Cadence Design Systems (CDNS) 10-K risk factor changes: FY2024 vs FY2023

[removed: We] [added: - We] have experienced varied operating results, and our operating results for any particular fiscal period are affected by the timing of revenue recognition, particularly for our [removed: emulation and prototyping hardware and] [added: hardware,] IP [removed: products.][added: and certain software products.]

Our operating results for any period are affected by the mix of products and services sold in a given period and the timing of revenue recognition, particularly for our [removed: emulation and prototyping hardware and] [added: hardware,] IP [removed: products.][added: and certain software products for which revenue is recognized at a point in time rather than over time.]

A substantial portion of the product revenue related to our hardware [removed: business] and [removed: our IP offerings] [added: IP, and to a lesser extent certain software,] is recognized upon delivery, and our forecasted revenue results are based, in part, on our expectations of [removed: hardware and IP] [added: these products] to be delivered in a particular quarter.

Therefore, changes in [removed: hardware and IP] bookings or deliveries [added: for these products,] relative to [removed: expectations] [added: expectations,] will have a more immediate impact on our revenue than changes in [added: the majority of our time-based] software or services bookings, for which revenue is generally recognized over time.

A substantial [removed: proportion] [added: portion] of our software licenses yield revenue recognized over time, which may make it difficult for us to rapidly increase our revenue in future fiscal periods and means that a decrease in orders in a given period would negatively affect our revenue in future periods.

Purchases of our products and services are dependent upon the commencement of new design projects by [removed: IC manufacturers] [added: semiconductor] and electronics systems companies.

The [removed: IC] [added: semiconductor] and electronics systems industries have also experienced significant downturns in connection with, or in anticipation of, maturing product cycles of both these industries’ and their customers’ products.

Uncertainty caused by [removed: the recent] challenging global political and economic conditions, including [removed: the effects of the rise in inflation and] [added: inflation,] interest rates, bank failures, U.S. deficit concerns, [removed: the Russian invasion of Ukraine] [added: geopolitical conflicts] and [removed: the conflict in the Middle East,] [added: other] adverse changes to international relationships among countries in which we or our customers operate or do business, protectionist measures or decline in corporate or consumer spending could negatively impact our customers’ businesses, reducing the number of new chip designs and their overall research and development spending, including their spending on our products and services, and as a result decrease demand for our products and services.

Adverse developments that affect financial institutions, transactional counterparties or other third parties, such as bank failures and [removed: protracted] [added: failure by Congress to increase the] U.S. federal debt ceiling [removed: negotiations,] [added: on a timely basis,] or concerns or speculation about any similar events or risks, have led and could lead to further credit downgrades and market-wide liquidity problems, which in turn may cause customers and other third parties to become unable to meet their obligations under various types of financial arrangements as well as general disruptions or instability in the financial markets.

Public health [removed: emergencies, like the COVID-19 pandemic,] [added: emergencies] and reactionary measures by governments and businesses have also had, and could in the future have, the effect of curtailing economic activity and causing substantial volatility and disruption in global markets.

For example, the ongoing geopolitical and economic uncertainty between the United States and China, where we have derived [removed: an increased] [added: a substantial] percentage of our revenue, the unknown impact of current and future U.S. and Chinese trade regulations, and geopolitical risks with respect to Taiwan, which serves as a central hub for the technology industry supply chain, could, directly or indirectly, materially harm our business, financial condition and results of operations.

If economic conditions or international relationships among countries in which we do business deteriorate, or, in particular, if semiconductor or electronics systems industry revenues do not grow, [removed: including as a result of a global semiconductor shortage,] the ability to export or import products or services by the semiconductor or electronics systems industry is adversely restricted, or our supplies of hardware components and products are subject to problems or delays, we may be adversely affected.

We must comply with [added: the import and export restrictions and] regulations [added: and economic sanctions laws] of the United States and of certain other countries in [removed: selling] [added: selling, providing] or shipping our products and transferring our technology outside the United States, to foreign nationals (including foreign nationals within the United States) or across borders.

For example, [removed: the] BIS maintains and frequently [removed: updates] [added: adds entities to] the “Entity List,” which limits our ability to deliver products and services to these entities, some of which are our customers.

When customers are on the Entity List or are subject to new or expanded trade restrictions, [removed: such as the recent implementation of controls on advanced computing ICs, computer commodities that contain such ICs, and certain semiconductor manufacturing items, as well as controls on transactions involving items for supercomputer and semiconductor manufacturing end-users,] it has a negative effect on our ability to sell products and provide services to these customers.

In addition, the issuance of new or expanded trade restrictions, such as the continued expansion of the military end-user and military end-use rule, the [removed: foreign-produced direct] [added: foreign-direct] product rules, or any other rule that prevents a class of commodities, software or technology from export to any specific country or countries without a license, could increase our costs or expenses.

[added: In addition, there may be indirect impacts to our] business which we cannot reasonably quantify, including that [added: certain restrictions, even if not directly applicable to us, may impact our customers' products which may have an adverse effect on demand for our products, or that] a country-specific export control may limit or prevent our employees who are nationals of the restricted country from performing their duties unless a license can be obtained.

Additionally, our business may also be impacted by other trade restrictions that may be imposed by the United States, [removed: China,] [added: China] or other countries.

Failure to obtain [added: import,] export [added: or re-export] licenses [added: or permits] when required or restrictions on trade imposed by the United States or other countries could harm our business by rendering us unable to sell or ship products and transfer our technology outside of the United States or across borders.

We have been and will continue cooperating with BIS and DOJ in responding to the subpoenas and their ongoing [removed: reviews.][added: investigations.]

These laws and regulations are complex and may have differing or conflicting legal standards, making compliance difficult and costly, and changes to these [removed: laws] [added: laws, or their interpretations,] may require us to make significant changes to our business operations that may adversely affect our business overall.

Acquisitions and other transactions, arrangements and investments involve numerous risks and potential operating difficulties and expenditures, [removed: including:][added: including the following, any of which could harm our business or negatively impact our results of operations:]

- the failure to [added: complete transactions on a timely basis or at all, or to] realize, or a delay in realizing, anticipated benefits or synergies, including as a result of any conditions placed upon approvals from governmental authorities;

- potential identified or unknown security vulnerabilities in acquired companies, technologies or products that expose us to additional security risks or delay our ability to integrate [removed: them into our organization and offerings;][added: them;]

- [removed: in the case of acquisitions with large greenhouse gas emissions, the] [added: brand or reputational harm, including due to] failure or perceived failure to achieve our publicly disclosed greenhouse gas emissions reduction [removed: target;][added: target due to acquisitions with large greenhouse gas emissions;]

- the failure to integrate, combine or manage acquired products, infrastructure, technologies and businesses [removed: effectively or to obtain customer acceptance of multiple platforms on a temporary or permanent basis;][added: effectively;]

- difficulties in integrating and assimilating acquired employees, which may lead to retention risk with respect to both acquired and existing [removed: employees;][added: employees and difficulties related to acquired employees represented by labor unions;]

- unanticipated costs or assumed liabilities, including those related to an acquired company's disclosure controls and procedures, internal control over financial reporting, [removed: cybersecurity] [added: cybersecurity, taxes] and other compliance [removed: programs, whether discovered during due diligence or thereafter;][added: programs;]

In addition, to facilitate acquisitions or investments, we [added: have and] may [added: in the future] seek additional equity or debt financing, which may not be available on terms favorable to us or at all, which may affect our ability to complete subsequent acquisitions or investments, and which may affect the risks of owning our common stock.

For example, [removed: if] we [added: have and may in the future] finance acquisitions or investments by issuing equity or convertible securities, or use such securities as consideration, [added: which have and may in the future cause] our existing stockholders [removed: may] [added: to] be diluted.

[removed: We rely on] [added: - Our success is highly dependent upon the legal protection of] our proprietary technology, as well as software and other IP rights licensed to us by third parties, and we cannot assure that the precautions taken to protect our rights will be adequate or that we will continue to be able to adequately secure such IP rights from third [removed: parties.][added: parties.]

Our failure to obtain third party software, other IP licenses or other IP rights that are necessary or helpful for our business on favorable [removed: terms,] [added: terms (or at all),] or our need to engage in litigation over these licenses or rights, could seriously harm our business, operating results or financial condition.

We [added: use AI Technologies throughout our business and] are making significant investments in AI initiatives, including [removed: building out] [added: expanding] our generative AI platform and applications, to enable our customers to optimize their products’ performance, increase the productivity of their design teams and workflows and develop AI solutions themselves.

We may incur significant costs, resources, investments, delays and not achieve a return on investment or capitalize on opportunities presented by [removed: AI.][added: AI, and we could incur financial losses.]

[removed: The] [added: Further, the] introduction of AI [removed: technologies] [added: Technologies] into new or existing products may result in new or enhanced governmental or regulatory scrutiny, litigation, confidentiality or security risks, ethical concerns, or other complications that could adversely affect our business, reputation or financial results.

[removed: The] [added: Further, the] IP ownership and license rights, including copyright, surrounding AI [removed: technologies has] [added: Technologies have] not been fully addressed by U.S. courts or other federal or state laws or regulations, and the use or adoption of AI [removed: technologies] [added: Technologies] into our products and services may result in exposure to claims of copyright infringement or other IP misappropriation.

[removed: In addition, the] [added: The] rapid evolution of AI [removed: technologies] [added: Technologies] requires the application of resources to help ensure that AI is implemented responsibly in order to minimize unintended, harmful impact.

If the development or use of AI [removed: technologies] [added: Technologies] by us or our customers draws controversy due to perceived or actual impact on human rights, IP, privacy, security, [removed: employment,] [added: employment or] the environment or in other social contexts, we may experience brand or reputational harm, competitive harm or legal liability.

We have experienced cyberattacks and other security [removed: breaches] [added: incidents] in the past and will continue to experience varying degrees of attacks and incidents in the future.

A [removed: significant] cyberattack on our [added: IT Systems] or [removed: a third-party provider’s] IT Systems [added: of one of our third-party providers or customers] could result in any or all of the following: compromise to our Cadence Cloud portfolio, which includes both our managed and customer-managed environments, and our data centers and those of our customers and end users; corruption or stealing of Confidential Information such as proprietary information related to our [added: (or our customers')] business, products, services and infrastructure or personally identifiable information; manipulation or stealing of financial data and assets; and/or disruption of our systems and services and those of our customers and others.

Risk Factors Summary

- Uncertainty in the global economy and instability within international relations, including changes in governmental policies relating to technology, and any potential downturn in the semiconductor and electronics industries, may negatively impact our business and reduce our bookings levels and revenue.

- We are subject to governmental export and import controls that could subject us to liability or impair our ability to compete in global markets as well as a variety of other laws and regulations.

- As we continue to acquire and invest in companies or technologies, we may not realize the expected business or financial benefits and these acquisitions could prove difficult to integrate, disrupt our business, dilute stockholder value and adversely affect our operating results and the market value of our common stock.

- We could suffer serious harm to our business because of the infringement or misappropriation of our IP rights by third parties.

- We may not realize opportunities presented by AI and may incur reputational and financial harm and liability as a result of issues in the development and use of AI.

- Cyberattacks that compromise the confidentiality, integrity or availability of our or our third-party providers’ information technology systems or confidential information could materially harm our business, reputation and financial condition.

- Risks associated with our international operations could adversely impact our financial condition.

- The effect of foreign exchange rate fluctuations may adversely impact our revenue, expenses, cash flows and financial condition.

- A significant portion of our cash is held and generated outside of the United States, and if our cash available in the United States is insufficient to meet our requirements in the United States, we may be required to raise cash in ways that could negatively affect our financial condition, results of operations and the market price of our common stock.

- The investment of our cash is subject to risks that may cause losses and affect the liquidity of these investments.

- The long sales cycle of our products and services may cause our operating results to fluctuate unexpectedly.

- We have incurred, and may in the future incur, substantial costs in connection with restructuring plans, which might not result in the benefits we anticipate, possibly having a negative effect on our future operating results.

- Our business is subject to the risk of natural disasters and global climate change.

- Customer consolidation could affect our operating results.

- Our failure to respond quickly to technological developments or customers’ increasing technological requirements and to continue to develop or acquire technological capabilities could make our products uncompetitive and obsolete and impede our ability to address the requirements in technology segments that are expected to contribute to our growth.

- Our investment in research and development of new and existing products, technologies and services may affect our operating results, and our return on investment may be lower or develop more slowly than expected.

- The competition in our industries is substantial, and we may not be able to continue to compete successfully.

- Our future revenue is dependent in part upon our installed customer base continuing to license or buy products and purchase services.

- Our results could be adversely affected by an increase in our effective tax rate as a result of U.S. and foreign tax law changes, outcomes of current or future tax examinations, or by material differences between our forecasted and actual effective tax rates.

- Litigation, government investigations or regulatory proceedings could adversely affect our financial condition and operations.

- If we become subject to unfair hiring claims, we could be prevented from hiring needed employees, incur liability for damages and incur substantial costs in defending ourselves.

- We are subject to evolving corporate governance, environmental and social practices and public disclosure expectations and regulations that impact compliance costs and risks of noncompliance.

- Our stock price has been and may continue to be subject to fluctuations.

- The amount and frequency of our share repurchases may fluctuate, and we cannot guarantee that we will fully consummate our share repurchase authorization, or that it will enhance long-term stockholder value.

