Cadence still very happy with CAE offerings
Last night Cadence announced results for the first fiscal quarter of 2022; you can read about them in much more detail here — they were overall very good and the company increased just about all forecasts for 2022. I’m most interested in hearing the company’s thoughts on its CAE acquisitions and on how its operations are affected by the conflict in Ukraine — you might recall that PLMish companies so far don’t seem to be much affected while SAP spoke of lost revenue and effects on net income.
Cadence? Not so much. In its filing with the SEC, the company wrote that it suspended operations in Russia during Q1 in keeping with sanctions imposed by the US and other countries but that
“The suspension of our operations in Russia has not limited our ability to develop or support our products and did not have a material impact on our results of operations, financial condition, liquidity or cash flows. We do not have operations or employees in Ukraine. We will continue to monitor the future developments relative to this conflict and the potential impacts it could have on our employees and our ability to provide products and services to our global customer base.”
CAE, on the other hand, continues to be a topic of much interest to Cadence CEO Anirudh Devgan. He told investors,
“[in Q1] we continued executing our strategy of building out our multi-physics platform … We are pleased with the new wins and growing repeat orders for our [long-term] Clarity and Celsius products, as well as our recently acquired CFD technologies. Over the past year, our CFD solutions have continued to proliferate, especially in the aerospace and defense arena with customers such as Lockheed Martin … Last week we introduced Fidelity CFD, a CFD platform that includes enhanced meshing as well as a massively parallel high-order solver, that improves the performance and accuracy of complex CFD applications. Fidelity CFD’s software meshing capabilities have been chosen by Toyota Motor Europe to be their standard workflow for CFD preprocessing. The winning America’s Cup team, New Zealand, relies on Fidelity Marine solver for their hull hydrodynamic modeling”.
That last bit, about the America’s Cup, may look like a non-sequitur but is actually a big deal for Cadence. Numeca’s Fine/Marine was chosen by the New Zealand team maybe ten years ago, and to have them move forward under the Cadence banner is a big vote of confidence in the company’s strategy and direction for its CAE/CFD acquisitions.
Mr. Devgan also spoke about his sales approach for the CAE products:
“We first always focus on key customers, the top customers in a [market]. These are big system and semi companies because we want to make sure our product is differentiated. That’s ongoing and you [its success] see the strength in Clarity and Celsius — and now with the introduction of Fidelity.
We are [also] expanding our partner network and [making more] of these solutions available on the cloud, which also naturally reaches more customers.
We always want to first focus on the product, focus on the top customers and then build out a framework to expand the deployment and go-to-market. Overall, we are pleased with our progress — it is also synergistic with our overall EDA position and overall intelligent system design strategy.“
These CFD/CAE solutions are reported as part of the System Design & Analysis line but aren’t specifically singled out. SD&A’s reported revenue was roughly 10% of the company’s total revenue, or about $90 million in Q1. Since it was also 10% of the total a year ago, we can theorize that it was up over 20% — but we don’t have specific data so don’t read too much into that. Even though a small part of overall revenue, these solutions are critical to the company’s “computational software” strategy which, Mr. Devgan said, is “fueling robust design activity, and accelerating growth … across a rapidly expanding customer base.”