Revenue (Tables)

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Revenue from external customers by product category

The following table shows the percentage of revenue contributed by each of Cadence’s five product categories for the three and nine months ended September 30, 2023 and October 1, 2022:

	Three Months Ended				Nine Months Ended
	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Custom Integrated Circuit (“IC”) Design and Simulation	22	%	22	%	21	%	22	%
Digital IC Design and Signoff	28	%	29	%	27	%	28	%
Functional Verification, including Emulation and Prototyping Hardware*	26	%	25	%	29	%	26	%
Intellectual Property (“IP”)	11	%	12	%	11	%	13	%
System Design and Analysis	13	%	12	%	12	%	11	%
Total	100	%	100	%	100	%	100	%

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* Includes immaterial amount of revenue accounted for under leasing arrangements.

Disaggregation of revenue

The following table shows the percentage of Cadence’s revenue that is classified as recurring or up-front for the three and nine months ended September 30, 2023 and October 1, 2022:

	Three Months Ended				Nine Months Ended
	September 30, 2023		October 1, 2022		September 30, 2023		October 1, 2022
Revenue recognized over time	83	%	81	%	80	%	82	%
Revenue from arrangements with non-cancelable commitments	2	%	3	%	3	%	2	%
Recurring revenue	85	%	84	%	83	%	84	%
Up-front revenue	15	%	16	%	17	%	16	%
Total	100	%	100	%	100	%	100	%

Contract balances

Cadence’s contract balances as of September 30, 2023 and December 31, 2022 were as follows:

	As of
	September 30, 2023		December 31, 2022
	(In thousands)
Contract assets	$	14,353	$	22,766
Deferred revenue	766,515		782,062