Share repurchases could also increase the volatility of the trading price of our common stock and diminish our cash reserves.

- Our bylaws designate the Court of Chancery of the State of Delaware as the exclusive forum for certain disputes between us and our stockholders.

- Our debt obligations expose us to risks that could adversely affect our business, operating results or financial condition, and could prevent us from fulfilling our obligations under such indebtedness.

- At the option of the holders of our outstanding notes, we may, under certain circumstances, be required to repurchase such notes.

- The terms of our debt agreements restrict our current and future operations, particularly our ability to respond to changes or to take certain actions.

- We may not be able to generate sufficient cash to service all of our indebtedness and may be forced to take other actions to satisfy our obligations under our indebtedness, which may not be successful.

- Our variable rate indebtedness subjects us to interest rate risk, which could cause our debt service obligations to increase significantly.

Business and Operational Risks

We have experienced varied operating results, and our operating results for any particular fiscal period are affected by the timing of revenue recognition, particularly for our hardware, IP and certain software products.

Changes in our products or services, or changes in and continued expansion of these laws and regulations, including new or increased tariffs, trade protection measures, sanctions, trade embargoes and other trade barriers, may create delays in the introduction of our products or services into international markets, prevent our customers from deploying our products or services or, in some cases, prevent the export or import of our products or services to certain countries, governments or persons altogether or result in increased costs for us, which could reduce our competitiveness, or for our customers, which could affect their purchasing behaviors.

Any decreased use of our products or services or limitation on our ability to export to or sell our products or services in international markets would likely harm our business, operating results and financial condition.

For example, the United States and other global actors have imposed economic sanctions on Russia and other entities and individuals as a result of the Russian invasion of Ukraine and conflicts in the Middle East.

New or increased tariffs and other changes in U.S. trade policy, including new sanctions, could trigger retaliatory actions by affected countries.

In addition, if our customers sell our products to any entity on the Entity List without our knowledge or authorization, we may be held liable for such sales.

In December 2024, we began discussions with BIS and DOJ regarding preliminary findings of their investigations and a potential resolution of this matter.

Changes in these regulations or restrictions due to changes in trade relationships with the United States, including new tariffs, trade protection measures, import or export licensing requirements, sanctions, trade embargoes and other trade barriers, could harm our business, operating results and financial condition.

In addition, there may be indirect impacts to our

Restrictions on our ability to sell and ship our products to customers on the Entity List have had, and may continue to have, an adverse effect on our business, results of operations or financial condition.

- the failure to complete transactions on a timely basis or at all, including due to a failure to obtain required approvals on a timely basis, or at all, from governmental authorities;

- brand or reputational harm;

- contingent payments in connection with acquisitions in the future where we may be required to make certain contingent payments without deriving the value we expect to derive from an acquisition in excess of such payments or at all;

Any of these risks could harm our business or negatively impact our results of operations.

If we finance acquisitions or investments through debt financing, we could face constraints related to the terms (including restrictive covenants) of, and repayment obligation related to, the incurrence of indebtedness.

These arrangements may impact our liquidity, financial position and results of operations or increase dilution of our stockholders’ equity interests in the company, all of which could adversely affect the market price of our common stock.

Moreover, the long-term trajectory of this technological trend is unknown.

If we fail to develop and timely offer such products or keep pace with the product offerings of our competitors, or if demand for such products does not grow as anticipated, our business could be adversely affected.

Existing laws and regulations may apply to us or our customers in new ways, and new laws and regulations may be instituted, the effects of which are difficult to predict.

- country-specific export controls could impact our employees who are nationals of the restricted country, preventing these foreign nationals from performing their technology-focused roles which may slow our pace of innovation and/or impact our ability to service customers unless an export license is granted;

We have significant operations outside the United States.

Our revenue from international operations as a percentage of total revenue has historically exceeded 50%, and we expect that revenue from our international operations will continue to account for a significant portion of our total revenue.

We also transact business in various foreign currencies, although the majority of our revenue contracts worldwide are denominated in U.S. dollars.

Approximately one third of our total costs and expenses are transacted in foreign currencies.

Accordingly, if our U.S. cash is insufficient to meet our future

Our strategy is also intended to increase our business among semiconductor companies, which are increasing their contribution to the end products into which their ICs and other electronic subsystems are incorporated.

Models of each component’s electrical properties and behavior also become more complex as do requisite analysis, design, verification and manufacturing capabilities.

- increased technological capability of the FPGA logic chip, which creates an alternative to IC implementation for some companies, could reduce demand for our IC implementation products and services;

A transition by our customers to different business models associated with cloud computing technologies could result in reduced revenue.

Such investments may affect our operating results, and, if the return on these investments is lower or develops more slowly than we expect, our revenue and operating results may suffer.

We invest and expect to continue to invest in research and development for new and existing products, technologies and services in response to our customers’ increasing technological requirements.

We believe that we must continue to invest a significant amount of time and resources in our research and development efforts and technical sales support to maintain and improve our competitive position.

Customer consolidation can reduce the total level of purchases of our software, hardware, IP and services increase customers’ bargaining power in negotiations with their suppliers, including us.

contract manufacturers.

For example, the global semiconductor shortage since 2021 has negatively impacted and may continue to negatively impact multiple segments of the semiconductor industry, including our company and our customers.

investigations or regulatory proceedings from time to time.

developing, internal controls and processes that continue to evolve, and assumptions that are subject to change.

If our ESG-related data, processes and reporting are incomplete or inaccurate, or if we fail to achieve progress with respect to our ESG targets or goals on a timely basis, or at all, our business, financial performance and growth could be adversely affected.

All 400,000 shares of preferred stock are currently designated as Series A Preferred, but because no such shares are outstanding or reserved for issuance, our Board of Directors may reduce the number of shares of preferred stock designated as Series A Preferred to zero.

As of December 31, 2023, both our 2024 Notes and 2025 Term Loan will mature in the next 22 months, which could require us to consume a significant portion of our liquidity or raise additional financing in adverse capital markets conditions.

Our inability to generate sufficient cash flows to satisfy our debt obligations, or to refinance our indebtedness on commercially reasonable terms or at all, would materially and adversely affect our financial position and results of operations.

Our revolving credit facility utilizes, at our option, either (1) Term Secured Overnight Financing Rate (“SOFR”), plus a margin between 0.750% and 1.250% per annum, plus a SOFR adjustment of 0.10% or (2) the base rate plus a margin between 0.000% and 0.250% per annum, to calculate the amount of accrued interest on any borrowings.

The 2025 Term Loan utilizes, at our option, either (1) Term SOFR, plus a margin between 0.625% and 1.125% per annum, plus a SOFR adjustment of 0.10% or (2) base rate plus a margin between 0.000% and 0.125% per annum, to calculate the amount of accrued interest on borrowings.

Since our inception, we have been at the forefront of technology [removed: innovation, solving highly complex challenges in the semiconductor and electronic systems industries.][added: innovation.]

We group our products into [removed: categories related to major design activities:][added: the following categories:]

For additional information about our products, see the discussion in Item 1, “Business,” under the heading [removed: “Products and Product] [added: “Product] Categories.”

Because we operate globally, our business is subject to the effects of [removed: expanded trade control laws and regulations, geopolitical conflict] [added: economic downturns or recessions] in [removed: and around Ukraine,] the [removed: Middle East, and other areas of the world,] [added: regions in which we do business,] volatility in foreign currency exchange rates relative to the U.S. [removed: dollar and the rise in] [added: dollar, inflation, changing] interest [removed: rates.][added: rates, expanded trade control laws and regulations, potential imposition of new or higher tariffs and geopolitical conflicts.]

We have been impacted by the continued expansion of trade control laws and regulations, including certain export control restrictions concerning advanced node IC production in China, the inclusion of additional Chinese technology companies on the Bureau of Industry and Security [removed: (“BIS”)] “Entity List” and regulations governing the sale of certain technologies.

We also continuously monitor geopolitical conflicts around the [removed: world] [added: world, including the ongoing conflict between Russia] and [added: Ukraine and conflicts in the Middle East, and assess] their [removed: effects] [added: impact] on our business.

[removed: The termination of our operations in Russia has] [added: To date, these conflicts have] not materially limited our ability to develop or support our products and [removed: has] [added: have] not had a material impact on our results of operations, financial condition, liquidity or cash flows.

The discussion of our fiscal [removed: 2023] [added: 2024] consolidated results of operations includes year-over-year comparisons to fiscal [removed: 2022] [added: 2023] for revenue, cost of revenue, operating expenses, operating margin, other non-operating [added: income and] expenses, income taxes and cash flows.

For a discussion of the fiscal [removed: 2022] [added: 2023] changes compared to fiscal [removed: 2021,] [added: 2022,] see the discussion in Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K for the fiscal year ended December 31, [removed: 2022,] [added: 2023,] filed with the SEC on February [removed: 13, 2023.][added: 14, 2024.]

Results of operations for fiscal [removed: 2023,] [added: 2024,] as compared to fiscal [removed: 2022,] [added: 2023,] reflect the following:

- [removed: Increased revenue in each of our five product categories, primarily driven by growth] [added: Growth] in revenue from our [removed: software and emulation] [added: software, services, IP] and [removed: prototyping] hardware offerings;

- Continued investment in research and development activities and technical sales [removed: support;][added: support, including headcount from acquisitions;]

We primarily generate revenue from licensing our software and IP, selling or leasing our [removed: emulation and prototyping] hardware [removed: technology,] [added: products,] providing maintenance for our software, hardware and IP, providing engineering [removed: and cloud] services and earning royalties generated from the use of our IP.

The timing of our revenue is significantly affected by the mix of software, hardware and IP products generating revenue in any given [removed: period,] [added: period and] whether the revenue is recognized over [removed: time,] [added: time] or [removed: recognized] at a point in [removed: time] [added: time,] upon completion of delivery.

Recurring revenue includes revenue recognized over time from our software arrangements, services, royalties, maintenance on IP licenses and [removed: hardware,] [added: hardware products,] and operating leases of hardware.

Up-front revenue is primarily generated by our sales of [removed: emulation and prototyping] hardware [removed: and] [added: products,] individual IP [added: licenses and certain software] licenses.

The percentage of our recurring and up-front revenue and fluctuations in revenue within our geographies [added: in any single fiscal period] are [added: primarily] impacted by delivery of hardware and IP products to our [removed: customers in any single fiscal period.][added: customers.]

The following table shows the percentage of our revenue that is classified as recurring or up-front for fiscal [removed: 2023] [added: 2024] and [removed: 2022:][added: 2023:]

| Revenue recognized over time | | | [removed: 81] [added: 80] | | % | | | | [removed: 83] [added: 81] | | % |

| Revenue from arrangements with non-cancelable commitments | | | 3 | | % | | | | [removed: 2] [added: 3] | | % |

| Recurring revenue | | | [removed: 84] [added: 83] | | % | | | | [removed: 85] [added: 84] | | % |

| Up-front revenue | | | [removed: 16] [added: 17] | | % | | | | [removed: 15] [added: 16] | | % |

[removed: Up-front revenue as a percentage of total revenue increased during] [added: During] fiscal [removed: 2023,] [added: 2024,] as compared to fiscal [removed: 2022,] [added: 2023, revenue in the United States increased] primarily due to growth in [added: revenue from] our [removed: emulation] [added: hardware, software, IP] and [removed: prototyping] [added: service offerings, while revenue in China decreased primarily due to a decrease in revenue from our] hardware [added: and IP] offerings.

| | | | December 31, [removed: 2023] [added: 2024] | | | | | | September 30, [removed: 2023] [added: 2024] | | | | | | June 30, [removed: 2023] [added: 2024] | | | | | | March 31, [removed: 2023] [added: 2024] | | | | | | December 31, [removed: 2022] [added: 2023] | | |

| Recurring revenue | | | [removed: 84] [added: 83] | | % | | | | [removed: 84] [added: 86] | | % | | | | [removed: 84] [added: 87] | | % | | | | [removed: 84] [added: 87] | | % | | | | [removed: 85] [added: 84] | | % |

| Up-front revenue | | | [removed: 16] [added: 17] | | % | | | | [removed: 16] [added: 14] | | % | | | | [removed: 16] [added: 13] | | % | | | | [removed: 16] [added: 13] | | % | | | | [removed: 15] [added: 16] | | % |

The following table shows our revenue for fiscal [removed: 2023] [added: 2024] and [removed: 2022] [added: 2023] and the change in revenue between years:

| | | | [removed: 2023] [added: 2024] | | | | | | [removed: 2022] [added: 2023] | | | | | | | | | | | | [removed: 2023] [added: 2024] vs. [removed: 2022] [added: 2023] | | | | | | | | | | | | | | | | | | | | |

| Product and maintenance | | | $ | [removed: 3,834.4] [added: 4,213.5] | | | | | $ | [removed: 3,340.2] [added: 3,834.4] | | | | | | | | | | | $ | [removed: 494.2] [added: 379.1] | | | | | [removed: 15] [added: 10] | | % | | | | | | | | | | | | |

| Total revenue | | | $ | [removed: 4,090.0] [added: 4,641.3] | | | | | $ | [removed: 3,561.7] [added: 4,090.0] | | | | | | | | | | | $ | [removed: 528.3] [added: 551.3] | | | | | [removed: 15] [added: 13] | | % | | | | | | | | | | | | |

[removed: Services revenue] [added: Cost of services] increased during fiscal [removed: 2023,] [added: 2024,] as compared to fiscal [removed: 2022,] [added: 2023,] primarily due to increased [removed: revenue from our Cadence-managed cloud-based offerings, including] [added: costs associated with] our [removed: computational molecular modeling] [added: design service offerings] and [removed: simulation solution] [added: costs] associated with [added: the service offerings from] our acquisition of [removed: OpenEye.][added: Invecas.]

