Cadence at Goldman Sachs Conference: AI Strategy and Market Growth

On Tuesday, 09 September 2025, Cadence Design Systems (NASDAQ:CDNS) presented at the Goldman Sachs Communicopia + Technology Conference 2025. CEO Anirudh Devgan provided insights into Cadence’s strategic direction, focusing on AI integration and market expansion. While the company showcased strong financial performance and growth prospects, challenges in the China market and the broader competitive landscape were also addressed.

Key Takeaways

• Cadence reported a 15% revenue CAGR over the past three years and a 44% operating margin this year.
• The company is leveraging AI in both design processes and systems development.
• China accounts for 10-11% of Cadence’s revenue, with stability expected despite past export issues.
• Cadence is expanding its IP portfolio, with 30% growth last year, through acquisitions and organic development.
• The company aims to capture a larger share of R&D budgets, driven by AI advancements.

Financial Results

• Revenue CAGR: Approximately 15% over the last three years
• Operating Margin: Approximately 44% this year
• Rule of 40: In the high fifties, indicating a balance between growth and profitability
• China Revenue: Currently 10-11% of total revenue, down from 17% a few years ago
• IP Business: Grew 30% last year, valued at $700 to $800 million
• Target Market: Projected to reach $1.2 trillion by 2030 and $2.5 trillion by 2035

Operational Updates

• Focus Areas: "Design for AI" and "AI for design" with five major AI platforms
• Recent Acquisitions: MSC from Hexagon, Rambus HBM business, and ARM’s Artisan business
• Organic Growth: In DDR, PCIE, and UCIE businesses
• Market Penetration: Efforts to improve relationships with Intel and Samsung
• R&D Budget: Increased from 7-8% to close to 11% for automation

Future Outlook

• Silicon Content: Expected to rise, driven by AI and Moore’s Law
• EPS Growth: Aiming to maintain consistency with past five to ten years
• AI Phases: Focus on infrastructure AI, physical AI, and science AI
• Physical AI Deployment: Expected in the next three to five years
• IP Growth: Anticipated strong performance for the full year
• Moore’s Law: Expected to continue for the next 10 years

Q&A Highlights

• China Market: Stability anticipated despite a six-to-seven-week EDA ban
• Physical Design: Expanded capabilities through acquisitions, integrating EDA and simulation
• IP Strategy: Growing portfolio in DDR, PCIE, UCIE, HBM, and foundation IP
• System vs. Semiconductor Design: Commitment to both markets
• Synergies: AI-driven acceleration of EDA and SDA integration
• Competitive Landscape: Efforts to strengthen ties with Intel and Samsung

For a deeper dive into Cadence’s strategic plans and financial performance, readers are encouraged to refer to the full transcript below.

Full transcript - Goldman Sachs Communicopia + Technology Conference 2025:

Anirudh Devgan, CEO, Cadence Design Systems: Yes, yes.

Jim Schneider, Senior Director of Analysts, Goldman Sachs: Okay, very good.

Anirudh Devgan, CEO, Cadence Design Systems: Can you hear me okay?

Jim Schneider, Senior Director of Analysts, Goldman Sachs: Yes.

Anirudh Devgan, CEO, Cadence Design Systems: Yeah.

Jim Schneider, Senior Director of Analysts, Goldman Sachs: Okay. Good afternoon, everybody. Welcome to the Goldman Sachs Communication and Technology Conference. My name is Jim Schneider. I’m the Senior Director of Analysts here at Goldman Sachs, and it’s my pleasure to welcome Cadence and Julien Monteiro with us today. Thanks very much for being here. We appreciate it.

Anirudh Devgan, CEO, Cadence Design Systems: Thank you. It’s great to be here.

