $1409 | $1491 | $1587 | $1739 | $1877 | $2125 | ~$2,368 |
| Non-GAAP operating expense growth | 5% | 6% | 6% | 10% | 8% | 13% | ~11% |
| **GAAP operating margin** | **17%** | **19%** | **21%** | **24%** | **26%** | **30%** |  |
| **Implied GAAP operating margin\*\*** |  |  |  |  |  |  | **31.25%** |
| Non-GAAP operating margin | 28% | 30% | 32% | 35% | 37% | 40% |  |
| Implied Non-GAAP operating margin\*\* |  |  |  |  |  |  | 41.25% |
| **GAAP earnings per share** | $**0.73** | $**1.23** | $**3.53** | $**2.11** | $**2.50** | $**3.09** | **$3.24 - $3.34** |
| Non-GAAP earning per share | $1.40 | $1.87 | $2.20 | $2.80 | $3.29 | $4.27 | $4.90 - $5.00 |
| Weighted average shares diluted outstanding | 280.2 | 281.1 | 280.5 | 279.6 | 278.9 | 275.0 | 272 - 274 |
| Cash flow from operations | 471 | 605 | 730 | 905 | 1101 | 1242 | $1300 - $1400 |
| Capital expenditures | 58 | 62 | 75 | 95 | 65 | 123 | ~$120 |

---

\* Fiscal 2014 and 2020 were 53-week years, compared to all other years which are 52 week years. 2020 (which impacts the 3 year CAGR in 2023) included approximately $45 million revenue impact for the extra week. 2014 revenue (which impacts the 3 year CAGR in 2017) included approximately $27 million revenue impact for the extra week.

\*\* At midpoint of guidance.

**Profitability Trends**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| (In Millions) | **2017** | **2018** | **2019** | **2020** | **2021** | **2022** | **2023E\*** |
| Revenue | $1943 | $2138 | $2336 | $2683 | $2988 | $3562 | $4030 |
| Revenue Growth | 7% | 10% | 9% | 15% | 11% | 19% | ~13% |
| 3-Year Revenue Growth CAGR | 7% | 8% | 9% | 11% | 12% | 15% | ~15% |
| **GAAP operating margin** | **17%** | **19%** | **21%** | **24%** | **26%** | **30%** | **31.25%** |
| **Non-GAAP operating margin** | **28%** | **30%** | **32%** | **35%** | **37%** | **40%** | **41.25%** |
| Stock-based compensation | (7)% | (8)% | (8)% | (7)% | (7)% | (8)% | ~(8)% |
| Non-GAAP operating margin adjusted for stock-based compensation | 21% | 22% | 24% | 28% | 30% | 32% | 33.25% |
| **GAAP operating income** | $**324** | $**396** | $**492** | $**646** | $**779** | $**1074** | $**1234** |
| **Non-GAAP operating income** | $**534** | $**647** | $**749** | $**944** | $**1111** | $**1436** | $**1662** |
| **Non-GAAP operating income adjusted for stock-based compensation** | $**404** | $**479** | $**567** | $**747** | $**901** | $**1166** | $**1332** |

---

\* At midpoint of guidance.

February 13, 2023 Cadence Q4 and Fiscal Year 2022 Financial Results 2

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Cadence Design Systems, Inc. <br>

**First Quarter 2023 Financial Outlook** 

---

| | | | |
|:---|:---|:---|:---|
| | **Q1 2022** | **Q4 2022** | **Q1 2023E** |
| Total Revenue ($ Millions) | $902 | $900 | $1000 - $1020 |
| &nbsp;&nbsp;&nbsp;&nbsp;Q/Q Growth |  | 0% | 11% - 13% |
| &nbsp;&nbsp;&nbsp;&nbsp;Y/Y Growth |  | 16% | 11% - 13% |
| **GAAP Operating Margin** | **35%** | **23%** | **31% -32%** |
| Non-GAAP Operating Margin | 44% | 36% | 41% - 42% |
| **GAAP EPS** | $**0.85** | $**0.88** | **$0.84 - $0.88** |
| Non-GAAP EPS | $1.17 | $0.96 | $1.23 - $1.27 |