No one customer accounted for 10% or more of total revenue during fiscal [removed: 2023] [added: 2024] or [removed: 2022.][added: 2023.]

The following table shows the percentage of [removed: product and related maintenance] revenue contributed by each of our [removed: five] product categories [removed: and services] during fiscal [removed: 2023] [added: 2024] and [removed: 2022:][added: 2023:]

| System Design and Analysis | | | [removed: 12] [added: 16] | | % | | | | 12 | | % | | | | | | |

| United States | | | $ | [removed: 1,694.5] [added: 2,159.7] | | | | | $ | [removed: 1,577.9] [added: 1,694.5] | | | | | | | | | | | $ | [removed: 116.6] [added: 465.2] | | | | | [removed: 7] [added: 27] | | % | | | | | | | | | | | | |

| Other Americas | | | [removed: 65.3] [added: 93.1] | | | | | | [removed: 53.1] [added: 65.3] | | | | | | | | | | | | [removed: 12.2] [added: 27.8] | | | | | | [removed: 23] [added: 43] | | % | | | | | | | | | | | | |

| Other Asia | | | [removed: 766.4] [added: 855.9] | | | | | | [removed: 629.5] [added: 766.4] | | | | | | | | | | | | [removed: 136.9] [added: 89.5] | | | | | | [removed: 22] [added: 12] | | % | | | | | | | | | | | | |

| Europe, Middle East and Africa (“EMEA”) | | | [removed: 655.1] [added: 699.3] | | | | | | [removed: 582.4] [added: 655.1] | | | | | | | | | | | | [removed: 72.7] [added: 44.2] | | | | | | [removed: 12] [added: 7] | | % | | | | | | | | | | | | |

[removed: Revenue in each of the six geographies presented in the table above] [added: Product and maintenance revenue] increased during fiscal [removed: 2023,] [added: 2024,] as compared to fiscal [removed: 2022,] [added: 2023,] primarily due to [removed: increased] [added: growth in] revenue from our [removed: software offerings, resulting from our] [added: software, hardware and IP offerings as a result of] customers’ continued investment in [removed: new,] complex designs for their products.

| United States | | | [removed: 41] [added: 47] | | % | | | | [removed: 44] [added: 41] | | % | | | | | | |

Cadence® is a global market leader that develops computational, AI-driven software, accelerated hardware, and IP solutions for engineers and scientists to bring new and innovative products to life.

The world’s most innovative technology companies use our solutions and services to deliver transformational products to multiple industries that drive the global economy.

The products these companies develop are some of the most complex systems in the world.

We work closely with our customers, helping them solve their most complex challenges in the semiconductor and electronic systems industries to unlock limitless opportunities.

Our strategy allows us to deliver solutions to our customers to solve their most complex product development challenges.

Our industry-leading computational software, specialized accelerated hardware, and IP enable us to adapt to our customer’s dynamic design requirements, allowing them to meet their critical business and environmental concerns including time-to-market and sustainability.

The creation of even the most seemingly simple electronic systems and products often requires a complex design process and requires highly trained engineers with various areas of specialized knowledge and skill sets.

Our ability to deliver innovative products that keep up with increasing complexity allows our customers to be successful in meeting their business goals and objectives.

- Core EDA

Recent Acquisitions

Consistent with our Intelligent System Design strategy, during the first quarter of fiscal 2024, we completed our acquisition of Invecas, a leading provider of design engineering, embedded software and system-level solutions.

We believe the addition of a skilled engineering team with vast experience in delivering end-to-end system solutions with deep expertise in advanced nodes, mixed-signal, verification, embedded software, packaging and turnkey custom silicon production will enhance our ability to pursue attractive opportunities in the markets we serve.

Revenue and cost of revenue associated with contracts assumed with our acquisition of Invecas is primarily classified as services revenue and cost of services in our consolidated income statements.

During the second quarter of fiscal 2024, we completed our acquisition of BETA CAE, a system analysis platform provider of multi-domain, engineering simulation solutions.

The acquisition of BETA CAE expands our multiphysics system analysis suite with highly complementary products, enabling us to offer a more comprehensive portfolio to customers in the automotive sector and at companies in the aerospace, industrial and healthcare industries.

Revenue associated with contracts assumed with our acquisition of BETA CAE is primarily classified as product and maintenance revenue in our System Design and Analysis product category.

Cost of revenue associated with these contracts is primarily classified as cost of product and maintenance in our consolidated income statements.

In addition, President Trump has announced the imposition of broad-based tariffs on imports from many countries, including China and Mexico.

We are monitoring the imposition of these new or higher tariffs, including any pauses on the tariffs imposed, and will assess their potential impact on our business either directly, such as on our hardware business, or due to downstream effects.

- Incremental costs for professional services; and

- Increased interest expense from our indebtedness.

| | | | 2024 | | | | | | 2023 | | |

The percentage of revenue characterized as recurring compared to revenue characterized as up-front may vary between fiscal quarters.

We expect our percentage of annual up-front revenue to continue to increase in 2025 as growth in our product offerings for which revenue is recognized up-front is expected to be greater than the growth of our product offerings for which revenue is recognized over time

| Services | | | 427.8 | | | | | | 255.6 | | | | | | | | | | | | 172.2 | | | | | | 67 | | % | | | | | | | | | | | | |

Services revenue increased during fiscal 2024, as compared to fiscal 2023, primarily due to growth in revenue from our design service offerings, which were supplemented by our acquisition of Invecas.

| | | | 2024 | | | | | | 2023 | | | | | | | | |

| Core EDA | | | 71 | | % | | | | 76 | | % | | | | | | |

| IP | | | 13 | | % | | | | 12 | | % | | | | | | |

Revenue from any one product category as a percentage of total revenue may fluctuate from period to period based on the mix of products and services sold in a given period and the timing of revenue recognition, particularly for our hardware, IP and certain software products.

While revenue from our Core EDA product category increased during fiscal 2024, as compared to fiscal 2023, Core EDA as a percentage of total revenue decreased over the same period.

As shown in the table below, revenue from China decreased during the same period and the substantial majority of that decreased revenue is included in the Core EDA category, resulting in lower revenue growth in the Core EDA category compared to both the IP and System Design and Analysis categories.

| China | | | 573.1 | | | | | | 679.5 | | | | | | | | | | | | (106.4) | | | | | | (16) | | % | | | | | | | | | | | | |

| Japan | | | 260.2 | | | | | | 229.2 | | | | | | | | | | | | 31.0 | | | | | | 14 | | % | | | | | | | | | | | | |

| Total revenue | | | $ | 4,641.3 | | | | | $ | 4,090.0 | | | | | | | | | | | $ | 551.3 | | | | | 13 | | % | | | | | | | | | | | | |

Revenue in the remaining geographies presented in the table above increased during fiscal 2024, as compared to fiscal 2023, primarily due to growth in revenue from software offerings.

| | | | 2024 | | | | | | 2023 | | | | | | | | |

| Cost of services | | | 210.9 | | | | | | 103.3 | | | | | | | | | | | | 107.6 | | | | | | 104 | | % | | | | | | | | | | | | |

| | | | 2024 | | | | | | 2023 | | | | | | | | |

| | | | 2024 | | | | | | 2023 | | | | | | | | | | | | 2024 vs. 2023 | | | | | | | | | | | | | | | | | | | | |

Cadence is a leading pioneer in electronic system design software and IP, building upon more than 35 years of computational software expertise.

We are a global company that provides computational software, special-purpose computational hardware, IP and services to multiple vertical sectors including automotive, AI, aerospace and defense, high-performance and mobile computing, hyperscalers, wireless communications, IIoT and medical equipment.

Our strategy allows us to deliver essential computational software, hardware and IP that our customers use to turn their design concepts into reality.

Our customers include many of the world's most innovative companies that design and build highly sophisticated semiconductor and electronic systems found in products used in everyday life.

Our Intelligent System Design strategy allows us to quickly adapt to our customers' dynamic design requirements.

Our products and services enable our customers to develop complex and innovative semiconductor and electronic systems, so demand for our technology and expertise is driven by increasing complexity and our customers’ need to invest in new designs and products that are highly differentiated.

Historically, the industry that provided the tools used by IC engineers was referred to as Electronic Design Automation (“EDA”).

Today, our offerings include and extend beyond EDA.

- Custom IC Design and Simulation;

- Digital IC Design and Signoff;

- Functional Verification;

Consistent with our Intelligent System Design strategy, we completed several acquisitions since the beginning of fiscal 2023 that we believe enhance our talent, our technology portfolio and our ability to pursue attractive opportunities in the markets we serve.

During fiscal 2023, these acquisitions increased expenses, including amortization of acquired intangible assets, more than revenue.

Fiscal Year End

Historically, our fiscal years were 52- or 53-week periods ending on the Saturday closest to December 31.

During fiscal 2022, our Board of Directors approved a change in our fiscal year end from the Saturday closest to December 31 of each year to December 31 of each year.

The fiscal year change became effective beginning with our fiscal year 2023, which began on January 1, 2023.

Fiscal year 2022, which is included in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” for comparative purposes, represents a 52-week period.

Our first three fiscal quarters end on March 31, June 30, and September 30.

No transition report was required in connection with this change.

During the first half of fiscal 2022, due to the ongoing conflict between Russia and Ukraine and the corresponding sanctions imposed by the United States and other countries, we terminated our operations in Russia.

We do not have operations or employees in Ukraine.

More recently, the conflict in the Middle East has had an impact on our employees and our customers in that region of the world.

Our assessment of the potential impact that this conflict could have on our business and our operations is ongoing.

- Incremental costs resulting from integration of acquired businesses; and

- Gains from our investments in equity securities.

| | | | 2023 | | | | | | 2022 | | |

This growth was driven by increased production capacity during fiscal 2023 to address demand for our emulation and prototyping hardware offerings.

While the percentage of revenue characterized as recurring compared to revenue characterized as up-front may vary between fiscal quarters, the overall mix of revenue was relatively consistent over the course of twelve consecutive months during both fiscal 2023 and fiscal 2022.

| Services | | | 255.6 | | | | | | 221.5 | | | | | | | | | | | | 34.1 | | | | | | 15 | | % | | | | | | | | | | | | |

Product and maintenance revenue increased during fiscal 2023, as compared to fiscal 2022, primarily due to increased demand across our five product categories.

This growth was driven by our customers investing in new, complex designs for their products that included the design of electronic systems for consumer, hyperscale computing, mobile, 5G communications, automotive, aerospace and defense, industrial and healthcare.

| | | | 2023 | | | | | | 2022 | | | | | | | | |

| Custom IC Design and Simulation | | | 22 | | % | | | | 22 | | % | | | | | | |

| Digital IC Design and Signoff | | | 27 | | % | | | | 28 | | % | | | | | | |

| Functional Verification, including Emulation and Prototyping Hardware | | | 27 | | % | | | | 26 | | % | | | | | | |

| IP | | | 12 | | % | | | | 12 | | % | | | | | | |

Revenue by product category fluctuates from period to period based on demand for our products and services, our available resources and our ability to deliver and support them.

| China | | | 679.5 | | | | | | 521.5 | | | | | | | | | | | | 158.0 | | | | | | 30 | | % | | | | | | | | | | | | |

| Japan | | | 229.2 | | | | | | 197.3 | | | | | | | | | | | | 31.9 | | | | | | 16 | | % | | | | | | | | | | | | |

The following table provides information about our foreign currency forward exchange contracts as of December 31, [removed: 2023.][added: 2024.]

All of these forward contracts mature during February [removed: 2024.][added: 2025.]

| European [removed: Union] [added: union] euro | | | [removed: $] [added: 165.1] | [removed: 162.1] | | | | | [removed: 0.92] [added: 0.94] | | |

| South Korean [removed: won] [added: Won] | | | [removed: 40.6] [added: 3.4] | | | | | | [removed: 1,304.45] [added: 1,399.26] | | |

| Estimated fair value | | | $ | [removed: 9.3] [added: (7.5)] | | | | | | | |

As of December 31, [removed: 2022,] [added: 2023,] our foreign currency exchange contracts had an aggregate principal amount of [removed: $489.0] [added: $697.9] million, and an estimated fair value of [removed: $5.3] [added: $9.3] million.

We have performed sensitivity analyses as of December 31, [removed: 2023,] [added: 2024,] and December 31, [removed: 2022,] [added: 2023,] using a modeling technique that measures the change in the fair values arising from a hypothetical 10% change in the value of the U.S. dollar relative to applicable foreign currency exchange rates, with all other variables held constant.