Jim Schneider, Senior Director of Analysts, Goldman Sachs: Before I’m going to get started with the disclosure, today’s discussion will contain forward-looking statements, including Cadence’s outlook on future business and operating results. Due to risks and uncertainties, actual results may differ materially from those projected or implied in today’s discussion. With that, let’s get started. I’m sure we’re going to be hearing a lot about artificial intelligence this week. We already heard about it yesterday and today. I think the EDA space is a place where AI is already being used. It can be even more beneficial to users. Maybe talk to us about how you use AI internally and what your AI offerings are. When customers use a tool like Cadence’s, what are the improvements they’re seeing in either time and market designer hours or other metrics?

Anirudh Devgan, CEO, Cadence Design Systems: Yeah, great question. First thing I want to emphasize is like what we talk about is a design for AI and AI for design. Versus other kind of software companies, the benefit of Cadence Design Systems and EDA is that we are helping build AI also. Most of the monetization right now is in the silicon and system build-out, right? Whether it’s NVIDIA or Google or all the hyperscalers, all the Mach 7. We are in a unique position that whenever they are building their silicon and systems, they use our products, and we are essential to the build-out of all AI systems. In parallel, we can apply AI to our software products to make them better, which is your question.

In that, also there are slight differences because one worry right now is, okay, is AI going to, you know, there could be some benefit, but does it cannibalize the software business, right? This is a question. I’m sure that’s on your mind, right? The reason it’s different for Cadence Design Systems is that the workload, first of all, the barrier to entry is very high for EDA. We have done this over, we have a kind of vertical flow which has been built over the last 20, 30 years. Whenever we work with even the big AI companies, it’s normally a collaboration with them. The second thing, which is unique to chip design and EDA, is that the workload is exponential. It has been exponential for the last 20 years, but it will continue to be exponential for the next 10 years.

If the workload is constant, I mean, like, I don’t know, tax preparation or whatever, I don’t want to pick on any particular area, then if you have 10x productivity, then AI can cannibalize the, but if the workload is exponential, if you look at now the chip size is 100 billion transistors or 200 billion for Blackwell, in the next five years, it will be like 1 trillion or more. It will be 10x bigger chips and the workload will be 20, 30 times more. We need the 10x productivity in AI just to keep up because our customers can’t hire like 30 times more engineers. That’s the other unique thing about EDA, the workload is exponential. Now, how we actually use AI, we have like five major kind of AI platforms.

The main thing is that we can make not only the design faster, which you would expect, but more importantly, I think the monetization happens if we can make the design better, meaning the PPA or the power performance can be better. I can give you a lot of examples because AI is able to optimize over a bigger design space. Typically what our customers do, they will run, they’re not running the software one time, right? They’re running it and then they change something and they run it again, they change something. The software may run for two days, but the design takes one year or six months. In the past, there was no way to transfer knowledge from one run to the next run. With AI, we can create all these models that can give a PPA benefit.

PPA is power, performance, and area, which are like 10% or 15%. Typically these days, technology scaling, let’s say go from five to three or three to two, the PPA benefit is 15% to 20%. The AI tools are giving almost or half the benefit that you get from moving from one node to another node. The benefit in terms of PPA is huge for the AI tools. To put in context, the workload is exponential and we are also benefiting from the build-out of AI. That’s why I think Cadence is in a unique position to benefit from.

Jim Schneider, Senior Director of Analysts, Goldman Sachs: Yeah, okay. Interesting. I think you have a really good, and maybe it’s even a unique, view into your customers’ roadmaps.

Anirudh Devgan, CEO, Cadence Design Systems: Yeah.

Jim Schneider, Senior Director of Analysts, Goldman Sachs: Maybe by proxy the health of those roadmaps. What are you seeing? What are the levels of chip design activity in terms of design starts or tape outs? Do you see it slowing down anytime soon or even accelerating?

Anirudh Devgan, CEO, Cadence Design Systems: I think it’s accelerating. If you look at, if I compare it to, I mean, like let’s say one year ago and the beginning of the year, there was all this concern about deep seek and other things. By the way, I believe there will be multiple deep seek moments, not just one, because, you know, AI right now is like a dense multiplier. It has to get much, much more efficient and software will improve significantly to make it much more efficient. If you look at, you know, we do computational software for 30 years. If you look at the history of EDA software for 30 years, it has gotten much, much more efficient. I think AI compute or the algorithms will get much more efficient, but at the same time, because of reasoning and other things, you know, the amount of compute will still go up.

