Confidential Cadence Design Systems, Inc. February/March 2019 Safe Harbor Statement and Regulation G Safe Harbor Statement The following discussion contains forward looking statements, and our actual results may differ materially from those expectations discussed here. Additional information concerning factors that could cause such a difference can be found in our Form 10-Q for the quarter ended September 29, 2018, our Form 10-K for the year ended December 29, 2018, the company’s future filings with the Securities and Exchange Commission and the cautionary statements regarding forward-looking statements in our February 19, 2019 earnings press release for the quarter ended December 29, 2018. Regulation G In addition to financial results prepared in accordance with Generally Accepted Accounting Principles, or GAAP, this presentation will also contain certain non-GAAP financial measures. Cadence management believes that in addition to using GAAP results in evaluating our business, it can also be useful to measure results using certain non-GAAP financial measures. Investors and potential investors are encouraged to review the reconciliation of non-GAAP financial measures with their most direct comparable GAAP financial results, including those set forth in our February 19, 2019 press release and our CFO Commentary for the quarter ended December 29, 2018, both of which can be found in the quarterly earnings section of the investor relations portion of our website at cadence.com. 2 © 2019 Cadence Design Systems, Inc. All rights reserved. Cadence-at-a-glance • Leading provider of system design enablement (SDE) solutions – software, hardware, and IP • Mission critical technology for designing today’s electronic systems • Culture of innovation - more than 20 significant new products in last 3 years • Subscription software model with very high customer renewal rates and loyalty • Revenue: ~$2.14B • Headquarters in Silicon Valley ~7500 employees worldwide NASDAQ: CDNS; S&P 500 & Nasdaq 100 indexes 3 © 2019 Cadence Design Systems, Inc. All rights reserved. Financial summary 2018 2500 Revenue 2000 1 Revenue 1500 $2.14B 1000 ($ millions) 500 Non-GAAP 0 operating 2012 2013 2014 2015 2016 2017 2018 margin1 30% 1 $2.00 Non-GAAP EPS $1.75 Free $1.50 cash flow $1.25 $1.00 $543M $0.75 $0.50 $0.25 $0.00 2012 2013 2014 2015 2016 2017 2018 Notes: 1. Non-GAAP operating margin and non-GAAP EPS (excludes amortization of acquired intangibles, stock-based compensation, non-qualified deferred compensation expenses and certain non-recurring cash expenses. See quarterly earnings releases and CFO Commentary for reconciliations to GAAP measures. 4 © 2019 Cadence Design Systems, Inc. All rights reserved. Industry landscape . Cadence and its peers develop highly specialized software, hardware, and IP solutions for the automated design and verification of electronic products and SDE/EDA economics within systems the 2017 electronics framework . Our technology is critical to semiconductors, Applications and is increasingly deployed by a variety of systems companies Electronic Systems $1.50T Semi $445B SDE/EDA & IP $9.8B Source: The McClean Report, 2018, ESD Alliance Market Survey Service Q4 2017, Cadence analysis 5 © 2019 Cadence Design Systems, Inc. All rights reserved. Data-driven economy (DDE) drives growth opportunities Data Data Creation Storage Data Data Transmission Analytics 6 © 2019 Cadence Design Systems, Inc. All rights reserved. Key technology waves propel DDE Mobile Edge computing Machine learning Automotive Datacenter 7 © 2019 Cadence Design Systems, Inc. All rights reserved. System Design Enablement (SDE) strategy MOBILE DATACENTER EDGE COMPUTING AUTOMOTIVE AERO & DEFENSE AND MORE… SYSTEM INTEGRATION System analysis * HW-SW verification * Software applications SECURITY PACKAGE AND BOARD I PCB design * Package design * PCB and package analysis P CHIP (Core EDA) Design and implementation * IP/SoC verification * Software