---

**Fiscal Year 2023 Financial Outlook**

---

| | | |
|:---|:---|:---|
| | **FY 2022** | **FY 2023E** |
| Recurring Revenue | ~85% | ~85% |
| Total Revenue ($ Millions) | $3562 | $4000 - $4060 |
| &nbsp;&nbsp;&nbsp;&nbsp;Y/Y Growth | 19% | 12% - 14% |
| Revenue from Beginning Backlog | ~70% | ~75% |
| **GAAP Operating Margin** | **30.1%** | **30.5% - 32.0%** |
| Non-GAAP Operating Margin | 40.3% | 40.5% - 42.0% |
| **GAAP Other Income & Expense ($ Millions)** | $**(28)** | **$(21) - $(29)** |
| Non-GAAP Other Income & Expense ($ Millions) | $(14) | $(21) - $(29) |
| **GAAP Tax Rate** | **19%** | **~26%** |
| Non-GAAP Tax Rate | 17.5% | 17.5% |
| Weighted Average Diluted Shares Outstanding (Millions) | 275.0 | 272 - 274 |
| **GAAP EPS** | $**3.09** | **$3.24 - $3.34** |
| **Y/Y Growth** | **24%** | **5% - 8%** |
| Non-GAAP EPS | $4.27 | $4.90 - $5.00 |
| &nbsp;&nbsp;&nbsp;&nbsp;Y/Y Growth | 30% | 15% - 17% |
| Cash Flow from Operations ($ Millions) | $1242 | $1300 - $1400 |
| DSO | 49 | ~45 |
| Capital Expenditures ($ Millions) | $123 | ~$120 |

---

February 13, 2023 Cadence Q4 and Fiscal Year 2022 Financial Results 3

------

Cadence Design Systems, Inc. <br>

**Fourth Quarter and Fiscal Year Financial Results**

Backlog

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| (In Billions) | **2018** | **2019** | **2020** | **2021** | **2022** |
| Backlog | $3.0 | $3.6 | $3.9 | $4.4 | $5.8 |

---

Revenue

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| (In Millions) | **Q4 2021** | **Q1 2022** | **Q2 2022** | **Q3 2022** | **Q4 2022** |
| Product and Maintenance | $720 | $846 | $803 | $846 | $846 |
| Services | 53 | 56 | 55 | 57 | 54 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total Revenue | $773 | $902 | $858 | $903 | $900 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| (In Millions) | **2018** | **2019** | **2020\*** | **2021** | **2022** |
| Product and Maintenance | $1998 | $2204 | $2537 | $2813 | $3340 |
| Services | 140 | 132 | 146 | 175 | 222 |
| &nbsp;&nbsp;&nbsp;&nbsp;Total Revenue | $2138 | $2336 | $2683 | $2988 | $3562 |

---

\* Fiscal 2020 was a 53-week year.

Recurring and Up-Front Revenue

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Q4 2021** | **Q1 2022** | **Q2 2022** | **Q3 2022** | **Q4 2022** |
| Revenue recognized over time | 88% | 81% | 84% | 81% | 84% |
| Revenue from arrangements with non-cancelable commitments | 3% | 2% | 2% | 3% | 3% |
| &nbsp;&nbsp;&nbsp;Recurring Revenue | 91% | 83% | 86% | 84% | 87% |
| Up-Front Revenue | 9% | 17% | 14% | 16% | 13% |
| &nbsp;&nbsp;&nbsp;Total | 100% | 100% | 100% | 100% | 100% |

---

---

| | | | |
|:---|:---|:---|:---|
| | **2020** | **2021** | **2022** |
| Revenue recognized over time | 85% | 85% | 83% |
| Revenue from arrangements with non-cancelable commitments | 3% | 3% | 2% |
| &nbsp;&nbsp;&nbsp;Recurring Revenue | 88% | 88% | 85% |
| Up-Front Revenue | 12% | 12% | 15% |
| &nbsp;&nbsp;&nbsp;Total | 100% | 100% | 100% |

---

Trailing Twelve Months Recurring and Up-Front Revenue

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Trailing Twelve Months Ended** | **Trailing Twelve Months Ended** | **Trailing Twelve Months Ended** | **Trailing Twelve Months Ended** | **Trailing Twelve Months Ended** |
| | **Q4 2021** | **Q1 2022** | **Q2 2022** | **Q3 2022** | **Q4 2022** |
| Recurring Revenue | 88% | 87% | 87% | 86% | 85% |
| Up-Front Revenue | 12% | 13% | 13% | 14% | 15% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | 100% | 100% | 100% | 100% | 100% |