When I talk to the big customers, you know, they are saying like order of magnitude improvement in inference, but still the amount of inference is going up faster than that. If I compare it from one year to now, I think I see even more commitment in the big hyperscalers to do their own chips. You’re seeing that in the industry. Of course, the big companies like NVIDIA will do very well. With this, you know, physical AI like cars, drones, and robots, companies like Tesla and other, you know, so overall, if you step back, we see the semi, so roughly in terms of our business, 45% of our business is from system companies and 55% is from semiconductor companies. Even though NVIDIA, I don’t know, it’s both semi and system, but we classify them in semi.

NVIDIA, Broadcom, all these companies, AMD, I mean, they’re doing phenomenally well. The system companies are also doing their own chips. I believe that the amount of silicon that is going to be designed from AI, both infrastructure and physical AI, should accelerate in the next few years.

Jim Schneider, Senior Director of Analysts, Goldman Sachs: Very good. I think at a very high level, you know, most investors understand that your revenue is generally tied to your customers’ R&D levels at a very high level. Give us a sense about how much incremental wallet share you can drive within your customers, whether that’s headcount and your ability to price over time for the value you’re creating with AI or otherwise.

Anirudh Devgan, CEO, Cadence Design Systems: Yeah, I think, I mean, we are, of course, tied to R&D, right? We are engineers. We say engineers for, we make software for other engineers. That’s the reason that the barrier to entry is very high. I think barrier to entry is lower in some of the other non-engineering software. We invest significantly in our own R&D, right? Our goal always is to maximize revenue growth plus operating margin. If you look at the last three years, our CAGR, revenue CAGR, is about 15%. This year, our margin is about 44% and operating margin. It goes up incrementally. If you look at rule of 40, we are in the high fifties. There are very few companies who can achieve that on a sustainable basis. I believe Cadence has done that last five, ten years, can do it going forward. It’s a combination of margin and revenue growth.

Revenue growth should happen because of all this, you know. Pricing is a part of that. I think one, again, good thing about our position and the industry is because of Moore’s law, and we can argue Moore’s law is dead or alive, but one part of Moore’s law is true that the chips will get bigger and bigger. Whether they get faster, it’s in question. When you go from seven to five to three to two to one, the complexity of the chip will increase. If the complexity of the chip increases, then they need more software and hardware to design our chips. The demand should go up. Pricing, we always work collaboratively with our customers. If we can deliver value to the top 50 companies, they will always pay us. They don’t have any shortage of money. We just have to show our value to them.

Jim Schneider, Senior Director of Analysts, Goldman Sachs: Hopefully, you get a bigger slice of that.

Anirudh Devgan, CEO, Cadence Design Systems: Yeah.

Jim Schneider, Senior Director of Analysts, Goldman Sachs: Yeah. I mean, one thing that’s interesting, one thing I thought I wanted to talk a little bit about is China, because that’s been an area where there’s been a lot of noise, both with respect to the U.S. export control restrictions, but also, you know, sort of your forecast. I think you now think that your China revenue can grow just a little bit this year, I believe. Maybe talk about the impact of those export control regulations. Was there anything agreed to between you and the government in terms of your restrictions on your business going forward? What impact are you seeing from your customers in China going forward?

Anirudh Devgan, CEO, Cadence Design Systems: Yeah, that’s a good question. There are so many details in that question because I don’t know if people know there was like an EDA ban for like six, seven weeks that got lifted in early July. Then there’s the general export control, you know, that. Overall, I do think that China should be stable and improve, barring this six, seven weeks hiatus that happened. I mean, overall, our China percentage has come down. Right now we are roughly 10, 11%. A few years ago it used to be 17%. China this year is not growing much, but overall has grown, but the rest of the world has grown faster. Over time, I think this is sustainable. It may come down a little bit more. The good thing is we are very diversified geographically and product and industries, right? China right now, the demand is good.