drivers Partnerships with Ecosystem Leaders 8 © 2019 Cadence Design Systems, Inc. All rights reserved. SDE – expanding beyond traditional EDA . Strategy takes end-product view and provide tools and content that enable system development . Core EDA at the heart of the SDE strategy − Deliver innovative, differentiated core products & flows − Tight partnerships with top customers and key ecosystem players . Provide comprehensive printed circuit board and IC package design solutions . Offer focused and differentiated IP portfolio . Expand to system level through solutions for HW/SW integration, software development and system analysis . Gear solutions to specific vertical markets 9 © 2019 Cadence Design Systems, Inc. All rights reserved. Innovation – engine of growth More than 20 significant new products in past 3 years Tensilica 112G SerDes USB Type-C Vision C5 IP IP DSP Legato Cadence Legato™ Virtuoso® Memory Cloud Reliability RF Solution Solution Tensilica® Pegasus Liberate™ 2018 TSMC VDE Vision Verification Allegro Pulse Trio Q6 DSP System Tensilica Tensilica OrCAD® Tensilica Vision P5 DNA 100 Capture Cloud HiFi 3z DSP DSP Genus™ Protium S1 Next-Gen Conformal Synthesis Prototyping Virtuoso ADE Smart LEC Solution Platform Innovus™ Joules™ Tensilica Virtuoso Implementation RTL Power Fusion G3 System Design System Solution DSP Platform Indago™ Modus™ Xcelium Allegro PCB 2015 - 2017 Debug DFT Software Parallel DesignTrue Platform Solution Simulator Tensilica® Next Gen CCIX VIP Stratus™ HLS Vision P6 Jasper Gold and DIP DSP Palladium® Z1 Tensilica Enterprise JasperGold Fusion DSP Emulation RTL Signoff Platform 10 © 2019 Cadence Design Systems, Inc. All rights reserved. Recurring revenue model High visibility software revenue stream . ~90% of total revenue recognized over time . Backlog: $2.8B (Q4’18) Revenue Revenue growth 600 . 10% (2018/2017) 500 400 300 ($ millions) 200 100 0 2012 2013 2014 2015 2016 2017 2018 11 © 2019 Cadence Design Systems, Inc. All rights reserved. Diversified business across products and regions Verification Americas 12% 8% Digital 24% Asia Analog 9% 19% PCB/Pkg EMEA 45% IP Japan 26% 29% 28% Revenue mix for 2018 12 © 2019 Cadence Design Systems, Inc. All rights reserved. Driving profitable growth Strong operating profitability: . Focus on growth and disciplined ROI-centric resource allocation . Non-GAAP operating margin 30%1 (2018) Non-GAAP Operating Margin1 35% 30% 25% 20% 15% 10% 5% 0% 2012 2013 2014 2015 2016 2017 2018 Notes: 1. Non-GAAP operating margin and non-GAAP EPS (excludes amortization of acquired intangibles, stock-based compensation, non-qualified deferred compensation expenses and certain non-recurring cash expenses. See quarterly earnings releases and CFO Commentary for reconciliations to GAAP measures. 13 © 2019 Cadence Design Systems, Inc. All rights reserved. Cash flow, capital structure and uses of cash Free cash flow Free cash flow generation 600 500 . $543M (2018) 400 ($ millions) ($ 300 Capital structure (Q4‘18) 200 . Cash: $533M 100 . LT Debt: $450M 0 2012 2013 2014 2015 2016 2017 2018 . Credit facility: $350M ($100M drawn) Stock repurchase 1200 Capital allocation 1000 . Internal investment 800 . M&A millions) ($ 600 . Repurchase stock 400 200 0 2012 2013 2014 2015 2016 2017 2018 14 © 2019 Cadence Design Systems, Inc. All rights reserved. In summary . Mission critical solutions for designing semiconductors and electronic systems . Data-driven economy and supporting technology waves drive growth . Culture of innovation creates the products for growth . Growth, focus and discipline drive financial performance 15 © 2019 Cadence Design Systems, Inc. All rights reserved. © 2019 Cadence Design Systems, Inc. All rights reserved worldwide. Cadence, the Cadence logo, and the other Cadence marks found at www.cadence.com/go/trademarks are trademarks or registered trademarks of Cadence Design Systems, Inc. All other trademarks are the property of their respective owners..