---

February 13, 2023 Cadence Q4 and Fiscal Year 2022 Financial Results 4

------

Cadence Design Systems, Inc. <br>

Revenue Mix by Geography

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(% of Total Revenue)* | **Q4 2021** | **Q1 2022** | **Q2 2022** | **Q3 2022** | **Q4 2022** |
| Americas | 43% | 47% | 45% | 45% | 46% |
| China | 12% | 16% | 13% | 17% | 13% |
| Other Asia | 21% | 18% | 18% | 17% | 18% |
| Europe, Middle East and Africa | 18% | 14% | 18% | 16% | 17% |
| Japan | 6% | 5% | 6% | 5% | 6% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | 100% | 100% | 100% | 100% | 100% |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(% of Total Revenue)* | **2018** | **2019** | **2020** | **2021** | **2022** |
| Americas | 45% | 44% | 42% | 45% | 46% |
| China | 10% | 10% | 15% | 13% | 15% |
| Other Asia | 18% | 20% | 18% | 19% | 18% |
| Europe, Middle East and Africa | 19% | 18% | 18% | 17% | 16% |
| Japan | 8% | 8% | 7% | 6% | 5% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | 100% | 100% | 100% | 100% | 100% |

---

Revenue Mix by Product Category

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(% of Total Revenue)* | **Q4 2021** | **Q1 2022** | **Q2 2022** | **Q3 2022** | **Q4 2022** |
| Custom IC Design and Simulation | 24% | 22% | 23% | 22% | 22% |
| Digital IC Design and Signoff | 29% | 27% | 27% | 29% | 28% |
| Functional Verification | 21% | 28% | 24% | 25% | 25% |
| IP | 14% | 13% | 14% | 12% | 12% |
| System Design and Analysis | 12% | 10% | 12% | 12% | 13% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | 100% | 100% | 100% | 100% | 100% |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(% of Total Revenue)* | **2018** | **2019** | **2020** | **2021** | **2022** |
| Custom IC Design and Simulation | 26% | 25% | 25% | 23% | 22% |
| Digital IC Design and Signoff | 29% | 30% | 29% | 29% | 28% |
| Functional Verification | 24% | 23% | 22% | 24% | 26% |
| IP | 12% | 13% | 14% | 13% | 12% |
| System Design and Analysis | 9% | 9% | 10% | 11% | 12% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total | 100% | 100% | 100% | 100% | 100% |

---

February 13, 2023 Cadence Q4 and Fiscal Year 2022 Financial Results 5

------

Cadence Design Systems, Inc. <br>

3 Year Revenue CAGR by Product Category

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(% of Total Revenue)* | **2018** | **2019** | **2020** | **2021** | **2022** |
| Custom IC Design and Simulation | 7% | 9% | 9% | 8% | 10% |
| Digital IC Design and Signoff | 9% | 10% | 11% | 11% | 13% |
| Functional Verification | 10% | 5% | 11% | 11% | 20% |
| IP | 8% | 16% | 18% | 16% | 15% |
| System Design and Analysis | 3% | 7% | 13% | 19% | 24% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total 3 Year CAGR | 8% | 9% | 11% | 12% | 15% |

---

3 Year Revenue CAGR by Product Category Without 53rd Week Impact\*

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(% of Total Revenue)* | **2018** | **2019** | **2020** | **2021** | **2022** |
| Custom IC Design and Simulation | 7% | 9% | 8% | 8% | 10% |
| Digital IC Design and Signoff | 9% | 10% | 10% | 11% | 13% |
| Functional Verification | 10% | 5% | 10% | 11% | 20% |
| IP | 8% | 16% | 18% | 16% | 15% |
| System Design and Analysis | 3% | 7% | 12% | 19% | 24% |
| &nbsp;&nbsp;&nbsp;&nbsp;Total 3 Year CAGR | 8% | 9% | 11% | 12% | 15% |

---

\* Fiscal 2020 was a 53-week year and included approximately $45 million revenue impact for the extra week.

Gross Margin

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Q4 2021** | **Q1 2022** | **Q2 2022** | **Q3 2022** | **Q4 2022** |
| **GAAP Gross Margin** | **91.0%** | **89.1%** | **89.2%** | **90.3%** | **89.6%** |
| Non-GAAP Gross Margin | 92.7% | 90.7% | 90.6% | 91.5% | 91.1% |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **2018** | **2019** | **2020** | **2021** | **2022** |
| **GAAP Gross Margin** | **87.9%** | **88.6%** | **88.6%** | **89.7%** | **89.6%** |
| Non-GAAP Gross Margin | 90.0% | 90.6% | 90.6% | 91.7% | 91.0% |

---

Total Costs and Expenses

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(In Millions)* | **Q4 2021** | **Q1 2022** | **Q2 2022** | **Q3 2022** | **Q4 2022** |
| **Total GAAP Costs and Expenses** | $**577** | $**583** | $**575** | $**642** | $**689** |
| Total Non-GAAP Costs and Expenses | $498 | $505 | $494 | $547 | $579 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(In Millions)* | **2018** | **2019** | **2020\*** | **2021** | **2022** |
| **Total GAAP Costs and Expenses** | $**1742** | $**1845** | $**2037** | $**2209** | $**2488** |
| Total Non-GAAP Costs and Expenses | $1491 | $1587 | $1739 | $1877 | $2125 |

---

\* Fiscal 2020 was a 53-week year.