The sensitivity analyses indicated that a hypothetical 10% decrease in the value of the U.S. dollar would result in [removed: a decrease] [added: an increase] to the fair value of our foreign currency forward exchange contracts of [removed: $18.4] [added: $18.3] million and [removed: $4.2] [added: a decrease of $18.4] million as of December 31, [removed: 2023] [added: 2024] and December 31, [removed: 2022,] [added: 2023,] respectively, while a hypothetical 10% increase in the value of the U.S. dollar would result in [removed: an increase] [added: a decrease] to the fair value of our foreign currency forward exchange contracts of [removed: $20.4] [added: $12.7] million and [removed: $7.2] [added: an increase of $20.4] million as of December 31, [removed: 2023] [added: 2024] and December 31, [removed: 2022,] [added: 2023,] respectively.

Our exposure to market risk for changes in interest rates relates primarily to our portfolio of cash, cash equivalents, investments in debt securities and any balances outstanding on our [removed: 2021] [added: 2024] Credit [removed: Facility and 2025 Term Loan.][added: Facility.]

Our investments in debt securities had a fair value of approximately [added: $50.3 million and] $49.8 million as of December 31, [added: 2024 and December 31,] 2023, [removed: which] [added: respectively, that] may decline in value if market interest rates rise.

As of December 31, [added: 2024 and December 31,] 2023, an increase in the market rates of interest of 1% would result in a decrease in the fair values of our marketable debt securities by approximately [added: $2.0 million and] $2.6 [removed: million.][added: million, respectively.]

Interest rates under our [removed: 2021] [added: 2024] Credit Facility [removed: and 2025 Term Loan] are variable, so interest expense could be adversely affected by [removed: changes] [added: increases] in interest rates, particularly for periods when we maintain [removed: a balance] [added: an] outstanding [removed: under the revolving credit facility.][added: balance.]

As of December 31, [removed: 2023,] [added: 2024,] there were no borrowings outstanding under our [removed: 2021] [added: 2024] Credit [removed: Facility and $300.0 million of borrowings outstanding under our 2025 Term Loan.][added: Facility.]

Interest rates for our [removed: 2021] [added: 2024] Credit Facility [removed: and 2025 Term Loan] can fluctuate based on changes in market interest rates and in interest rate margins that vary based on the credit ratings of our unsecured debt.

Assuming [removed: all loans were] [added: our 2024 Credit Facility was] fully drawn and we were to fully exercise our right to increase borrowing capacity under our [removed: 2021] [added: 2024] Credit [removed: Facility and made no prepayments on our 2025 Term Loan,] [added: Facility,] each quarter point change in interest rates would result in a [removed: $3.4] [added: $4.4] million change in annual interest expense on our indebtedness under our [removed: 2021] [added: 2024] Credit [removed: Facility and 2025 Term Loan.][added: Facility.]

For an additional description of the [removed: 2021] [added: 2024] Credit [removed: Facility and 2025 Term Loan,] [added: Facility,] see Note 5 in the notes to consolidated financial statements.

| British pound | | | $ | 205.3 | | | | | 0.79 | | |

| Chinese renminbi | | | 124.3 | | | | | | 7.25 | | |

| Swiss franc | | | 106.2 | | | | | | 0.89 | | |

| Japanese yen | | | 101.7 | | | | | | 154.4 | | |

| Israeli shekel | | | 74.9 | | | | | | 3.69 | | |

| Swedish krona | | | 52.4 | | | | | | 10.93 | | |

| Indian rupee | | | 49.1 | | | | | | 84.99 | | |

| Canadian dollar | | | 28.2 | | | | | | 1.4 | | |

| Taiwan dollar | | | 14.9 | | | | | | 32.54 | | |

| Singapore dollar | | | 2.1 | | | | | | 1.34 | | |

| Total | | | $ | 927.6 | | | | | | | |

All highly liquid securities with a maturity of three months or less at the date of purchase are considered to be cash equivalents.

The carrying value of our interest-bearing instruments approximated fair value as of December 31, 2024.

Our 2025 Term Loan and 2026 Term Loan, which had variable interest rates, were prepaid in full in September 2024.

| British pound | | | 158.2 | | | | | | 0.80 | | |

| Japanese yen | | | 111.2 | | | | | | 146.46 | | |

| Swedish krona | | | 69.9 | | | | | | 10.72 | | |

| Israeli shekel | | | 57.6 | | | | | | 3.73 | | |

| Indian rupee | | | 34.4 | | | | | | 83.47 | | |

| Canadian dollar | | | 34.1 | | | | | | 1.37 | | |

| Chinese renminbi | | | 16.3 | | | | | | 7.12 | | |

| Taiwan dollar | | | 11.8 | | | | | | 30.95 | | |

| Singapore dollar | | | 1.7 | | | | | | 1.33 | | |

| Total | | | $ | 697.9 | | | | | | | |

Such variability in market interest rates may result in a negative impact on the results of our investment activities.

As of December 31, 2022, we did not hold investments in debt securities.

Statements including, but not limited to, statements regarding the [added: horizons of artificial intelligence (“AI"), other technological and market advancements and their impacts on our business; the] extent, timing and mix of future revenues and customer demand; the deployment of our products and services; the impact of the macroeconomic and geopolitical environment, including but not limited to, expanded trade [removed: control laws and regulations,] [added: controls, tariffs,] conflicts [removed: in and] around [removed: Ukraine,] the [removed: Middle East and other areas of the] world, volatility in foreign currency exchange rates, inflation and [removed: the rise] [added: changes] in interest rates; the impact of government actions; future costs, expenses, tax rates and uses of cash; pending legal, administrative and tax proceedings; restructuring actions and associated charges and benefits; pending acquisitions, accounting for acquisitions and integration of acquired businesses; and other statements using words such as “anticipates,” “believes,” “could,” “estimates,” “expects,” “forecasts,” “intends,” “may,” “plans,” “projects,” “should,” “targets,” “will” and “would,” and words of similar import and the negatives thereof, constitute forward-looking statements.

Important risks and uncertainties that could cause actual results to differ materially from those contained in the forward-looking statements include, but are not limited to, those identified in the “Proprietary Technology,” [added: “Governmental Regulations,”] “Competition,” “Risk Factors,” “Critical Accounting Estimates,” “Results of Operations,” “Quantitative and Qualitative Disclosures About Market Risk” and “Liquidity and Capital Resources” sections contained in this Annual Report and the risks discussed in our other Securities and Exchange Commission (“SEC”) filings.*

Since our inception, we have been at the forefront of technology [removed: innovation, solving highly complex challenges in the semiconductor and electronic systems industries.][added: innovation.]

The creation of even the most seemingly simple electronic systems and products [removed: that people use every day is] [added: typically includes] a complex [added: design] process and requires [removed: many highly-trained] [added: highly trained] engineers with various areas of specialized knowledge and skill sets.

Our ability to deliver [added: innovative] products that keep up with increasing complexity allows our customers to be successful in meeting their business goals and objectives.

Historically, the industry that provided the [added: software] tools [removed: used by] IC engineers [added: used] was [removed: referred to as] [added: called] Electronic Design Automation (“EDA”).

[removed: ][added: ]

Our software and [removed: special-purpose] hardware products also support cloud access to address [removed: the] [added: our customers'] growing computational [removed: needs of our customers.][added: needs.]

In [removed: January] [added: the first quarter of fiscal] 2024, we acquired Invecas, [removed: Inc.,] a leading provider of design engineering, embedded [removed: software] [added: software,] and system-level solutions.

[removed: This acquisition adds] [added: With this acquisition, we have added] a [added: highly] skilled system design engineering team with expertise in providing [removed: custom solutions across] [added: IP design services for a wide variety of advanced node and mixed-signal] chip [removed: design,] [added: designs, verification,] product engineering, advanced [removed: packaging] [added: packaging,] and embedded software.

Our products and services enable our customers to design complex and innovative semiconductor and electronic systems that are [removed: accelerated] [added: driven] by [removed: the trends of] [added: key trends, including foundries creating new advanced transistor devices and processes,] semiconductor companies designing electrical systems, systems companies designing semiconductors, the hyper-convergence between electrical and mechanical [removed: systems] [added: systems, hyperscale computing, autonomous driving,] and [removed: generative AI.][added: 5G.]

In general, these attributes can be grouped into broader categories such as quality of results [removed: (“QoR”)] (in terms of power consumption, performance and chip area), engineering productivity, tool performance, [removed: manufacturing,] [added: manufacturability,] reliability and faster time to market.

[removed: Products and Product] [added: Product] Categories

[removed: Custom] [added: *Custom] IC Design and [removed: Simulation][added: Simulation*]

[removed: The Virtuoso Studio platform] [added: Verisium™] is our generative AI solution for [removed: custom IC and mixed-signal design and simulation] [added: multi-run verification] that enables additional productivity, [removed: automation] [added: automation,] and quality of results throughout the entire [removed: design] [added: verification] flow.

[removed: Digital] [added: *Digital] IC Design and [removed: Signoff][added: Signoff*]

[removed: This offering includes] [added: For sign-off checks, customers use] the [removed: Tempus™] [added: Quantus Extraction,] Timing [removed: Signoff Solution, Voltus™] [added: Signoff, Voltus C] Power [removed: Integrity Solution, Quantus™ Extraction Solution] [added: Integrity,] and [removed: Pegasus™] [added: Pegasus] Physical Verification [removed: System.][added: solutions.]

Cadence Cerebrus™ is our generative AI solution that combines all elements of the full-flow IC through [removed: signoff that enables] [added: signoff, enabling] additional productivity, [removed: automation] [added: automation,] and improved quality of results throughout the entire design flow.

[removed: Functional Verification][added: *Functional Verification*]

[removed: Verification] [added: Functional verification] is [removed: largely] done [added: multiple times] throughout the design [removed: process,] [added: process as changes are incorporated,] with the objective of identifying as many potential functional [removed: problems] [added: issues] as possible before manufacturing the circuitry, thereby significantly reducing the risk of discovering a costly error in the completed product.

[removed: Once the design is more mature, with early formal and simulation verification tasks performed, verification engineers deploy our] [added: Our] Palladium® Enterprise Emulation Platform and Protium™ field programmable gate arrays (“FPGA”)-Based Prototyping Platforms [added: are] for more comprehensive chip verification, often running low-level embedded software on top of a model of the chip, to ensure proper functionality before silicon manufacturing.

Our Palladium platform provides high throughput, capacity, data center [removed: reliability] [added: reliability,] and workgroup productivity to enable global design teams to develop advanced hardware-software systems.

The Protium platform leverages a common front end with the Palladium environment to move designs rapidly from emulation to the prototyping stage, [removed: allowing for] [added: enabling] software development to begin weeks to months earlier than otherwise possible.

[removed: We offer many types of IP, including] [added: Our] Tensilica® configurable digital signal processors [removed: (“DSPs”),] [added: are] vertically targeted subsystems for AI, audio/voice, baseband and vision/imaging applications, controllers and physical interfaces for standard protocols and analog IP.

Our design IP portfolio includes solutions for high speed [removed: SerDes,] [added: serializer/deserializer (“SerDes”),] peripheral component interconnect (“PCI”), [removed: USB] [added: USB,] and many other standards.

The capabilities in the Allegro® System Design Platform include PCB [removed: authoring] [added: design] and implementation, IC package and system-in-package design, signal and power integrity analysis, and PCB library design management and collaboration.

The need for compact, high-performance mobile, [removed: consumer] [added: consumer,] and automotive design with advanced serial interconnect is driving the technological evolution [removed: for] [added: of] our PCB offerings.

The speed and [removed: close] proximity of signals on silicon, through packages to boards, and through connectors and cables, exposes these communications to various kinds of interference, generates [removed: heat] [added: heat,] and emits electromagnetic radiation.

Careful analysis is required for these systems to work as designed under a wide range of operating [removed: conditions and within compliance of standards] [added: conditions, standards,] and [added: regulatory] laws.

Our comprehensive suite of computational fluid dynamics (“CFD”) solutions enables our customers to extend their multiphysics analysis workflows to address simulation and analysis challenges for applications such as aerodynamics, hydrodynamics, propulsion, turbomachinery, heat [removed: transfer] [added: transfer,] and combustion.

Millennium M1 is the first release and [removed: overcomes] [added: is designed to overcome] traditional CFD speed/accuracy and compute resource limitations with a combination of GPU resident CFD solvers such as Fidelity LES for large eddy simulations (“LES”) and scalable high-performance hardware.

[removed: Optimality Explorer breaks] [added: We implement generative AI agents to analyze large data sets and break] through the limitations of the conventional human-intensive optimization process [removed: and is designed] to [removed: produce the] [added: achieve] optimal [removed: system] design [removed: solution] [added: solutions] expeditiously and without compromising accuracy.

[removed: An additional AI digital twin solution of our Data Center Design and Insight Platform] [added: Our Cadence Reality Digital Twin platform] brings physics-based design and analysis to the data center sector for performance-aware design and operational planning.

Data center professionals can future-proof designs and assess operational decisions with this digital twin and empower designers, [removed: owners] [added: owners,] and operators to address the need for reliability, [removed: capacity] [added: capacity,] and energy efficiency.

We also offer molecular modeling and simulation solutions [removed: obtained through our acquisition of OpenEye Scientific Software in fiscal 2022.][added: and services.]

These solutions and services are used by a wide range of organizations in the pharmaceutical and biotechnology sectors to accelerate the drug discovery process and make more informed decisions in [removed: the development of] [added: developing] new therapeutics.

