Cadence designs and sells electronic design automation (EDA) software, semiconductor IP, and hardware that engineers use to design, simulate, and verify complex chips and electronic systems. Cadence's customers include semiconductor companies (roughly 55% of revenue) and systems companies like hyperscalers and automotive OEMs (roughly 45%). Core EDA tools — including the Virtuoso platform for analog chip design, Innovus for digital IC design, and Xcelium and Jasper for functional verification — make up the largest share of revenue. Cadence also sells hardware emulation systems (Palladium and Protium platforms) that physically emulate chips to run tests that would otherwise take months via software. Semiconductor IP (~16% of revenue) offers pre-built circuit blocks — including high-speed memory interfaces and Tensilica processors — that chip designers license rather than build from scratch. The System Design and Analysis segment (~16% of revenue) extends Cadence's tools to PCBs, advanced packaging, and multiphysics simulation. Cadence licenses software primarily on two-to-three year subscription terms, targeting roughly 80% recurring revenue. Hardware is sold upfront but large customers repurchase on a near-annual basis. Cadence's growth strategy centers on AI chip complexity — as chips grow more complex, customers need more licenses and simulation capacity — and on expanding from chip design into broader system simulation through acquisitions like BETA CAE and the pending Hexagon Design & Engineering deal. Cadence reinvests roughly 35% of revenue into R&D and targets returning approximately 50% of free cash flow to shareholders via buybacks.