Arteris, Inc.

Good afternoon, everyone, and welcome to the Arteris IP fourth quarter and full year 2021 earnings call. All material contained in the webcast is the sole property and copyright of Arteris IP with all rights reserved. For opening remarks and introductions, I will now turn the call over to Ms. Erica Mannion at Sapphire Investor Relations. Please go ahead. You may begin.

Thank you, and good afternoon. With me today from Arteris IP are Charlie Janik, Chief Executive Officer, and Nick Hawkins, Chief Financial Officer. Charlie will begin with a brief review of the business results for the fourth quarter ended December 31, 2021. Nick will then review the financial results for the fourth quarter in full year 2021, followed by the company's outlook for the first quarter and full year of 2022. We will then open the call for questions. Before we begin, I'd like to remind you that management will make statements during this call that are forward-looking statements within the means of federal securities laws. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated, and you should not place undue reliance on forward-looking statements. Additional information regarding these risks, uncertainties, and factors that could cause results to appear in the press release our Taras IP, issued today and in the documents and reports filed by our Taras IP from time to time with the Securities and Exchange Commission. Please note, during this call, we will cite certain non-GAAP measures, including non-GAAP net loss and non-GAAP net loss per share, which are not measures prepared in accordance with U.S. GAAP. The non-GAAP measures are prepared as we believe that they provide investors with the means of evaluating and understanding how the company's management evaluates the company's operating performance. These non-GAAP measures should not be considered in isolation from, as substitutes for, or superior to financial measures prepared in accordance with U.S. GAAP. Listeners who do not have a copy of the press release for the quarter ended December 31, 2001, may obtain a copy by visiting the investor relations section of the company's website. Now, I'd like to turn the call over to Charlie.

Thank you, Erica, and thanks, everyone, for joining us on the call this afternoon. We are excited to report a strong fourth quarter, our second quarter as a public company, with annual contract value plus trailing 12-month royalties of $50 million, up 19% year over year. Demonstrating our continuing momentum in 2021, our active customers increased by 42 new system IP customers, including 36 for NOC interconnect IP and six for IP deployment software. This marks the highest number of new active customer addition in a 12-month period in the company's history. In the fourth quarter alone, the total number of active customers increased from 179 to 192. Total customer design starts increased from 57 in 2020 to 86 in 2021. Machine learning applications continue to account for the largest number of new licensees licenses, followed by automotive and 5G infrastructure. Machine learning design wins included Konami, Sci-5, and six other as of yet unannounced machine learning companies. The edge machine learning market continues to be promising with large number of new customers and broad range of applications. Customers in the automotive market continued adoption of Arturia's IP technology in the fourth quarter, illustrated by both solid license revenue and increasing automotive royalties as EVs and automated driving vehicles begin commercialization in increasing numbers. Automotive orders continued to be strong across the entire supply chain, including semiconductor companies such as Mobileye and NXP, tier one vendors such as Bosch, automotive OEMs such as BMW, and several ride-sharing companies as well as several unannounced customers. Demonstrating the breadth of activity throughout the automotive supply chain, in the fourth quarter, we won a key design win with a major automotive OEM who is making the transition to designing their own SOCs together with their semiconductor company partners. The reason this OEM selected Arteris IP was their desire to control their SOC architectures, allowing this OEM to better support their extensive automated driving software development programs. In addition, Arteris IP track record in supporting functional safety requirements with our resilience features was another factor in the selection process. With the successful track record of our existing automotive customers in getting their SOCs to market, we believe Arteris IP is increasingly being viewed as an innovative technology partner in the automotive sector. Another major development in the quarter was the increasing adoption of both Arturia's IP network on chip knock interconnect products and IP deployment software by customers at the same time in an attempt to shorten SOC design cycles and make the use of their IP block library assets more effective. Design win customers licensing both products include Sundrell, a UK-based design house, and Mobulant, an emerging machine learning company, as well as four other unannounced customers licensing both solutions together in a quarter. As we discussed last quarter, we announced the launch of Arteria's Harmony Trace design data intelligence solution to help ease compliance with semiconductor industry functional safety and quality standards. The development of Harmony Trace was driven by our customers' needs to establish an automated traceability flow and implement change management best practices between their existing requirements, specification, electronic design automation tools, software code depository, and documentation tools. Harmony Trace allows our customers to use their existing tools and automatically link data between them due to Harmony Trace's unique semiconductor industry-specific semantic computing technology. We believe Harmony Trace is a revolutionary product that is best adopted by multiple companies at different levels of an industry supply chain. The initial feedback from customers has been positive as Harmony Trace helps them verify and close gaps between product specifications and actual implementation of those requirements. We are now at a stage where we are working with multiple early adopters to fit Harmony Trace into their product development flows. We expect Harmony Trace will take time for wide customer adoption, but we believe it will ultimately be a valuable product for mission critical segments of the semiconductor industry. As we look ahead to move towards system IP being of greater complexity and therefore greater value continues. Decision-making SOCs which incorporate machine learning functions are and will continue to be more complex than data processing semiconductors, and we believe this provides Arterios IP the opportunity to deliver ever-increasing value. Since 2003, the industry developed from one processor, a few IOs, and one or two memory channels to hundreds of IP blocks, multiple processors, cache coherency used outside of the processor subsystem, and up to eight channels of memory access. More recently, we have also viewed the emergence of machine learning technology and chiplets, which require further increased in system IP complexity. The semiconductor industry is also going through regionalization, where fab investment in the three major economic blocks of the world is increasing dramatically. Democratization of SOC design, with system houses being able to build their own custom semiconductor and semi-custom SOCs profitably, as well as a disintermediation of the semiconductor supply chain toward a fabless model where only a few critical IP blocks are being designed internally by major system companies, we believe is a further expanding our potential customer base. All of these trends support greater design activity with more companies engaging in semiconductor design and more outsourcing of non-core IP block technology, which in turn favors the development and growth of Artarius IP. We do not currently anticipate a slowdown in SOC design starts. More and more companies are designing SOCs or are partnering with SOC design partners to get the silicon they need to support their business models. Some of these software-driven business models require large investments and benefit from running on customized silicon. For example, we believe that automotive OEMs who do not move to at least understand their SOC hardware architectures will be at a significant disadvantage versus those which have access to customized silicon technologies. Moreover, our customers' design starts are increasingly complex. We believe this increase in SoC complexity makes it increasingly difficult to develop system IP solutions in-house, though some of the largest semiconductor companies continue to do so. As an added benefit for Arterios IP, the increasing number of IP blocks in SOC designs also increases the value of IP deployment software solutions, given their ability to accelerate the use of all types of IP blocks and facilitate SOC assembly. As a result, we're seeing a trend toward SOC system IP solutions being increasingly licensed from commercial vendors such as Arterios IP. Specific to Arterios IP, We plan to introduce at least one new IP deployment and or not interconnect product in 2022. Before I turn the call over to Nick to review the financials, I would also like to mention we have strengthened our management team with addition of Pankaj Mayor as our new executive vice president of global sales, providing our executive team with additional public company experience. We also plan to continue to invest in engineering, customer support, sales, and technical marketing headcount, to enhance the support of our customers and continue growing our business to capitalize on our system's IP opportunity. With that, I'd like to turn it over to Nick to discuss our financial results in more detail.