Our [removed: emulation and prototyping] hardware products are either sold or leased to our customers.

For a further description of our license agreements, our [removed: emulation and prototyping] hardware sale or lease agreements, revenue recognition policies and results of operations, please refer to the discussion under “Critical Accounting Estimates” under Part II, Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”

Our education services offerings can be customized and include training programs that are delivered online, [removed: app-based,] [added: through an app,] or in a classroom setting.

We offer a number of services, including [added: design services,] services related to methodology, education and hosted design solutions.

Cadence® is a global market leader that develops computational, AI-driven software, accelerated hardware, and intellectual property (“IP”) solutions for engineers and scientists to bring new and innovative products to life.

The world’s most innovative technology companies use our solutions and services to deliver transformational products to multiple industries that drive the global economy.

The products these companies develop are some of the most complex systems in the world.

We work closely with our customers, helping them solve their most complex challenges in the semiconductor and electronic systems industries to unlock limitless opportunities.

Our customers include semiconductor companies that design and manufacture semiconductor devices and systems companies that design and manufacture products containing many different types of semiconductors, which they either make themselves or buy from a semiconductor company.

Semiconductors, also referred to as integrated circuits (“ICs”), or chips, are the heart of almost every industry.

Semiconductors are the catalyst for innovation in many industries including automotive, aerospace, biotech, hyperscale and cloud computing, data centers, telecommunications, medical technology, industrial internet of things (“IIoT”), and AI.

They are found in a wide variety of consumer products such as cell phones, automobiles, computers, home appliances, home security, drones, and home entertainment systems.

Our Intelligent System Design™ (“ISD”) strategy allows us to deliver solutions to our customers to solve their most complex product development challenges.

Our industry-leading computational software, accelerated hardware, and IP enable us to adapt to our customer's dynamic design requirements, allowing them to meet their critical business and environmental concerns including time-to-market and sustainability.

Our strategy, illustrated in the graphic below, is focused on three primary areas: Design Excellence, System Innovation, and Pervasive Intelligence.

Design Excellence focuses on our core technology and deep understanding of computational software, accelerated computing, machine learning, and AI to develop best-in-class electronic design and analysis semiconductor solutions.

In this area, customers are primarily developing large chips including those used in computers, laptops, cellphones, medical devices, games and entertainment systems, and many other types of consumer electronics.

Design Excellence applies to all types of semiconductor electronics including CPUs, GPUs, MCUs, memory, radio frequency (“RF”), analog, and mixed-signal, in both mainstream and advanced semiconductor process nodes.

System Innovation builds on our foundation of Design Excellence and deep expertise in computational algorithms and expands that expertise to include multiphysics-based analysis of systems that contain electronic devices, including printed circuit boards (“PCBs”), devices with advanced packaging technology, and 3-dimensional IC (“3D-IC”).

This gives customers designing full systems containing multiple electronic devices, the ability to verify that their products will work as intended under various physical conditions.

Some examples of electronic systems are a computer motherboard, the electronics in a cellphone, or the electronic transmission or infotainment system in an automobile.

Pervasive Intelligence incorporates AI training and inference algorithms in our solutions to help customers optimize performance and productivity with improved quality of results for their products.

The amount of data produced in the design phase of their products has grown exponentially over the last 20 years.

Customers can access our solutions via our Cadence OnCloud Platform.

These trends are accelerated by the AI super cycle.

Generative AI is reshaping the entire semiconductor and systems industry development process.

From our perspective, the AI super cycle we are experiencing will influence our key business opportunities along three horizons, which are Infrastructure AI, Physical AI and Life Sciences AI.

The first horizon, Infrastructure AI, is being driven by data centers and hyperscale computing to provide the necessary power to run AI workloads.

The second horizon, Physical AI, is the integration of AI with autonomous systems.

It will drive many applications such as automobiles, industrial robots, and many other autonomous systems.

The third horizon, Life Sciences AI, is the application of AI and computer science to biology to drive advancements in the medical and life sciences industries.

Engineers use our solutions to complete critical steps in the design process, which includes creating, implementing, and verifying the design for functionality, manufacturability and other required industry-related compliance standards.

Much of an engineer's time spent with our solutions during the design process involves running simulations to verify that their design will work as expected.

Our technology, enhanced by AI, allows our customers to build a virtual model or digital twin that accurately predicts how their design will work.

The ability to perform these simulations leads to significant time and cost savings for our customers as they can find and fix critical design problems before building their products.

Our customers rely on our solutions to ensure their products perform safely and reliably.

In alignment with our Intelligent System Design strategy, we define our solutions in three product categories: Core EDA, Semiconductor IP, and System Design and Analysis (“SD&A”).

Core EDA includes our software, hardware, and services used to design and verify a wide variety of semiconductors.

Our Semiconductor IP portfolio includes silicon subsystems, software, and services that are used in semiconductor design.

The SD&A category includes our software and services used to design and verify a wide variety of physical electronic systems.

Leveraging our AI and computational software expertise, we have integrated the multiphysics domain (also known as “computational fluid dynamics,” or “CFD”) with our EDA solutions to provide customers with complete system-level design and analysis solutions.

These categories are tightly integrated to provide complete design solutions for our customers.

Core EDA

Our Core EDA product category addresses the design and verification for a wide variety of semiconductor chips and manufacturing process technologies.

Cadence® is a leading pioneer of electronic system design software and intellectual property (“IP”), building upon more than 35 years of computational software expertise.

We are a global company that provides computational software, special-purpose computational hardware, IP and services to multiple vertical sectors including automotive, artificial intelligence (“AI”), aerospace and defense, high-performance and mobile computing, hyperscalers, wireless communication, industrial internet of things (“IIoT”) and life sciences.

Our solutions are integrated and used in every stage of design creation, implementation, verification, analysis and signoff from chips to printed circuit boards (“PCBs”) to complete electromechanical systems.

Companies that design semiconductors and other electronic devices use our solutions to design, simulate, verify, signoff and manufacture every major type of semiconductor electronics including analog, mixed-signal, radio frequency (“RF”) and microwave devices, photonics, memory devices and digital chips for high-performance computing and AI, including central processing units (“CPUs”), graphics processing units (“GPUs”), neural processing units (“NPUs”), three-dimensional (“3D”) integrated circuit (“3D-IC”) and advanced package devices.

These devices are used in multiple vertical sectors.

Companies that design system-level products cover a broad range of vertical sectors including automotive, aerospace and defense systems, networking and communication systems, high-performance computing, cloud infrastructure and data centers, medical systems and health and life sciences.

These companies use our solutions to design, simulate, verify and manufacture complete system products with the electronics included.

Our offerings include software, hardware, services, and reusable IC design blocks, which are commonly referred to as IP.

Our semiconductor customers use our offerings to design, configure, analyze, and verify integrated circuits (“ICs”).

Additionally, customers license our IP, which accelerates their product development processes by providing pre-designed and verified circuit blocks for their ICs.

Systems customers use our offerings to design, simulate, and verify the electro-thermal and physical functionality of their ICs, PCBs, and systems products.

Some of our software offerings are used by pharmaceutical and biotech companies to help accelerate their drug discovery process.

Our Intelligent System Design™ strategy allows us to deliver essential computational software, hardware and IP that our customers use to turn their design concepts into reality.

Our customers include many of the world’s most innovative companies that design and build highly sophisticated semiconductor and electronic systems found in products used in everyday life.

Our Intelligent System Design strategy allows us to quickly adapt to our customers' dynamic design requirements.

We develop industry-leading computational software and hardware, generative AI, and digital twin algorithms to help solve their toughest challenges.

Our software and services enable our customers to produce products that meet their critical business goals including time-to-market, costs and productivity while meeting growing global environmental concerns including sustainability and carbon emissions.

Today, our offerings include and extend beyond EDA to enable computational software for Intelligent System Design across three layers as illustrated below—starting with semiconductor and silicon design excellence, followed by system innovation, and then pervasive intelligence.

The foundation of design excellence for semiconductors is essential for our customers to produce best-in-class technology for custom IC, digital IC design and signoff, simulation and functional verification, and leverages pre-built semiconductor IP.

These tools, IP and associated services are specifically designed to meet the growing requirements of engineers designing increasingly complex chips across analog, digital and mixed-signal domains, and perform the associated verification tasks, including validation of low-level software running on a digital twin of the silicon model.

This enables design teams to manage complexity and verification throughput without increasing their team size or extending the project schedule, while reducing technical risks.

The second layer of our strategy leverages our computational expertise, expanding our solutions into the physical analysis in system innovation.

It includes tools and services used for system design of the packages that encapsulate the ICs, 3D-ICs and PCBs.

Our technology covers system simulation analysis, including electromagnetic, electro-thermal, electromechanics, and other multiphysics analysis necessary as part of optimizing the full system’s performance, radio frequency (“RF”) and microwave systems, and embedded software.

We also leverage our computational software expertise to life sciences by offering biosimulation solutions.

The third layer of our strategy addresses pervasive intelligence in new electronics.

It starts with providing solutions and services to develop AI-enhanced systems and includes machine learning, deep learning and digital twin capabilities being added to the Cadence computational software and computational hardware portfolio to make IP and tools more automated and to produce optimized results faster.

It also includes deploying generative AI techniques and LLMs to provide a rich set of co-pilots or design assistants to accelerate the design process.

Recent Acquisitions

Consistent with our Intelligent System Design strategy, we completed several acquisitions since the beginning of fiscal 2023 that we believe enhance our talent, our technology portfolio and our ability to pursue attractive opportunities in the markets we serve.

During the second quarter of fiscal 2023, we acquired Pulsic, Ltd., a provider of floorplanning, placement and routing of custom IC software.

This acquisition enhances our existing generative AI capabilities in Virtuoso® Studio to solve advanced node challenges using intelligent AI-based physical design and virtual prototyping techniques.

During the third quarter of fiscal 2023, we acquired the Rambus SerDes and memory interface PHY IP assets from Rambus Inc. This acquisition broadens our enterprise IP portfolio in the design of AI, data center and hyperscale applications, as well as extends our expertise across multiple vertical sectors including automotive, aerospace and defense and consumer electronics, with the objective of providing broad subsystem solutions that meet the demands of our worldwide customers.

During the fourth quarter of fiscal 2023, we acquired Intrinsix Corporation, a wholly owned subsidiary of CEVA, Inc., and a provider of design engineering solutions focused on the U.S. aerospace and defense industry.

This acquisition adds a highly skilled engineering team that has expertise in advanced nodes, radio frequency, mixed signal and security algorithms.

We believe the most promising new opportunities for us involve enabling the design of electronic systems for consumers, including digital twin, generative AI, augmented reality (“AR”), virtual reality (“VR”), IIoT, edge computing, hyperscale computing (including data center infrastructure), mobile, communications (including 5G networks), automotive, aerospace and defense, industrial subsystems, as well as the emerging opportunities in life sciences.

Large and existing electronics categories, such as data center infrastructure, networking, mobile, smartphones and AI products, continue to provide business opportunities for us as customers initiate new design projects.

Our Intelligent System Design strategy enables our customers to address a broad range of challenges that arise as they develop electronic products.

Our solutions are categorized according to the role they play in the electronic product design process.

We group our products into categories related to major design activities, including custom IC design and simulation, digital IC design and signoff, functional verification, IP, and system design and analysis.

For the fiscal year ended December 31, [removed: 2023][added: 2024]

[removed: ][added: ]

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold as of the last business day of the registrant’s most recently completed second fiscal quarter ended June 30, [removed: 2023] [added: 2024] was approximately [removed: $63,740,000,000.][added: $84,268,000,000.]

On January 31, [removed: 2024,] [added: 2025,] approximately [removed: 272,239,000] [added: 274,108,000] shares of the registrant’s common stock, $0.01 par value, were outstanding.

Portions of the definitive proxy statement for Cadence Design Systems, Inc.’s [removed: 2024] [added: 2025] Annual Meeting of Stockholders are incorporated by reference into Parts II and III hereof.