They are also big in physical AI. If you look at five, six big car companies, they’re all designing their own chips, trying to do self-driving. They have like 100 robotic companies and they’re all the regular phone companies and data center companies. I think the regulatory environment, I would say right now, at least what I can see, is stable, barring that seven-week thing.

Jim Schneider, Senior Director of Analysts, Goldman Sachs: Yeah, yeah. No long-term impact, just sort of an overall stable profile.

Anirudh Devgan, CEO, Cadence Design Systems: Right now I see. China customers were also pretty, during this seven-week ban, they were pretty measured. Right now what I see in Q3 is back to normal in China.

Jim Schneider, Senior Director of Analysts, Goldman Sachs: Great. I want to talk about sort of physical design for a second and that sort of overlap with your business. It’s been topical. One of your competitors bought Ansys recently in sort of the physical design simulation. You’ve done some tuck-ins in this space over time. Last week you bought the design engineering unit from Hexagon. Maybe talk about your overall capabilities in physical design and simulation on a competitive basis and sort of how you expect to kind of drive that business going forward and the importance of the synergies you see between EDA and then the physical simulation design.

Anirudh Devgan, CEO, Cadence Design Systems: Right, right. Yeah, and we have been doing this from, I’ve been doing this from 2017. You can blame me for all the consolidation that is happening because, you know, the thing was, you know, I was going to be CEO and they said, okay, what is the future of EDA? Okay, this is 2017, 2018. In my opinion, and this is a very different time at that time, 2018 in the semiconductor industry, all the consultants would come tell us that there will be only 10 companies left because Broadcom will buy Qualcomm. Qualcomm, there’s massive consolidation will happen. If you look at EDA, what is our core strength, right? Everybody wants to grow, but you have to grow in your core strength. Our core strength, and you know, my background anyway is EDA and numerical analysis, is computer science plus mathematics.

EDA is very numerical, mathematical software, and applied to silicon. We are best in the world at doing this kind of software. If you look at all these places out or simulations, it’s very numerical, complex software. That’s our core strength, what I call computational software, which is CS plus math. If you look at the world around us, and this is obvious now, but it was not obvious in 2018, we look at the world in three concentric circles. There’s the silicon circle, then there’s the system circle, and then there’s the data circle. A perfect example is the electric car. You have all the navigation data, then you add the physical car, which is electrical plus mechanical, and the silicon that drives the car. You take computational software, which is our core strength, and you overlay that on these three concentric circles.

Computational software applied to silicon, that’s EDA, right? Computational software applied to system is system simulation. Thermal, electromagnetics, aerodynamics, that’s why I entered all this space. I think that will in 2018. Yeah. Computational software applied to data is, of course, AI. A lot of the algorithms are very similar, numerical analysis, linear algebra, things like that. From 2018, we are doing EDA plus what we call SDA, system design and analysis, and AI. That’s not going to change. We thought it’s better to do it organically or mostly organically because the margin profile is better, EPS growth is better. We do some tuck-ins, you know, but our culture always is organic first. I don’t believe that will change. Now the 2025 version of that is different than the 2018 version. What is different in 2025 versus 2018?

Number one thing, the value of EDA is much higher because now, because of AI, it is driven by infrastructure. That is why we want to make sure we refocus on EDA and IP, and that’s what we have done. We have the broadest portfolio in EDA, and we are clearly well positioned in EDA. In systems, the most exciting thing for me is systems, like I mentioned, is physical AI. The future, right? You don’t want to miss these big trends. That is why we bought MSC from Hexagon because they have two great products, Adams, which is the number one multi-body dynamics, which is a robotic simulator, and Nastran, which is structural. We are pretty well positioned in systems. The other exciting thing of systems is 3D IC and the chip and the package. Cadence has the majority share with Allegro in 3D IC-based designs.