February 13, 2023 Cadence Q4 and Fiscal Year 2022 Financial Results 6

------

Cadence Design Systems, Inc. <br>

Operating Margin

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Q4 2021** | **Q1 2022** | **Q2 2022** | **Q3 2022** | **Q4 2022** |
| **GAAP Operating Margin** | **25.3%** | **35.4%** | **33.0%** | **28.9%** | **23.5%** |
| Non-GAAP Operating Margin | 35.5% | 44.0% | 42.4% | 39.4% | 35.6% |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **2018** | **2019** | **2020** | **2021** | **2022** |
| **GAAP Operating Margin** | **18.5%** | **21.1%** | **24.1%** | **26.1%** | **30.1%** |
| Non-GAAP Operating Margin | 30.2% | 32.1% | 35.2% | 37.2% | 40.3% |

---

Earnings Per Share

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Q4 2021** | **Q1 2022** | **Q2 2022** | **Q3 2022** | **Q4 2022** |
| **GAAP Net Income Per Share** | $**0.63** | $**0.85** | $**0.68** | $**0.68** | $**0.88** |
| Non-GAAP Net Income Per Share | $0.82 | $1.17 | $1.08 | $1.06 | $0.96 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **2018** | **2019** | **2020** | **2021** | **2022** |
| **GAAP Net Income Per Share** | $**1.23** | $**3.53** | $**2.11** | $**2.50** | $**3.09** |
| Non-GAAP Net Income Per Share | $1.87 | $2.20 | $2.80 | $3.29 | $4.27 |

---

Total DSO

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Q4 2021** | **Q1 2022** | **Q2 2022** | **Q3 2022** | **Q4 2022** |
| DSO | 40 | 37 | 42 | 40 | 49 |

---

**Balance Sheet and Cash Review**

Free Cash Flow

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(In Millions)* | **Q4 2021** | **Q1 2022** | **Q2 2022** | **Q3 2022** | **Q4 2022** |
| Net Cash from Operating Activities | $216 | $337 | $325 | $317 | $264 |
| Capital Expenditures | 15 | 18 | 24 | 44 | 37 |
| Free Cash Flow | $201 | $319 | $301 | $273 | $227 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(In Millions)* | **2018** | **2019** | **2020** | **2021** | **2022** |
| Net Cash from Operating Activities | $605 | $730 | $905 | $1101 | $1242 |
| Capital Expenditures | 62 | 75 | 95 | 65 | 123 |
| Free Cash Flow | $543 | $655 | $810 | $1036 | $1119 |

---

Cash and Cash Equivalents

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(In Millions)* | **Q4 2021** | **Q1 2022** | **Q2 2022** | **Q3 2022** | **Q4 2022** |
| Cash and Cash Equivalents | $1089 | $1135 | $1030 | $1026 | $882 |

---

• Approximately 24 percent of our cash and cash equivalents were in the U.S. at quarter-end.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(In Millions)* | **2018** | **2019** | **2020** | **2021** | **2022** |
| Cash and Cash Equivalents | $533 | $705 | $928 | $1089 | $882 |

---

February 13, 2023 Cadence Q4 and Fiscal Year 2022 Financial Results 7

------

Cadence Design Systems, Inc. <br>

Share Repurchase

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(In Millions)* | **Q4 2021** | **Q1 2022** | **Q2 2022** | **Q3 2022** | **Q4 2022** |
| Share Repurchase | $110 | $250 | $320 | $180 | $300 |
| Number of Shares | 0.635 | 1.566 | 2.138 | 0.959 | 1.939 |

---

• Q3 2022 includes 109,365 shares and $30 million equity forward contract from Q2 2022 ASR settled in Q3 2022.