Such definitive proxy statement will be filed with the Securities and Exchange Commission within 120 days of the registrant's fiscal year ended December 31, [removed: 2023.][added: 2024.]

| Item 1. | | | [removed: [Business](#ic24734912743496c96f78452640091cf_13)] [added: [Business](#i42632382fa9049e3a986daf03147e52f_13)] | | | [removed: [1](#ic24734912743496c96f78452640091cf_13)] [added: [1](#i42632382fa9049e3a986daf03147e52f_13)] | | |

| Item 1A. | | | [Risk [removed: Factors](#ic24734912743496c96f78452640091cf_22)] [added: Factors](#i42632382fa9049e3a986daf03147e52f_22)] | | | [removed: [12](#ic24734912743496c96f78452640091cf_22)] [added: [11](#i42632382fa9049e3a986daf03147e52f_22)] | | |

| Item 1B. | | | [Unresolved Staff [removed: Comments](#ic24734912743496c96f78452640091cf_25)] [added: Comments](#i42632382fa9049e3a986daf03147e52f_25)] | | | [removed: [26](#ic24734912743496c96f78452640091cf_25)] [added: [29](#i42632382fa9049e3a986daf03147e52f_25)] | | |

| Item 1C. | | | [removed: [Cybersecurity](#ic24734912743496c96f78452640091cf_1739)] [added: [Cybersecurity](#i42632382fa9049e3a986daf03147e52f_28)] | | | [removed: [27](#ic24734912743496c96f78452640091cf_1739)] [added: [29](#i42632382fa9049e3a986daf03147e52f_28)] | | |

| Item 2. | | | [removed: [Properties](#ic24734912743496c96f78452640091cf_28)] [added: [Properties](#i42632382fa9049e3a986daf03147e52f_31)] | | | [removed: [28](#ic24734912743496c96f78452640091cf_28)] [added: [30](#i42632382fa9049e3a986daf03147e52f_31)] | | |

| Item 3. | | | [Legal [removed: Proceedings](#ic24734912743496c96f78452640091cf_31)] [added: Proceedings](#i42632382fa9049e3a986daf03147e52f_34)] | | | [removed: [28](#ic24734912743496c96f78452640091cf_31)] [added: [30](#i42632382fa9049e3a986daf03147e52f_34)] | | |

| Item 4. | | | [Mine Safety [removed: Disclosures](#ic24734912743496c96f78452640091cf_34)] [added: Disclosures](#i42632382fa9049e3a986daf03147e52f_37)] | | | [removed: [28](#ic24734912743496c96f78452640091cf_34)] [added: [30](#i42632382fa9049e3a986daf03147e52f_37)] | | |

| Item 5. | | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#ic24734912743496c96f78452640091cf_40)] [added: Securities](#i42632382fa9049e3a986daf03147e52f_43)] | | | [removed: [29](#ic24734912743496c96f78452640091cf_40)] [added: [31](#i42632382fa9049e3a986daf03147e52f_43)] | | |

| Item 6. | | | [removed: [\[Reserved\]](#ic24734912743496c96f78452640091cf_52)] [added: [\[Reserved\]](#i42632382fa9049e3a986daf03147e52f_55)] | | | [removed: [30](#ic24734912743496c96f78452640091cf_52)] [added: [32](#i42632382fa9049e3a986daf03147e52f_55)] | | |

| Item 7. | | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#ic24734912743496c96f78452640091cf_55)] [added: Operations](#i42632382fa9049e3a986daf03147e52f_58)] | | | [removed: [31](#ic24734912743496c96f78452640091cf_55)] [added: [33](#i42632382fa9049e3a986daf03147e52f_58)] | | |

| Item 7A. | | | [Quantitative and Qualitative Disclosures About Market [removed: Risk](#ic24734912743496c96f78452640091cf_79)] [added: Risk](#i42632382fa9049e3a986daf03147e52f_82)] | | | [removed: [44](#ic24734912743496c96f78452640091cf_79)] [added: [45](#i42632382fa9049e3a986daf03147e52f_82)] | | |

| Item 8. | | | [Financial Statements and Supplementary [removed: Data](#ic24734912743496c96f78452640091cf_82)] [added: Data](#i42632382fa9049e3a986daf03147e52f_85)] | | | [removed: [45](#ic24734912743496c96f78452640091cf_82)] [added: [47](#i42632382fa9049e3a986daf03147e52f_85)] | | |

| Item 9. | | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#ic24734912743496c96f78452640091cf_85)] [added: Disclosure](#i42632382fa9049e3a986daf03147e52f_88)] | | | [removed: [45](#ic24734912743496c96f78452640091cf_85)] [added: [47](#i42632382fa9049e3a986daf03147e52f_88)] | | |

| Item 9A. | | | [Controls and [removed: Procedures](#ic24734912743496c96f78452640091cf_88)] [added: Procedures](#i42632382fa9049e3a986daf03147e52f_91)] | | | [removed: [45](#ic24734912743496c96f78452640091cf_88)] [added: [47](#i42632382fa9049e3a986daf03147e52f_91)] | | |

| Item 9B. | | | [Other [removed: Information](#ic24734912743496c96f78452640091cf_91)] [added: Information](#i42632382fa9049e3a986daf03147e52f_94)] | | | [removed: [46](#ic24734912743496c96f78452640091cf_91)] [added: [48](#i42632382fa9049e3a986daf03147e52f_94)] | | |

| Item 9C. | | | [Disclosure Regarding Foreign Jurisdictions that Prevent [removed: Inspections](#ic24734912743496c96f78452640091cf_94)] [added: Inspections](#i42632382fa9049e3a986daf03147e52f_100)] | | | [removed: [46](#ic24734912743496c96f78452640091cf_94)] [added: [48](#i42632382fa9049e3a986daf03147e52f_100)] | | |

| Item 10. | | | [Directors, Executive Officers and Corporate [removed: Governance](#ic24734912743496c96f78452640091cf_100)] [added: Governance](#i42632382fa9049e3a986daf03147e52f_106)] | | | [removed: [47](#ic24734912743496c96f78452640091cf_100)] [added: [49](#i42632382fa9049e3a986daf03147e52f_106)] | | |

| Item 11. | | | [Executive [removed: Compensation](#ic24734912743496c96f78452640091cf_103)] [added: Compensation](#i42632382fa9049e3a986daf03147e52f_109)] | | | [removed: [47](#ic24734912743496c96f78452640091cf_103)] [added: [49](#i42632382fa9049e3a986daf03147e52f_109)] | | |

| Item 12. | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#ic24734912743496c96f78452640091cf_106)] [added: Matters](#i42632382fa9049e3a986daf03147e52f_112)] | | | [removed: [47](#ic24734912743496c96f78452640091cf_106)] [added: [49](#i42632382fa9049e3a986daf03147e52f_112)] | | |

| Item 13. | | | [Certain Relationships and Related Transactions and Director [removed: Independence](#ic24734912743496c96f78452640091cf_109)] [added: Independence](#i42632382fa9049e3a986daf03147e52f_115)] | | | [removed: [47](#ic24734912743496c96f78452640091cf_109)] [added: [49](#i42632382fa9049e3a986daf03147e52f_115)] | | |

| Item 14. | | | [Principal Accountant Fees and [removed: Services](#ic24734912743496c96f78452640091cf_112)] [added: Services](#i42632382fa9049e3a986daf03147e52f_118)] | | | [removed: [47](#ic24734912743496c96f78452640091cf_112)] [added: [49](#i42632382fa9049e3a986daf03147e52f_118)] | | |

| Item 15. | | | [Exhibits and Financial Statement [removed: Schedules](#ic24734912743496c96f78452640091cf_118)] [added: Schedules](#i42632382fa9049e3a986daf03147e52f_124)] | | | [removed: [48](#ic24734912743496c96f78452640091cf_118)] [added: [50](#i42632382fa9049e3a986daf03147e52f_124)] | | |

| Item 16. | | | [Form 10-K [removed: Summary](#ic24734912743496c96f78452640091cf_208)] [added: Summary](#i42632382fa9049e3a986daf03147e52f_217)] | | | [removed: [93](#ic24734912743496c96f78452640091cf_208)] [added: [98](#i42632382fa9049e3a986daf03147e52f_217)] | | |

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2024

| | | | [Signatures](#i42632382fa9049e3a986daf03147e52f_220) | | | [99](#i42632382fa9049e3a986daf03147e52f_220) | | |

| | | | [Signatures](#ic24734912743496c96f78452640091cf_211) | | | [94](#ic24734912743496c96f78452640091cf_211) | | |

We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, [removed: integrity,] [added: integrity] and availability of our critical systems and information, including our customers’, vendors’, partners’ and employees’ data, including personal information.

While we seek to maintain ISO/IEC [removed: 27001:2013,] [added: 27001:2013 and] ISO/IEC [removed: 27017] [added: 27017:2015 certifications,] and [added: seek to achieve] the SOC 2 Type 1 [removed: certifications,] [added: and Type 2 attestations,] this does not imply that we specifically or comprehensively comply with technical specification or requirements, only that we use all the above-mentioned standards and regulations as a guide to help us identify, assess and manage cybersecurity risks relevant to our business.

- risk assessment processes designed to help identify cybersecurity risks to our critical systems, information, products, [removed: services,] [added: services] and our broader enterprise IT environment;

- the use of external service providers, where appropriate, to assess, test [added: (including penetration test)] or otherwise assist with certain aspects of our security controls and processes;

- a third-party risk management process, including risk assessment and risk [removed: rating,] [added: rating (using common vulnerability scoring system or similar methodologies based on industry practices),] for certain service providers, [removed: suppliers,] [added: suppliers] and vendors.

[removed: *Cybersecurity Governance*][added: Cybersecurity Governance]

Our management team has relevant expertise in the following:(i) understanding of cybersecurity risks in enterprise operations, [added: including information technology, information security, product security, physical security and legal,] (ii) experience in overseeing risk management and understanding risks faced by enterprise operations and (iii) significant operating experience allowing them to provide insight into developing, implementing and assessing our operating plan.

In addition, our CISO has over [removed: 25] [added: 30] years of broad cybersecurity and information technology risk management experience, is a Certified Information Security Manager (“CISM”) and holds a Master's Degree in computer science and information systems.

Our management team supervises efforts to prevent, detect, [removed: mitigate,] [added: mitigate] and remediate cybersecurity risks and incidents, and is responsible for oversight and management of our cybersecurity risk management program.

- global security operations center services through certain service providers;

We also own properties in New [removed: Mexico] [added: Mexico, India, Greece] and [removed: India.][added: Italy.]

As of December 31, [removed: 2023,] [added: 2024,] the total square footage of our owned buildings was approximately [removed: 1,227,000.][added: 1,330,000.]

As of January 31, [removed: 2024,] [added: 2025,] we had [removed: 344] [added: 327] registered stockholders.

The graph assumes that the value of the investment in our common stock and in each index on December [removed: 29, 2018,] [added: 28, 2019,] (including reinvestment of dividends) was $100 and tracks it each year thereafter on the last day of our fiscal year through December 31, [removed: 2023,] [added: 2024,] and for each index on the last day of the calendar year.

[removed: ][added: ]

*$100 invested on [removed: 12/29/18] [added: 12/29/19] in stock or [removed: 12/31/18] index, including reinvestment of dividends.

Copyright© [removed: 2024] [added: 2025] Standard & [removed: Poor's,] [added: Poor’s,] a division of S&P Global.

| | | | | | | [removed: 12/29/2018] [added: 12/28/2019] | | | | | | [removed: 12/28/2019] [added: 1/2/2021] | | | | | | [removed: 1/2/2021] [added: 1/1/2022] | | | | | | [removed: 1/1/2022] [added: 12/31/2022] | | | | | | [removed: 12/31/2022] [added: 12/31/2023] | | | | | | [removed: 12/31/2023] [added: 12/31/2024] | | |

We are authorized to repurchase shares of our common stock under a publicly announced program [added: that was] most recently increased by our Board of Directors on August 2, 2023.

[removed: The share] [added: Our] repurchase authorization does not obligate us to acquire a minimum amount of shares, does not have an expiration date and may be modified, suspended or terminated without prior notice.

The following table presents repurchases made under our [removed: current authorization] [added: publicly announced repurchase authorizations] and shares surrendered by employees to satisfy income tax withholding obligations during the three months ended December 31, [removed: 2023:][added: 2024:]

(2)The weighted average price paid per share of common stock does not include the cost of [removed: commissions or excise taxes.][added: commissions.]

The information required by Item 201(d) of Regulation S-K under Item 5 is incorporated herein by reference from the section entitled “Equity Compensation Plan Information” in our definitive proxy statement for our [removed: 2024] [added: 2025] Annual Meeting of Stockholders.

| Cadence Design Systems, Inc. | | | | | | $ | 100.00 | | | | | $ | 194.10 | | | | | $ | 265.12 | | | | | $ | 228.54 | | | | | $ | 387.49 | | | | | $ | 427.46 | |

| Nasdaq Composite | | | | | | 100.00 | | | | | | 144.92 | | | | | | 177.06 | | | | | | 119.45 | | | | | | 172.77 | | | | | | 223.87 | | |

| S&P 500 | | | | | | 100.00 | | | | | | 118.40 | | | | | | 152.39 | | | | | | 124.79 | | | | | | 157.59 | | | | | | 197.02 | | |

| S&P 500 Information Technology | | | | | | 100.00 | | | | | | 143.89 | | | | | | 193.58 | | | | | | 139.00 | | | | | | 219.40 | | | | | | 299.72 | | |

| October 1, 2024 - October 31, 2024 | | | 230,867 | | | | | | $ | 268.37 | | | | | 199,684 | | | | | | $ | 923 | |

| November 1, 2024 - November 30, 2024 | | | 179,112 | | | | | | $ | 295.39 | | | | | 162,073 | | | | | | $ | 875 | |

| December 1, 2024 - December 31, 2024 | | | 164,036 | | | | | | $ | 308.45 | | | | | 157,047 | | | | | | $ | 827 | |

| Total | | | 574,015 | | | | | | $ | 288.25 | | | | | 518,804 | | | | | | | | |

| Cadence Design Systems, Inc. | | | | | | $ | 100.00 | | | | | $ | 162.18 | | | | | $ | 314.79 | | | | | $ | 429.97 | | | | | $ | 370.65 | | | | | $ | 628.45 | |

| Nasdaq Composite | | | | | | 100.00 | | | | | | 136.69 | | | | | | 198.10 | | | | | | 242.03 | | | | | | 163.28 | | | | | | 236.17 | | |

| S&P 500 | | | | | | 100.00 | | | | | | 131.49 | | | | | | 155.68 | | | | | | 200.37 | | | | | | 164.08 | | | | | | 207.21 | | |

| S&P 500 Information Technology | | | | | | 100.00 | | | | | | 150.29 | | | | | | 216.25 | | | | | | 290.92 | | | | | | 208.90 | | | | | | 329.73 | | |

As of December 31, 2023, approximately $1.4 billion of the share repurchase authorization remained available to repurchase shares of our common stock.

| October 1, 2023 - October 31, 2023 | | | 191,736 | | | | | | $ | 243.07 | | | | | 169,407 | | | | | | $ | 1,461 | |

| November 1, 2023 - November 30, 2023 | | | 179,388 | | | | | | $ | 259.37 | | | | | 166,508 | | | | | | $ | 1,418 | |

| December 1, 2023 - December 31, 2023 | | | 160,654 | | | | | | $ | 270.08 | | | | | 151,959 | | | | | | $ | 1,377 | |

| Total | | | 531,778 | | | | | | $ | 256.73 | | | | | 487,874 | | | | | | | | |

As required by Rule 13a-15 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”) under the supervision and with the participation of our management, including our Chief Executive Officer (“CEO”) and our Chief Financial Officer (“CFO”), we evaluated the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of December 31, [removed: 2023.][added: 2024.]