I believe we can grow well in systems. Of course, AI, we are doing a lot. The other thing that’s different in 2025 versus 2018, of course I’ve talked about infrastructure AI, right? Data centers, all those things, edge AI. The second big wave, I believe, is physical AI, you know, cars, drones, robots. We want to be well positioned. Hopefully in the next that will happen. The design is happening now, but the deployment will happen in the next three to five years. I believe the other big wave, third big wave of AI, science is AI. Physical sciences, of course, chip design, but also biosciences and life sciences. About two years ago, we bought a company to do biosimulations and all that. We don’t want to be too early, but we don’t want to be too late in that.

That is what I believe, these three big phases, and we want to be aligned with those three concentric circles.

Jim Schneider, Senior Director of Analysts, Goldman Sachs: Yeah, fair enough. You talked about EDA and the core growth there. I want to build on that because I think EDA growth has been quite good, quite solid, but I think you pointed to some things, whether that’s AI or otherwise, that could at least, you know, theoretically accelerate that growth rate. I’m kind of curious, you know, what do you see the levers of your core EDA software growth being, and do you think that that growth rate can accelerate in the next few years?

Anirudh Devgan, CEO, Cadence Design Systems: We are always conservative in projections, you know. We rather print it than talk about growth rate. What we have done, like I said, we have done more than 10, you know, in the mid double digits and the margin is in the mid 40s. The growth rate in the future, the silicon content will increase. The projections are pretty bullish, right? It’s $1.2 trillion by 2030, $2.5 trillion by 2035. Both system companies will do a lot of silicon. There is no doubt. You can see that in the latest numbers. I feel we are very well, and Moore’s law will continue for the next 10 years. We are at three right now. It will go to two, 1.4, and one. All these big foundries can see the roadmap till one. Each of them is two, three years.

For the next 10 years, Moore’s law is alive in terms of area scaling. You need to do more design to get the performance out of it. The complexity of the chips will go up. Amount of silicon deployed both in data centers, edge, physical AI will go up. The customers will spend, if there’s a $2.5 trillion market, the customers will invest in R&D. With AI, we hope to get bigger spend of that. The other thing I am watching is, we get a certain percentage of the R&D budget, right? It used to be 7, 8%. Now it’s close to 11% of R&D is going to automation. If the workload goes up by 30x, but your headcount only goes up by 2, 3x because hopefully the rest is AI, then as a percentage of R&D going to software and automation should go up.

Not only do I expect R&D budgets of customers to go up if the market is going to be $2.5 trillion, but there is the opportunity for Cadence Design Systems to capture more of that R&D budget with AI and automation.

Jim Schneider, Senior Director of Analysts, Goldman Sachs: Makes sense. Now, competitively, you and Synopsys have had different advantages at different steps in the process flow and design across different tools. Where do you feel you’re ahead, most ahead today? What are the areas you’re continuing to focus on in the core EDA flow to continue driving innovation?

Anirudh Devgan, CEO, Cadence Design Systems: Core EDA, we are very, very strong and we have the broadest portfolio. 3D IC, you know, Allegro, I said, has like majority share. I think in systems, you know, we are well positioned to the growth areas, you know, of systems, which is close to the, either close to the chip or all the way to the data center level. I think the things we have to do better, you know, competitively at the highest level is, you know, we haven’t done as well in Intel and Samsung. Cadence historically is very strong with TSMC and TSMC customers, but not as strong in, and some of these problems predate even before I joined Cadence. They’re like 15 years old. Intel for the longest time didn’t work with us and Samsung to some extent. We have to do better there.

Now there are a lot of changes in both those companies. We are working to, and the second area we have to do better, or I intentionally didn’t invest as much is in IP. Our competitor is much, much stronger in IP now. IP is not as profitable as EDA. That’s why I didn’t invest as much. I intentionally focused it on EDA and SDA. I think now in the last couple of years, we invest more in IP. IP are these pre-made kind of design blocks. Because of AI and 3D IC, there are opportunities in AI, so in IP. For us, you know, we need to keep our strength in EDA and SDA and AI, but add focus on IP and do better at Intel and Samsung.

