Cadence Design Systems Inc (NASDAQ:CDNS) Q3 2019 Earnings Conference Call - Final Transcript

Oct 21, 2019 • 05:00 pm ET

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Cadence Design Systems Inc (NASDAQ:CDNS) Q3 2019 Earnings Conference Call - Final Transcript

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Q & A
Analyst
Gary Mobley

your typical deal size maybe for these types of wins and as well, perhaps when you can start to recognize some revenue from these four early Clarity wins?

Executive
Lip-Bu Tan

Yeah, thank you for your question, Gary. I think couple of things. First of all, I think we have our approach of the -- you know the System Analysis space. That's something is really our core competent of computational software. And we can apply into this complex System Analysis space and then we have these two new products. Initially, we announced Clarity that is a 3D EM Solver. We are delighted. We have four competitive wins. And this is a very new product for us, and we have more than 30 active customer engagements going forward. And so we are excited about that. And then, meanwhile, we just announced our Celsius Thermal Solver. And again, back to that computational software strength that we have, and we clearly demonstrate that up to 10X performance and customers are delighted to see our performance especially Bosch and ARM. They both endorse our new products and we are in the middle of earlier discussion.

So it's still in the very early stage of our emerging into the System Analysis, and more and more our customer love that because you know besides the EDA, besides the IP, they want to look at the total system solution simulation with [indecipherable] the whole system, power in our thermal envelopes, and something that we can really demonstrate and provide the best solution for the customer. So it is still very early. And in term of our pricing, again, it's not part of our EDA. And so and now we do it differently, and they are basically close to the market competitive pricing, but in a very early stage of winning. Stay tuned. Over time we will unfold and give you a progress update.

Analyst
Gary Mobley

All right. Thank you guys.

Executive
Lip-Bu Tan

Thank you.

Operator
Operator

Your next question comes from Jackson Ader with JPMorgan. Your line is open.

Analyst
Jackson Ader

Thanks, guys. Thanks for taking the question. Can we just start with hardware? So it looks like Verification was the segment that probably struggled the most year-over-year. And we've seen inventory balances pick up in the last couple of quarters. So I'm just curious, is this maybe a building of some hardware ahead of pipeline? Or are we seeing any kind of struggling close rates in that hardware business?

Executive
Lip-Bu Tan

Now, let me start first Jackson. And then John will give you more detail about the inventory. And so I think first of all, I think function Verification remained a fastest growing challenge for our customer. And I've mentioned in Q3, we are delighted to deepen our partnership with Samsung to a comprehensive agreement across not just digital custom and also Verification products. And then Palladium Z1, have been doing great and the customer love it on the hardware emulation, but now we have the Protium X1 FPGA-based prototyping that we can provide a comprehensive solution across IP