Cadence Design Systems

International and currency · International operations and emerging markets

In addition to export control laws, our global operations are subject to numerous U.S. and foreign laws and regulations, including those related to anti-corruption, anti-bribery, tax, corporate governance, financial and other disclosures, competition, antitrust, data privacy, data protection and employment. These laws and regulations are complex and may have differing or conflicting legal standards, making compliance difficult and costly.

Credit and liquidity · Access to capital and financing

In addition, to facilitate future acquisitions or investments, we may 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.

Capital structure and performance · Credit rating and cost of capital

In addition to increasing the interest rates payable by us under our revolving credit facility and 2025 Term Loan, credit rating downgrades could also restrict our ability to obtain additional financing in the future and affect the terms of any such financing.

Credit and liquidity · Debt service and covenant compliance

If we do so, the risks related to our level of debt could intensify. Specifically, our level of debt could have important consequences, including the following: making it more difficult for us to satisfy our obligations to service our debt

Capital structure and performance · Financial reporting and accounting risks

The methods, estimates and judgments that we use in applying our accounting policies have a significant impact on our results of operations. Such methods, estimates and judgments are subject to substantial risks, uncertainties and assumptions, and factors may arise over time that may lead us to change our methods, estimates and judgments.

Capital structure and performance · Financial performance volatility

Such investments may involve significant time, risks and uncertainties, including the risk that the expenses associated with these investments may affect our margins and operating results and that such investments may not generate sufficient revenues to offset liabilities assumed and expenses associated with these new investments.

Tax and financial reporting · Tax compliance and changes in tax law

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.

Legal and litigation · Litigation and legal proceedings

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

Stakeholder relations · Investor relations and market confidence

In addition to these factors and industry and general economic and political conditions, our stock price may be adversely impacted by announcements related to financial results or forecasts that fail to meet or are inconsistent with earlier projections or the expectations of our securities analysts or investors

Corporate governance · Executive compensation and incentives

To attract, retain and motivate individuals with the requisite expertise, we may be required to grant large numbers of stock options or other stock-based incentive awards, which may be dilutive to existing stockholders and increase compensation expense

Strategic execution · Merger acquisition and divestiture risks

the failure to realize, or a delay in realizing, anticipated benefits; the failure to complete transactions on a timely basis or at all, including as a result of regulatory approval dynamics

Market position and competition · Industry consolidation and market concentration

There has been a trend toward customer consolidation in the semiconductor industry through business combinations, including mergers, asset acquisitions and strategic partnerships. If this trend continues, it could make us more dependent on fewer customers who may be able to exert increased pressure on our prices and other contract terms.

Market position and competition · Disruptive competitors and new market entrants

the development by others of competitive products or platforms and engineering services, possibly resulting in a shift of customer preferences away from our products and services and significantly decreased revenue

Market position and competition · Market cyclicality and demand volatility

A substantial portion of the product revenue related to our hardware business and our IP offerings is recognized upon delivery, and our forecasted revenue results are based, in part, on our expectations of hardware and IP to be delivered in a particular quarter. Therefore, changes in hardware and IP bookings or deliveries relative to expectations will have a more immediate impact on our revenue.

Innovation and product development · Product development and randd investment risks

We have invested and expect to continue to invest in research and development for new and existing products and technologies and technical sales support. 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.

Market position and competition · Competitive pressure and market share loss

Entity List restrictions and other trade restrictions may also encourage customers to seek substitute products from our competitors, including a growing class of foreign competitors and open source alternatives, that are not subject to these restrictions or to develop their own solutions, thereby decreasing our long-term competitiveness.

Cybersecurity and data protection · Third party data security and vendors

In addition, if we select a vendor that uses cloud storage of information as part of their service or product offerings or are selected as a vendor for our Cadence Cloud portfolio, despite our attempts to validate the security of such services, our proprietary information may be misappropriated by third parties.

Human capital and workforce · Talent acquisition and retention

Competition for highly skilled executive officers and employees can be intense, particularly in geographic areas recognized as high technology centers. In addition, competition for qualified personnel, including software engineers, in the EDA, commercial electronics engineering services and IP industries has intensified.

Geopolitical and trade · International conflicts and tensions

Some of our international research and development and other facilities are in parts of the world where there may be a greater risk of business interruption as a result of political instability, terrorist acts or military conflicts than businesses located domestically.

Natural and catastrophic events · Natural disasters and extreme weather

Our offices around the world may also be adversely impacted by natural disasters, including those intensified by climate change. Our offices, and those of our customers and suppliers, can be disrupted by droughts, extreme temperatures, fires, flooding and other climate change-related risks, as well as earthquakes, actions by utility providers, and other catastrophic events such as an actual or threatened public health emergency.