Jim Schneider, Senior Director of Analysts, Goldman Sachs: Very fair. On the point about IP, maybe talk about how you expect to do better. Is it, you’re going to do more M&A to the extent it’s available? Are you going to do more organic development of IP and just sort of think about how much you think the overall IP growth rate can lift long term?

Anirudh Devgan, CEO, Cadence Design Systems: Yeah, IP, like last year we grew 30% in IP. This year, I think it should, I mean, we haven’t finished the year, but I expect good growth, okay, in IP for the full year. The growth is a combination of inorganic and anyway, we like organic, I said. We did some acquisitions in IP because some companies like Rambus, for example, didn’t want to focus on IP. They wanted to become a product company. This is great. Same thing with ARM, you know, we bought Rambus HBM business, which is a great business. Recently we bought ARM’s Artisan business, which is their foundation IP, which ARM is a great partner of Cadence. That was a good acquisition also. We have some acquisitions, but in general, right, because of chip-to-chip interconnect, like all this UCIE from chip to chip, DDR memory access is a big thing, PCIE.

Those three areas we have done organically and they’re doing very well. If you have DDR, PCIE, and UCIE organically, and then HBM and foundation IP inorganically together, I think is a good portfolio. We are not too big, you know, we are just, we are about $700 million, you know, roughly $700 million, $800 million in IP, which I think is a good size. Also part of it is Tensilica, which is very profitable. It’s like software, like margins. I want to grow IP, but at a good profit margin. I feel right now the size and the margin is good that we can grow that.

Jim Schneider, Senior Director of Analysts, Goldman Sachs: Fair. Maybe just to sort of ask you, you talked about system simulation, physical design and simulation. If you think about the 10-year plus time horizon for the company, do you think it could be more of a kind of a systems design company over long term rather than a semiconductor design company?

Anirudh Devgan, CEO, Cadence Design Systems: No, it will be both. Because people say, like even in the customer mix, we say 55%, 45%. Then the question is, oh, will the system guys do so well that you will become more system? It’s very difficult to predict because the silicon guys do so well too. Look at NVIDIA, look at Broadcom. They’re actually top 10 market cap companies. Three of them are semi companies, you know, NVIDIA, Broadcom, and TSMC, all great partners of Cadence. It’s very difficult to predict. I think both will do well. I think finally the value of silicon is realized by the market and the customers. I hope they realize more that none of the silicon is possible without Cadence. That’s my job to do a better job explaining that. I think both of them will be there. I think semi will be strong and Intel will come back, hopefully Samsung.

On the hyperscalers, they will do more silicon. It’s a combination, you know, system and semi will be together.

Jim Schneider, Senior Director of Analysts, Goldman Sachs: Yeah. I mean, do you think you’re actually enabling a lot of your system companies to do more vertical integration?

Anirudh Devgan, CEO, Cadence Design Systems: Absolutely. Yeah, absolutely. This would not be possible 20 years ago, right? We have a big role along with, of course, TSMC and ARM to make that happen. You go back, it was a long time ago when I was in IBM in the late 1990s, we would design, you know, we used to do a lot of silicon design those days. We would design a CPU. It would take 400 or 500 people, four or five years to do that. Right now, if you want to design a CPU, you go to TSMC, use Cadence tool, maybe do your own CPU or get it from ARM. You can do it in six months with 40 people. That’s 10x times 10x. That’s a 100x improvement in productivity over 20 years. Then maybe 10x more with AI. This is the reason all these companies can do this.

The fact that chip design has become more scalable is the reason all these hyperscalers can do that. I think it will only increase over time and more companies, I think more car companies, more data, you look at all these new customers that are announced like OpenAI or like all these car companies, they will more and more do silicon to differentiate because you need to differentiate your offering. Otherwise, it all becomes uniform, right?

Jim Schneider, Senior Director of Analysts, Goldman Sachs: Yeah. Maybe kind of just close on your system design and analysis business for a second. You’ve talked about enabling that business, enabling companies like aerospace defense OEMs to simulate entire systems. If you think about Boeing or an automaker, how is selling to one of those customers different from selling to an NVIDIA or an AMD? Do they want the same kinds of models and just sort of how is the overall business process different?