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(In Millions)* | **2018** | **2019** | **2020** | **2021** | **2022** |
| Share Repurchase | $250 | $306 | $380 | $612 | $1050 |
| Number of Shares | 5.934 | 4.841 | 4.247 | 4.401 | 6.602 |

---

Employees

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Q4 2021** | **Q1 2022** | **Q2 2022** | **Q3 2022** | **Q4 2022** |
| Headcount | 9298 | 9411 | 9570 | 9994 | 10228 |

---

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **2018** | **2019** | **2020** | **2021** | **2022** |
| Headcount | 7499 | 8078 | 8746 | 9298 | 10228 |

---

February 13, 2023 Cadence Q4 and Fiscal Year 2022 Financial Results 8

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Cadence Design Systems, Inc. <br>

**Forward Looking Statements**

This CFO Commentary contains forward-looking statements, including Cadence's outlook on future operating results, strategic objectives, business prospects, technology and product developments, industry trends and other statements using words such as "anticipates," "believes," "expects," "intends," "plans," "will," and words of similar import and the negatives thereof. Forward-looking statements are subject to a number of risks, uncertainties and other factors, many of which are outside Cadence's control and which may cause actual results to differ materially from expectations expressed or implied in the forward-looking statements, including, among others: (i) Cadence's ability to compete successfully in the highly competitive industries in which it operates; (ii) the success of Cadence's efforts to maintain and improve operational efficiency and growth; (iii) the mix of products and services sold, the timing of orders and deliveries and the ability to develop, install or deliver Cadence's products or services; (iv) change in customer demands or supply constraints that could result in delays in purchases, development, installations or deliveries of Cadence's products or services, including those resulting from consolidation, restructurings and other operational efficiency improvements of Cadence's customers; (v) economic, geopolitical and industry conditions, including that of the semiconductor and electronics industries, government regulations and trade restrictions; (vi) capital expenditure requirements, legislative or regulatory requirements, changes in tax laws, interest rates, currency exchange rate fluctuations, inflation rates and Cadence's ability to access capital and debt markets; (vii) the acquisition of other companies, businesses or technologies or the failure to successfully integrate and operate them; (viii) events that affect cash flow, liquidity, or reserves, or settlement assumptions Cadence may take from time to time with respect to accounts receivable, taxes and tax examinations, litigation, regulatory or other matters; (ix) the effects of any litigation, regulatory or other proceedings to which Cadence is or may become a party or to which Cadence or its products, services or properties are subject; and (x) the duration, severity, volatility and effects of the COVID-19 pandemic and containment measures on Cadence, its employees, and its suppliers and customers, which may also have the effect of heightening the other risks described in this paragraph. In addition, the timing and amount of Cadence's repurchases of its common stock are subject to business and market conditions, corporate and regulatory requirements, stock price, acquisition opportunities and other factors.

For a detailed discussion of these and other cautionary statements related to Cadence's business, please refer to Cadence's filings with the U.S. Securities and Exchange Commission, including its most recent reports on Form 10-K and Form 10-Q and future filings.

**GAAP to Non-GAAP Reconciliation**

Non-GAAP financial measures should not be considered as a substitute for or superior to measures of financial performance prepared in accordance with GAAP. Investors are encouraged to review the reconciliation of non-GAAP financial measures contained within this CFO Commentary with their most directly comparable GAAP financial results. Investors are also encouraged to look at the GAAP results as the best measure of financial performance. See our earnings press release issued today for further discussion of our non-GAAP financial measures, as well as the reconciliation provided in the Appendix to this CFO Commentary.

Cadence's management uses non-GAAP net income because it excludes items that are generally not directly related to the performance of the company's core business operations and therefore provides supplemental information to Cadence's management and investors regarding the performance of the business operations, facilitates comparisons to the historical operating results and allows the review of Cadence's business from the same perspective as Cadence's management, including forecasting and budgeting.

***© 2023 Cadence Design Systems, Inc. All rights reserved worldwide. Cadence, the Cadence logo and the other Cadence marks found at*** *<u>www.cadence.com/go/trademarks</u>* ***are trademarks or registered trademarks of Cadence Design Systems, Inc. All other trademarks are the property of their respective owners.***

February 13, 2023 Cadence Q4 and Fiscal Year 2022 Financial Results 9

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Cadence Design Systems, Inc. <br>

APPENDIX I

Reconciliation of GAAP to Non-GAAP Financial Measures (Unaudited)

