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Cadence Design Systems CEO Discusses Q2 2012 Results - Earnings Call Transcript

In addition to financial results prepared in accordance with Generally Accepted Accounting Principles or GAAP, we will also present certain non-GAAP financial measures today. 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, which can be found in the quarterly earnings section of the Investor Relations portion of our website. A copy of today's press release dated April 25, 2012 for the quarter ended June 30, 2012, and related financial tables can also be found in the Investor Relations portion of our website.

Now, I'll turn the call over to Lip-Bu.

Lip-Bu Tan

Good afternoon, everyone, thank you for joining us. Cadence is delivered strong results in Q2, revenue totaled $326 million. Non-GAAP operating margin was 23% and operating cash flow was $67 million. Our business continued to be driven by design activity which remained robust in Q2, the macro environment is challenging with slow growth in China and the ongoing debt crisis in Europe and slow U.S. recovery.

Key shipments and infrastructure equipment are showing weakness and foundry issues have hurt sales for some customers. However, we believe this high activity will continue at a good pace in second half. We are working closely with customers on the most complex design; our backlog remained strong and continues to strengthen our product portfolio. After reviewing our pipeline for the second half and taking into account the macro-risk we are modestly raising guidance.

Now let us look at few of the highlights for Q2 starting with silicon realization. Our 20 nanometer design technology continues to gain momentum both for digital as well as custom and analog. We have previously announced 20 nanometer test chips with ARM, TSMC and Samsung.

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