Anirudh Devgan, CEO, Cadence Design Systems: Yeah, that’s a good question. I mean, normally the system has a longer tail, you know, but the top customers are the same. Semi is more concentrated. We will have probably like 500 customers, let’s say, and 50, 60 control most of the, like 60% of the spending. I think systems may have sometimes tens of thousands of customers. It’s more spread out, and the top 50 may have like 30, 40%. It’s still a big number, but it’s not as much as 60%. That’s one big difference. We need to build the long tail go to market, you know, whether it’s cloud or kind of distributors, because in the semi space, we are always direct. In the system space, we have to have distributors and cloud for the longer tail.

The top customers, you know, we always, our culture is always win with the winners, go to the top first. The top customer behavior is very similar. Actually, the top customer, they are sometimes the same. Even these big aerospace companies are doing silicon design. We already, or you know, you look at these big phone companies, they’re already doing silicon design. The top customer behavior is very similar, but the middle and long tail is different.

Jim Schneider, Senior Director of Analysts, Goldman Sachs: To wrap up, if you think about the synergies you see between the EDA and the FDA businesses long term, can you sort of flow chip design into thermal electromagnetic models directly? How do you think about how a customer would use both of those in concert to develop the broader system from chip all the way up to the system level?

Anirudh Devgan, CEO, Cadence Design Systems: No, absolutely. I mean, you can see that. I mean, there’s two perfect examples. One is the phone, right? There is a big, like, you know, one of these big phone companies without getting too much detail. I mean, the chip design is central, but it sits in a very tight confinement. The thermal and then the drop test, all that is super, it’s almost coming together. Okay. The same thing on the AI side. There’s no perfect example than NVIDIA or Broadcom. NVIDIA is full. I mean, they have such a good job of optimizing chip and the system and the therm. We have all kinds of collaboration with them to simulate data centers, simulate, you know, and of course design the chip with Palladium and our software. I think this is inevitable. This merger of system and silicon is going to happen.

It’s only going to accelerate because of AI, either because of the scale of it, or because of the form factor. The same thing is true in the car, right? You have to, you know, customize your chip separately because it’s a much more power constrained environment. One is thermal constrained or even power constrained data center. Car is battery constrained. Phone is size constraint. For all these reasons, the silicon and system, no, there is good logic to 2018. I think that EDA and SDA is invariably. Of course you add AI on top of it. I don’t see, I only see that accelerating in the next 10 years.

Jim Schneider, Senior Director of Analysts, Goldman Sachs: Yeah, fair enough. Maybe I have time for one last quick question, which is you meet with a lot of investors who ask you questions about Cadence. I’m kind of curious, you know, what do you think is the one thing that is most overlooked by investors about your company and the story? If we get up on stage five years from now and we look back, what do you think investors will be most surprised by?

Anirudh Devgan, CEO, Cadence Design Systems: First of all, you have great investors. Thank you for that. A lot of people do understand Cadence very well because we get a lot of all the top investors working with us. I think what we can do better is to show how critical we are in the long run because we are like R&D software for R&D engineers. It is very different than kind of vanilla software. Engineering software, especially EDA, especially Cadence, will be critical. The second thing is people say, oh, you have done well last five, 10 years. Will it continue in the future, five, 10 years? We are a compounder of value, right? We are a compounder, what Warren Buffett called the eighth wonder or whatever. I think if you look back 10 years from now, you will see that our EPS and growth rate, and we will have a good financial model.

That is our goal, to keep delivering EPS growth that we have delivered last five, 10 years in the next five, 10 years. You can buy Cadence and sleep well at night.

Jim Schneider, Senior Director of Analysts, Goldman Sachs: Sounds great. That’s a great place to wrap. Thanks very much, Anirudh, for being with us today. Appreciate it.

Anirudh Devgan, CEO, Cadence Design Systems: Thank you.

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