Reconciliation of GAAP Total Expenses to Non-GAAP Total Expenses

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| *(In Millions)* | **Q4 2021** | **Q1 2022** | **Q2 2022** | **Q3 2022** | **Q4 2022** |
| **GAAP total costs and expenses** | $**577** | $**583** | $**575** | $**642** | $**689** |
| Reconciling items to non-GAAP total costs and expenses |  |  |  |  |  |
| Stock-based compensation expense | (54) | (59) | (64) | (74) | (73) |
| Amortization of acquired intangibles | (17) | (17) | (15) | (13) | (16) |
| Acquisition and integration-related costs | (6) | (4) | (8) | (11) | (18) |
| Restructuring |  |  |  |  |  |
| Non-qualified deferred compensation (expenses) credits | (2) | 2 | 6 | 3 | (3) |
| Non-GAAP total costs and expenses † | $498 | $505 | $494 | $547 | $579 |

---

**† The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.** 

Reconciliation of GAAP Total Expenses to Non-GAAP Total Expenses

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| *(In Millions)* | **2017** | **2018** | **2019** | **2020\*** | **2021** | **2022** | **2023E** |
| **GAAP total costs and expenses** | $**1619** | $**1742** | $**1845** | $**2037** | $**2209** | $**2488** | $**2796** |
| Reconciling items to non-GAAP total costs and expenses |  |  |  |  |  |  |  |
| Stock-based compensation expense | (130) | (168) | (182) | (197) | (210) | (270) | (330) |
| Amortization of acquired intangibles | (57) | (53) | (53) | (64) | (67) | (60) | (58) |
| Acquisition and integration-related costs | (8) | (20) | (8) | (23) | (23) | (41) | (40) |
| Restructuring | (9) | (11) | (9) | (9) | 1 |  |  |
| Non-qualified deferred compensation (expenses) credits | (6) | 1 | (5) | (5) | (6) | 8 |  |
| Special charges\*\* |  |  | (1) |  | (27) |  |  |
| Non-GAAP total costs and expenses † | $1409 | $1491 | $1587 | $1739 | $1877 | $2125 | $2368 |

---

\* Fiscal 2020 was a 53-week year.

\*\* 2021 includes costs related to a voluntary retirement program.

**† The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.** 

February 13, 2023 Cadence Q4 and Fiscal Year 2022 Financial Results 10

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Cadence Design Systems, Inc. <br>

Reconciliation of GAAP Gross Margin as a Percent of Total Revenue to Non-GAAP Gross Margin as a Percent of Total Revenue

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **Q4 2021** | **Q1 2022** | **Q2 2022** | **Q3 2022** | **Q4 2022** |
| **GAAP gross margin as a percent of total revenue** | **91.0%** | **89.1%** | **89.2%** | **90.3%** | **89.6%** |
| Reconciling items to non-GAAP gross margin as a percent of total revenue |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Stock-based compensation expense | 0.2% | 0.2% | 0.2% | 0.2% | 0.3% |
| &nbsp;&nbsp;&nbsp;Amortization of acquired intangibles | 1.5% | 1.4% | 1.2% | 1.0% | 1.2% |
| &nbsp;&nbsp;&nbsp;Non-qualified deferred compensation expenses (credits) | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
| &nbsp;&nbsp;&nbsp;Acquisition and integration-related costs | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
| Non-GAAP gross margin as a percent of total revenue † | 92.7% | 90.7% | 90.6% | 91.5% | 91.1% |

---

**† The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.**

---

| | | | | | |
|:---|:---|:---|:---|:---|:---|
| | **2018** | **2019** | **2020** | **2021** | **2022** |
| **GAAP gross margin as a percent of total revenue** | **87.9%** | **88.6%** | **88.6%** | **89.7%** | **89.6%** |
| Reconciling items to non-GAAP gross margin as a percent of total revenue |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Stock-based compensation expense | 0.3% | 0.3% | 0.3% | 0.3% | 0.2% |
| &nbsp;&nbsp;&nbsp;Amortization of acquired intangibles | 1.8% | 1.7% | 1.7% | 1.6% | 1.2% |
| &nbsp;&nbsp;&nbsp;Non-qualified deferred compensation expenses (credits) | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
| &nbsp;&nbsp;&nbsp;Acquisition and integration-related costs | 0.0% | 0.0% | 0.0% | 0.0% | 0.0% |
| &nbsp;&nbsp;&nbsp;Special charges \* | 0.0% | 0.0% | 0.0% | 0.1% | 0.0% |
| Non-GAAP gross margin as a percent of total revenue † | 90.0% | 90.6% | 90.6% | 91.7% | 91.0% |

---

\* 2021 includes costs related to a voluntary retirement program.