Based on their evaluation our CEO and CFO have concluded that, as of December 31, [removed: 2023,] [added: 2024,] our disclosure controls and procedures were effective to provide reasonable assurance that the information required to be disclosed by us in our reports filed or submitted under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and is accumulated and communicated to our management, including the CEO and CFO, as appropriate to allow timely decisions regarding required disclosure.

There were no changes in our internal control over financial reporting during the fiscal quarter ended December 31, [removed: 2023,] [added: 2024,] that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s [added: Annual] Report on Internal Control Over Financial Reporting

Our management assessed the effectiveness of our internal control over financial reporting as of December 31, [removed: 2023.][added: 2024.]

Our management has concluded that, as of December 31, [removed: 2023,] [added: 2024,] our internal control over financial reporting is effective based on these criteria.

In accordance with guidance issued by the SEC staff, companies are permitted to exclude acquisitions from their assessment of internal control over financial reporting for a period not to exceed one year from the date of the acquisition.

Our assessment of the effectiveness of our internal control over financial reporting as of December 31, 2024 excluded BETA CAE, which we acquired on May 30, 2024.

The financial results of BETA CAE, a wholly-owned subsidiary, included in our consolidated financial statements since the date of acquisition constituted less than 2% of total consolidated assets and less than 2% of total consolidated revenue as of and for the year ended December 31, 2024.

During the fiscal quarter ended December 31, [removed: 2023,] [added: 2024,] our directors and officers (as defined in Rule 16a-1(f) under the Exchange Act) adopted or terminated the contracts, instructions or written plans for the purchase or sale of our securities set forth in the table below.

[removed: |] * Contract, instruction or written plan intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act. [removed: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |]

| Ita Brennan, Director | | | | | | Adoption | | | | | | 12/12/2024 | | | | | | X | | | | | | Up to 720 | | | | | | 3/16/2026 | | |

| Thomas P. Beckley, Senior Vice President and General Manager of the Custom IC and PCB Group | | | | | | Adoption | | | | | | 10/26/2023 | | | | | | X | | | | | | Up to 65,615 | | | | | | 2/14/2025 | | |

The information required by Item 10 as to directors is incorporated herein by reference from the sections entitled “Proposal 1 - Election of Directors” and, as applicable, “Security Ownership of Certain Beneficial Owners and Management - Delinquent Section 16(a) Reports” in [removed: Cadence’s] [added: our] definitive proxy statement for [removed: its 2024] [added: our 2025] Annual Meeting of Stockholders.

[removed: The] [added: Our] executive officers [removed: of Cadence] are listed at the end of Item 1 of Part I of this Annual Report.

The information required by Item 10 as to Cadence’s code of ethics is incorporated herein by reference from the section entitled “Corporate Governance - Code of Business Conduct” in [removed: Cadence’s] [added: our] definitive proxy statement for [removed: its 2024] [added: our 2025] Annual Meeting of Stockholders.

The information required by Item 10 as to the director nomination process and [removed: Cadence’s] [added: our] Audit Committee is incorporated by reference from the section entitled “Board of Directors - Committees of the Board” in [removed: Cadence’s] [added: our] definitive proxy statement for [removed: its 2024] [added: our 2025] Annual Meeting of Stockholders.

We have an insider trading policy (the “Securities Trading Policy”) governing the purchase, sale and other dispositions of our securities that applies to all of our personnel, including directors, officers, employees, and other covered persons.

We also follow procedures for our repurchase of our securities.

We believe that our Securities Trading Policy and repurchase procedures are reasonably designed to promote compliance with applicable insider trading laws, rules and regulations, and listing standards.

A copy of our Securities Trading Policy is filed as Exhibit 19.1 to this Form 10-K.

The information required by Item 11 is incorporated herein by reference from the sections entitled “Board of Directors - Components of Director Compensation,” “Board of Directors - Director Compensation for Fiscal [removed: 2023,”] [added: 2024,”] “Compensation Discussion and Analysis,” “Compensation Committee Report,” “Compensation Committee Interlocks and Insider Participation,” “Compensation of Executive Officers,” “Potential Payments Upon Termination or Change In Control” and “Pay Ratio Disclosure” in [removed: Cadence’s] [added: our] definitive proxy statement for [removed: its 2024] [added: our 2025] Annual Meeting of Stockholders.

The information required by Item 12 is incorporated herein by reference from the sections entitled “Security Ownership of Certain Beneficial Owners and Management” and “Equity Compensation Plan Information” in [removed: Cadence’s] [added: our] definitive proxy statement for [removed: its 2024] [added: our 2025] Annual Meeting of Stockholders.

The information required by Item 13 is incorporated herein by reference from the sections entitled “Certain Transactions” and “Board of Directors - Director Independence” in [removed: Cadence’s] [added: our] definitive proxy statement for [removed: its 2024] [added: our 2025] Annual Meeting of Stockholders.

The information required by Item 14 is incorporated herein by reference from the section entitled “Fees Billed to Cadence by the Independent Registered Public Accounting Firm During Fiscal [removed: 2023] [added: 2024] and [removed: 2022”] [added: 2023”] in [removed: Cadence’s] [added: our] definitive proxy statement for [removed: its 2024] [added: our 2025] Annual Meeting of Stockholders.

| | | | [Report of Independent Registered Public Accounting [removed: Firm](#ic24734912743496c96f78452640091cf_121)] [added: Firm](#i42632382fa9049e3a986daf03147e52f_127)] (Auditor Firm ID 238) | | | [removed: [49](#ic24734912743496c96f78452640091cf_121)] [added: [51](#i42632382fa9049e3a986daf03147e52f_127)] | | |

| | | | [Consolidated Balance Sheets as of December 31, [removed: 2023,] [added: 2024,] and December 31, [removed: 2022](#ic24734912743496c96f78452640091cf_124)] [added: 2023](#i42632382fa9049e3a986daf03147e52f_130)] | | | [removed: [51](#ic24734912743496c96f78452640091cf_124)] [added: [53](#i42632382fa9049e3a986daf03147e52f_130)] | | |

| | | | [Consolidated Income Statements for the three fiscal years ended December 31, [removed: 2023](#ic24734912743496c96f78452640091cf_127)] [added: 2024](#i42632382fa9049e3a986daf03147e52f_133)] | | | [removed: [52](#ic24734912743496c96f78452640091cf_127)] [added: [54](#i42632382fa9049e3a986daf03147e52f_133)] | | |

| | | | [Consolidated Statements of Comprehensive Income for the three fiscal years ended December 31, [removed: 2023](#ic24734912743496c96f78452640091cf_130)] [added: 2024](#i42632382fa9049e3a986daf03147e52f_136)] | | | [removed: [53](#ic24734912743496c96f78452640091cf_130)] [added: [55](#i42632382fa9049e3a986daf03147e52f_136)] | | |

| | | | [Consolidated Statements of Stockholders’ Equity for the three fiscal years ended December 31, [removed: 2023](#ic24734912743496c96f78452640091cf_133)] [added: 2024](#i42632382fa9049e3a986daf03147e52f_139)] | | | [removed: [54](#ic24734912743496c96f78452640091cf_133)] [added: [56](#i42632382fa9049e3a986daf03147e52f_139)] | | |

| | | | [Consolidated Statements of Cash Flows for the three fiscal years ended December 31, [removed: 2023](#ic24734912743496c96f78452640091cf_136)] [added: 2024](#i42632382fa9049e3a986daf03147e52f_142)] | | | [removed: [55](#ic24734912743496c96f78452640091cf_136)] [added: [57](#i42632382fa9049e3a986daf03147e52f_142)] | | |

| | | | [Notes to Consolidated Financial [removed: Statements](#ic24734912743496c96f78452640091cf_139)] [added: Statements](#i42632382fa9049e3a986daf03147e52f_145)] | | | [removed: [56](#ic24734912743496c96f78452640091cf_139)] [added: [58](#i42632382fa9049e3a986daf03147e52f_145)] | | |

© [removed: 2024] [added: 2025] Cadence Design Systems, Inc. All rights reserved worldwide.

We have audited the accompanying consolidated balance sheets of Cadence Design Systems, Inc. and its subsidiaries (the “Company”) as of December 31, [removed: 2023] [added: 2024] and [removed: 2022,] [added: 2023,] and the related consolidated statements of income, of comprehensive income, of stockholders’ equity and of cash flows for each of the three years in the period ended December 31, [removed: 2023,] [added: 2024,] including the related notes (collectively referred to as the “consolidated financial statements”).

We also have audited the Company’s internal control over financial reporting as of December 31, [removed: 2023,] [added: 2024,] based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, [removed: 2023] [added: 2024] and [removed: 2022,] [added: 2023,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2023] [added: 2024] in conformity with accounting principles generally accepted in the United States of America.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2023,] [added: 2024,] based on criteria established in *Internal Control - Integrated Framework* (2013) issued by the COSO.

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in Management’s [added: Annual] Report on Internal Control Over Financial Reporting appearing under Item 9A.

For the year ended December 31, [removed: 2023,] [added: 2024,] the Company’s total revenue was [removed: $4.090] [added: $4.641] billion.

December 31, [removed: 2023] [added: 2024] and December 31, [removed: 2022][added: 2023]

| | | | December 31, [removed: 2023] [added: 2024] | | | | | | December 31, [removed: 2022] [added: 2023] | | |

| Cash and cash equivalents [added: at beginning of year] | | | $ | 1,008,152 | | | | | $ | 882,325 | | [added: | | | $ | 1,088,940 | |]

| Receivables, net | | | [removed: 489,224] [added: 680,460] | | | | | | [removed: 486,710] [added: 489,224] | | |

| Inventories | | | [removed: 181,661] [added: 257,711] | | | | | | [removed: 128,005] [added: 181,661] | | |

| Prepaid expenses and other | | | [removed: 297,180] [added: 433,878] | | | | | | [removed: 209,727] [added: 297,180] | | |

| Total current assets | | | [removed: 1,976,217] [added: 4,016,079] | | | | | | [removed: 1,706,767] [added: 1,976,217] | | |

| Property, plant and equipment, net | | | [removed: 403,213] [added: 458,200] | | | | | | [removed: 371,451] [added: 403,213] | | |

| Goodwill | | | [removed: 1,535,845] [added: 2,378,671] | | | | | | [removed: 1,374,268] [added: 1,535,845] | | |

| Acquired intangibles, net | | | [removed: 336,843] [added: 594,734] | | | | | | [removed: 354,617] [added: 336,843] | | |

| Deferred taxes | | | [removed: 880,001] [added: 982,057] | | | | | | [removed: 853,691] [added: 880,001] | | |

| Other assets | | | [removed: 537,372] [added: 544,741] | | | | | | [removed: 476,277] [added: 537,372] | | |

| Total assets | | | $ | [removed: 5,669,491] [added: 8,974,482] | | | | | $ | [removed: 5,137,071] [added: 5,669,491] | |

| [removed: Revolving] [added: Proceeds from revolving] credit facility | | | [removed: $ |] — | | | | | [removed: $] | [removed: 100,000] [added: 50,000] | | [added: | | | | 585,000 | | |]

| Current portion of long-term debt | | | [removed: 349,285] [added: $] | [added: —] | | | | | [removed: —] [added: $] | [added: 349,285] | |

| Accounts payable and accrued liabilities | | | [removed: 576,558] [added: 632,692] | | | | | | [removed: 557,158] [added: 576,558] | | |

| Current portion of deferred revenue | | | [removed: 665,024] [added: 737,413] | | | | | | [removed: 690,538] [added: 665,024] | | |

| Total current liabilities | | | [removed: 1,590,867] [added: 1,370,105] | | | | | | [removed: 1,347,696] [added: 1,590,867] | | |

| Long-term portion of deferred revenue | | | [removed: 98,931] [added: 115,168] | | | | | | [removed: 91,524] [added: 98,931] | | |

| Long-term debt | | | [removed: 299,771] [added: 2,476,183] | | | | | | [removed: 648,078] [added: 299,771] | | |

| Other long-term liabilities | | | [removed: 275,651] [added: 339,448] | | | | | | [removed: 304,660] [added: 275,651] | | |

| Total long-term liabilities | | | [removed: 674,353] [added: 2,930,799] | | | | | | [removed: 1,044,262] [added: 674,353] | | |

| Common stock – $0.01 par value; authorized 600,000 shares; issued and outstanding shares: [removed: 271,706] [added: 273,851] and [removed: 272,675,] [added: 271,706,] respectively | | | [removed: 3,166,964] [added: 4,181,737] | | | | | | [removed: 2,765,673] [added: 3,166,964] | | |

| Treasury stock, at cost; [removed: 57,453] [added: 57,049] shares and [removed: 56,485] [added: 57,453] shares, respectively | | | [removed: (4,604,323)] [added: (5,309,579)] | | | | | | [removed: (3,824,163)] [added: (4,604,323)] | | |

| Retained earnings | | | [removed: 4,936,384] [added: 5,991,868] | | | | | | [removed: 3,895,240] [added: 4,936,384] | | |

| Accumulated other comprehensive loss | | | [removed: (94,754)] [added: (190,448)] | | | | | | [removed: (91,637)] [added: (94,754)] | | |

| [(a) 3. Exhibits](#i42632382fa9049e3a986daf03147e52f_214) | | | | | | [96](#i42632382fa9049e3a986daf03147e52f_214) | | |

As described in Management’s Annual Report on Internal Control Over Financial Reporting, management has excluded BETA CAE Systems International AG (“BETA CAE”) from its assessment of internal control over financial reporting as of December 31, 2024, because it was acquired by the Company in a purchase business combination during 2024.