**† The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.**

February 13, 2023 Cadence Q4 and Fiscal Year 2022 Financial Results 11

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Cadence Design Systems, Inc. <br>

Reconciliation of GAAP Operating Margin as a Percent of Total Revenue to Non-GAAP Operating Margin as a Percent of Total Revenue

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| | **Q4 2021** | **Q1 2022** | **Q2 2022** | **Q3 2022** | **Q4 2022** | **Q1 2023E** |
| **GAAP operating margin as a percent of total revenue** | **25%** | **35%** | **33%** | **29%** | **23%** | **31% - 32%** |
| Reconciling items to non-GAAP operating margin as a percent of total revenue |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Stock-based compensation expense | 7% | 7% | 7% | 8% | 8% | 8% |
| &nbsp;&nbsp;&nbsp;Amortization of acquired intangibles | 2% | 2% | 2% | 1% | 2% | 1% |
| &nbsp;&nbsp;&nbsp;Acquisition and integration-related costs | 1% | 0% | 1% | 1% | 2% | 1% |
| &nbsp;&nbsp;&nbsp;Restructuring | 0% | 0% | 0% | 0% | 0% | 0% |
| &nbsp;&nbsp;&nbsp;Non-qualified deferred compensation expenses (credits) | 1% | 0% | (1)% | 0% | 1% | 0% |
| Non-GAAP operating margin as a percent of total revenue † | 36% | 44% | 42% | 39% | 36% | 41% - 42% |

---

**† The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.**

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| | **2017** | **2018** | **2019** | **2020** | **2021** | **2022** | **2023E** |
| **GAAP operating margin as a percent of total revenue** | **17%** | **19%** | **21%** | **24%** | **26%** | **30%** | **30.5% - 32.0%** |
| Reconciling items to non-GAAP operating margin as a percent of total revenue |  |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Stock-based compensation expense | 7% | 8% | 8% | 7% | 7% | 8% | 8% |
| &nbsp;&nbsp;&nbsp;Amortization of acquired intangibles | 3% | 2% | 2% | 3% | 2% | 2% | 1% |
| &nbsp;&nbsp;&nbsp;Acquisition and integration-related costs | 0% | 1% | 0% | 1% | 1% | 1% | 1% |
| &nbsp;&nbsp;&nbsp;Restructuring | 1% | 0% | 1% | 0% | 0% | 0% | 0% |
| &nbsp;&nbsp;&nbsp;Non-qualified deferred compensation expenses (credits) | 0% | 0% | 0% | 0% | 0% | (1)% | 0% |
| &nbsp;&nbsp;&nbsp;Special charges \* | 0% | 0% | 0% | 0% | 1% | 0% | 0% |
| Non-GAAP operating margin as a percent of total revenue † | 28% | 30% | 32% | 35% | 37% | 40% | 40.5% - 42.0% |

---

\* 2021 includes costs related to a voluntary retirement program.

**† The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.**

February 13, 2023 Cadence Q4 and Fiscal Year 2022 Financial Results 12

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Cadence Design Systems, Inc. <br>

Reconciliation of GAAP Diluted Net Income Per Share to Non-GAAP Diluted Net Income Per Share

---

| | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|
| *(In Thousands, Except Per Share Data)* | **Q4 2021** | **Q1 2022** | **Q2 2022** | **Q3 2022** | **Q4 2022** | **Q1 2023E** |
| **Diluted net income per share on a GAAP basis** | $**0.63** | $**0.85** | $**0.68** | $**0.68** | $**0.88** | **$0.84 - $0.88** |
| &nbsp;&nbsp;&nbsp;Stock-based compensation expense | 0.20 | 0.22 | 0.23 | 0.27 | 0.27 | 0.28 |
| &nbsp;&nbsp;&nbsp;Amortization of acquired intangibles | 0.06 | 0.06 | 0.05 | 0.05 | 0.06 | 0.05 |
| &nbsp;&nbsp;&nbsp;Acquisition and integration-related costs | 0.02 | 0.01 | 0.03 | 0.04 | 0.06 | 0.05 |
| &nbsp;&nbsp;&nbsp;Restructuring |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Non-qualified deferred compensation expenses (credits) | 0.01 | (0.01) | (0.02) | (0.01) | 0.01 |  |
| &nbsp;&nbsp;&nbsp;Other income or expense related to investments and non-qualified deferred compensation plan assets \* | (0.01) | 0.02 | 0.03 | 0.02 | (0.01) |  |
| &nbsp;&nbsp;&nbsp;Income tax effect of non-GAAP adjustments | (0.09) | 0.02 | 0.08 | 0.01 | (0.31) | 0.01 |
| Diluted net income per share on a non-GAAP basis † | $0.82 | $1.17 | $1.08 | $1.06 | $0.96 | $1.23 - $1.27 |
| Shares used in calculation of diluted net income per share | 278253 | 276918 | 275172 | 274957 | 272997 |  |

---

**† The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.**

\* Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense.

February 13, 2023 Cadence Q4 and Fiscal Year 2022 Financial Results 13

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Cadence Design Systems, Inc. <br>

Reconciliation of GAAP Diluted Net Income Per Share to Non-GAAP Diluted Net Income Per Share

---

| | | | | | | | |
|:---|:---|:---|:---|:---|:---|:---|:---|
| *(In Thousands, Except Per Share Data)* | **2017** | **2018** | **2019** | **2020** | **2021** | **2022** | **2023E** |
| **Diluted net income per share on a GAAP basis** | $**0.73** | $**1.23** | $**3.53** | $**2.11** | $**2.50** | $**3.09** | **$3.24 - $3.34** |
| &nbsp;&nbsp;&nbsp;Stock-based compensation expense | 0.46 | 0.60 | 0.65 | 0.71 | 0.75 | 0.98 | 1.21 |
| &nbsp;&nbsp;&nbsp;Amortization of acquired intangibles | 0.20 | 0.19 | 0.19 | 0.23 | 0.24 | 0.22 | 0.21 |
| &nbsp;&nbsp;&nbsp;Acquisition and integration-related costs | 0.03 | 0.07 | 0.03 | 0.08 | 0.08 | 0.15 | 0.15 |
| &nbsp;&nbsp;&nbsp;Restructuring | 0.03 | 0.04 | 0.03 | 0.03 |  |  |  |
| &nbsp;&nbsp;&nbsp;Non-qualified deferred compensation expenses (credits) | 0.02 | (0.01) | 0.02 | 0.02 | 0.02 | (0.03) |  |
| &nbsp;&nbsp;&nbsp;Special charges\* |  |  |  |  | 0.10 |  |  |
| &nbsp;&nbsp;&nbsp;Other income or expense related to investments and non-qualified deferred compensation plan assets\*\* | (0.05) |  | (0.01) |  | (0.03) | 0.05 |  |
| &nbsp;&nbsp;&nbsp;Income tax benefit related to intercompany transfers of certain intellectual property rights |  |  | (2.05) |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Income tax related to transition tax | 0.24 |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Income tax related to tax rate change | 0.09 |  |  |  |  |  |  |
| &nbsp;&nbsp;&nbsp;Income tax effect of non-GAAP adjustments | (0.35) | (0.25) | (0.19) | (0.38) | (0.37) | (0.19) | 0.09 |
| Diluted net income per share on a non-GAAP basis † | $1.40 | $1.87 | $2.20 | $2.80 | $3.29 | $4.27 | $4.90 - $5.00 |
| Shares used in calculation of diluted net income per share | 280221 | 281144 | 280515 | 279641 | 278858 | 275011 | 272 - 274M |

---

**† The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.**

\* 2021 includes costs related to a voluntary retirement program.

\*\* Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense.

February 13, 2023 Cadence Q4 and Fiscal Year 2022 Financial Results 14

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Cadence Design Systems, Inc. <br>

Reconciliation of GAAP Total Other Income and Expense to Non-GAAP Total Other Income and Expense

---

| | | | |
|:---|:---|:---|:---|
| (In Millions) | **FY 2021** | **FY 2022** | **FY 2023E** |
| **GAAP total other income and expense** | $**(10.7)** | $**(28.3)** | **$(21) - $(29)** |
| Reconciling items to non-GAAP total income and expense |  |  |  |
| &nbsp;&nbsp;&nbsp;Other income or expense related to investments and non-qualified deferred compensation plan assets\* | (6.7) | 14.1 |  |
| Non-GAAP total other income and expense† | $(17.4) | $(14.2) | $(21) - $(29) |

---

**† The non-GAAP measures presented in the table above should not be considered a substitute for financial results and measures determined or calculated in accordance with GAAP.**

\* Includes, as applicable, equity in losses or income from investments, write-down of investments, gains or losses on investments and gains or losses on non-qualified deferred compensation plan assets recorded in other income or expense.

February 13, 2023 Cadence Q4 and Fiscal Year 2022 Financial Results 15