We have also excluded BETA CAE from our audit of internal control over financial reporting.

BETA CAE is a wholly-owned subsidiary whose total assets and total revenues excluded from management’s assessment and our audit of internal control over financial reporting represent less than 2% of the related consolidated financial statement amounts as of and for the year ended December 31, 2024.

February 20, 2025

| Cash and cash equivalents | | | $ | 2,644,030 | | | | | $ | 1,008,152 | |

For the three fiscal years ended December 31, 2024

| Unrealized losses on derivatives designated as hedging instruments | | | (7,038) | | | | | | — | | | | | | — | | |

For the three fiscal years ended December 31, 2024

| Net income | | | — | | | | | | — | | | | | | — | | | | | | 1,055,484 | | | | | | — | | | | | | $ | 1,055,484 | |

| Purchase of treasury stock | | | (1,930) | | | | | | — | | | | | | (550,026) | | | | | | — | | | | | | — | | | | | | $ | (550,026) | |

| Issuance of common stock in a business combination | | | 1,741 | | | | | | 501,824 | | | | | | — | | | | | | — | | | | | | — | | | | | | $ | 501,824 | |

| Balance, December 31, 2024 | | | 273,851 | | | | | | $ | 4,181,737 | | | | | $ | (5,309,579) | | | | | $ | 5,991,868 | | | | | $ | (190,448) | | | | | $ | 4,673,578 | |

For the three fiscal years ended December 31, 2024

| | | | 2024 | | | | | | 2023 | | | | | | 2022 | | |

| Net income | | | 1,055,484 | | | | | | 1,041,144 | | | | | | 848,952 | | |

| Proceeds from the issuance of debt | | | 3,196,595 | | | | | | — | | | | | | 300,000 | | |

| Payments of debt | | | (1,350,000) | | | | | | — | | | | | | — | | |

For the three fiscal years ended December 31, 2024

Cadence® is a global market leader that develops computational, AI-driven software, accelerated hardware, and IP solutions for engineers and scientists to create new and innovative products to life.

The world’s most innovative technology companies use Cadence solutions and services to deliver transformational products to multiple industries that drive the global economy.

The products these companies develop are some of the most complex systems in the world.

Since its inception, Cadence has been at the forefront of technology innovation with its customers, helping them solve their most complex challenges in the semiconductor and electronic systems industries to unlock limitless opportunities.

Certain prior year information has been reclassified to conform to the current year presentation.

Cadence adopted this ASU retrospectively during fiscal 2024.

See Note 21 in the notes to the consolidated financial statements for further details.

*Income Statement - Expense Disaggregation Disclosure*

In November 2024, the FASB issued ASU No. 2024-03, “Income Statement—Reporting Comprehensive Income—Expense Disaggregation Disclosures,” which requires additional disclosure of certain costs and expenses in the notes to the financial statements.

Early adoption is permitted and will be applied prospectively with the option for retrospective application.

Provisions for obsolescence reserves are recorded as a component of cost of product and maintenance in Cadence’s consolidated income statements.

Cadence did not incur any excise tax on the net value of stock repurchases during fiscal 2024.

For certain software arrangements where the updates are not critical to maintaining the utility of the software, Cadence considers the license, related updates and technical support as separate performance obligations.

In these instances, the total consideration is allocated across the separate performance obligations using SSPs and the license revenue is recognized upon the later of the delivery or effective date of the contract and the revenue related to the updates and technical support is recognized over the term of the arrangement.

| | | | 2024 | | | | | | 2023 | | | | | | 2022 | | |

| Core EDA | | | 71 | | % | | | | 76 | | % | | | | 76 | | % |

| IP | | | 13 | | % | | | | 12 | | % | | | | 12 | | % |

| | | | 2024 | | | | | | 2023 | | | | | | 2022 | | |

As of December 31, 2024, one customer accounted for approximately 11% of Cadence’s total receivables.

| Year ended December 31, 2024 | | | | | | $ | 4,553 | | | | | $ | 2,078 | | | | | | | | | | | $ | (823) | | | | | $ | 5,808 | |

| 2027 Notes | | | 500,000 | | | | | | (3,206) | | | | | | 496,794 | | | | | | — | | | | | | — | | | | | | — | | |

| [(a) 3. Exhibits](#ic24734912743496c96f78452640091cf_205) | | | | | | [91](#ic24734912743496c96f78452640091cf_205) | | |

February 13, 2024

| Balance, January 2, 2021 | | | 278,941 | | | | | | $ | 2,217,939 | | | | | $ | (2,057,829) | | | | | $ | 2,350,333 | | | | | $ | (17,425) | | | | | $ | 2,493,018 | |

| Net income | | | — | | | | | | — | | | | | | — | | | | | | 695,955 | | | | | | — | | | | | | $ | 695,955 | |

| Purchase of treasury stock | | | (4,401) | | | | | | — | | | | | | (612,297) | | | | | | — | | | | | | — | | | | | | $ | (612,297) | |

| Cash and cash equivalents at beginning of year | | | $ | 882,325 | | | | | $ | 1,088,940 | | | | | $ | 928,432 | |

| Payments on revolving credit facility | | | (150,000) | | | | | | (485,000) | | | | | | — | | |

Cadence Design Systems, Inc. (“Cadence”) is an innovation leader in electronic system design that delivers essential computational software, hardware, and IP that its customers use to turn their design concepts into reality.

Many of Cadence’s customers design semiconductors and electronic systems.

Semiconductor companies focus on the design of all types of semiconductor devices including integrated circuits (“ICs”), analog, mixed-signal, memory, 3D-IC, processor chips for computing (“CPUs”), graphics (“GPUs”), and AI.

These customers will then use the semiconductor devices in the design of printed circuit boards (“PCBs”).

Cadence’s electronic systems customers design and create products for consumer and business needs, such as smartphones, laptop computers, gaming and entertainment systems, automobiles and autonomous driving systems, aerospace and defense systems, communication systems, networking products, compute servers, cloud data center infrastructure, artificial intelligence (“AI”) systems, medical equipment, and a much longer list of consumer products used in everyday life.

These systems companies internally develop, or externally purchase, the sub-components for their products, including ICs and PCBs, which connect all the hardware components, and software at various levels that run on the hardware.

No transition report was required in connection with this change.

Cadence has not recently adopted any accounting standard updates that are material or potentially material to its consolidated financial statements.

Early adoption is permitted.

A corresponding liability for the excise tax payable was recorded as a component of accounts payable and accrued liabilities on Cadence's consolidated balance sheet as of December 31, 2023.

| Custom IC Design and Simulation | | | 22 | | % | | | | 22 | | % | | | | 23 | | % |

| Digital IC Design and Signoff | | | 27 | | % | | | | 28 | | % | | | | 29 | | % |

| Functional Verification, including Emulation and Prototyping Hardware* | | | 27 | | % | | | | 26 | | % | | | | 24 | | % |

| IP | | | 12 | | % | | | | 12 | | % | | | | 13 | | % |

| Year ended January 1, 2022 | | | | | | $ | 2,867 | | | | | $ | 525 | | | | | $ | 780 | | | | | $ | (480) | | | | | $ | 3,692 | |

| Revolving Credit Facility | | | $ | — | | | | | $ | — | | | | | $ | — | | | | | $ | 100,000 | | | | | $ | — | | | | | $ | 100,000 | |

| 2025 Term Loan | | | 300,000 | | | | | | (229) | | | | | | 299,771 | | | | | | 300,000 | | | | | | (341) | | | | | | 299,659 | | |

In September 2022, Cadence amended the 2021 Credit Facility to, among other things, allow Cadence to change its fiscal year to match the calendar year commencing in 2023 and change the interest rate benchmark for loans under the 2021 Credit Facility from the London Inter-Bank Offered Rate (“LIBOR”) to Term Secured Overnight Financing Rate (“SOFR”).

The material terms of the 2021 Credit Facility otherwise remain unchanged.

Interest is payable quarterly.

Borrowings bear interest at what is estimated to be current market rates of interest.

2024 Notes

Interest is payable in cash semi-annually in April and October.

Cadence may redeem the 2024 Notes, in whole or in part, at a redemption price equal to the greater of (a) 100% of the principal amount of the notes to be redeemed and (b) the sum of the present values of the remaining scheduled payments of principal and interest, plus any accrued and unpaid interest, as more particularly described in the indenture governing the 2024 Notes.

2025 Term Loan

The 2025 Term Loan is unsecured and ranks equal in right of payment to all of Cadence’s unsecured indebtedness.

Amounts outstanding under the 2025 Term Loan accrue interest at a rate equal to, at Cadence’s option, either (1) Term SOFR plus a margin between 0.625% and 1.125% per annum, determined by reference to the credit rating of Cadence’s unsecured debt, plus a SOFR adjustment of 0.10% or (2) base rate plus a margin between 0.000% and 0.125% per annum, determined by reference to the credit rating of Cadence’s unsecured debt.

As of December 31, 2023, the interest rate on the 2025 Term Loan was 6.21%.

Accordingly, the carrying value of the 2025 Term Loan approximates fair value.

The 2025 Term Loan contains customary negative covenants that, among other things, restrict Cadence’s ability to incur additional indebtedness, grant liens and make certain asset dispositions.

In addition, the 2025 Term Loan contains a financial covenant that requires Cadence to maintain a funded debt to EBITDA ratio not greater than 3.25 to 1, with a step-up to 3.75 to 1 for one year following an acquisition by Cadence of at least $250 million that results in a pro forma leverage ratio between 3.00 to 1 and 3.50 to 1.

Cadence will continue to evaluate certain estimates and assumptions, primarily related to assumed liabilities, during the measurement period (up to one year from the acquisition date).

2021 Acquisitions

| Dated: | | | February [removed: 13, 2024] [added: 20, 2025] | | |

| /s/ Anirudh Devgan | | | DATE: | | | February [removed: 13, 2024] [added: 20, 2025] | | |

| /s/ John M. Wall | | | DATE: | | | February [removed: 13, 2024] [added: 20, 2025] | | |

| /s/ | | | Mary Louise Krakauer | | | | | | February [removed: 13, 2024] [added: 20, 2025] | | | | | |

| /s/ | | | Mark W. Adams | | | | | | February [removed: 13, 2024] [added: 20, 2025] | | | | | |

| /s/ | | | Ita Brennan | | | | | | February [removed: 13, 2024] [added: 20, 2025] | | | | | |

| /s/ | | | Lewis Chew | | | | | | February [removed: 13, 2024] [added: 20, 2025] | | | | | |

| /s/ | | | Julia Liuson | | | | | | February [removed: 13, 2024] [added: 20, 2025] | | | | | |

| /s/ | | | Dr. James D. Plummer | | | | | | February [removed: 13, 2024] [added: 20, 2025] | | | | | |

| /s/ | | | Dr. Alberto Sangiovanni-Vincentelli | | | | | | February [removed: 13, 2024] [added: 20, 2025] | | | | | |

| /s/ | | | Young K. Sohn | | | | | | February [removed: 13, 2024] [added: 20, 2025] | | | | | |

| *(Principal Executive Officer)* | | | | | | | | |

| *(Principal Financial and Accounting Officer)* | | | | | | | | |

| /s/ | | | Anirudh Devgan | | | | | | February 20, 2025 | | | | | |

| Anirudh Devgan, Director | | | | | | | | | | | | | | |

| /s/ | | | Moshe Gavrielov | | | | | | February 20, 2025 | | | | | |

| Moshe Gavrielov, Director | | | | | | | | | | | | | | |

| | | | | | | | | | | | | | | |

| /s/ | | | Dr. John B. Shoven | | | | | | February 13, 2024 | | | | | |

| Dr. John B. Shoven, Director | | | | | | | | | | | | | | |