Arteris, Inc.

Good afternoon, everyone, and welcome to the Arteris IP second quarter 2022 earnings call. Please note that this call is being recorded in simultaneously webcast. All material contained in this webcast is a sole property of and copyright of Arteris IP and with all rights reserved. For opening remarks and introductions, I will now like to turn the call over to Erica Mannion at Sapphire Investor Relations. Please go ahead.

Thank you and good afternoon. With me today from our TRS-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 second quarter ended June 30, 2022. Nick will then review the financial results for the second quarter, followed by the company's outlook for the third 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 meaning 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 differ appear in the press release our Terrace IP issued today and in the documents and reports filed by our Terrace 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 per share and free cash flow, which are not measured prepared in accordance with U.S. GAAP. These non-GAAP measures are presented as we believe 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. A reconciliation of these non-GAAP measures to the nearest GAAP measure can be found in the press release for the quarter ended June 30, 2022. In addition, for a definition of certain of the key performance indicators used in this presentation, such as annual contract value, confirmed design starts, active customers, and remaining performance obligations, please see the press release for the quarter ended June 30, 2022. Listeners who do not have a copy of the press release for the quarter ended June 30, 2022 may obtain one by visiting the investor relations section of the company's website. Now I'd like to turn the call to Charlie.

Thank you, Erika. And thanks to everyone for joining us on the call this afternoon. We're excited to report our continuing momentum in 2022 with annual contract value plus trailing 12-month royalties of $51.7 million in the second quarter, up 18% year-over-year, despite HiSilicon's contract ending in Q2, which removed $3.3 million of annual contract value. Demonstrating the strength in market demand, our active customers increased by nine in the quarter, while total confirmed design starts were 18 SOC projects. Major new customer wins, including Telechips in automotive, Pleops in consumer, and Sunrise Memory in enterprise, as well as a leading automotive OEM, leading enterprise hyperscaler, and a leading machine learning, artificial intelligence, semiconductor company. Deals in the second quarter were driven by strong demand for our terrorist IP across our core markets, including multiple transactions in automotive, consumer electronics, enterprise around data center applications, and AI ML. These were broadly distributed geographically across APAC, EMEA, and the U.S., Within EMEA, there was an increase in innovative Israeli startup wins, including Inuitive for development of next generation of vision processing for edge devices, for robotics, drones, augmented reality, virtual reality, and mobile products. On the product front, we continue to invest heavily in development of innovative system IP products. In the second quarter, we made a major release of our Encore cash-coherent product to multiple automotive and enterprise customers. With respect to the IP deployment software product line, we partnered with major customers to implement continuous IP block integration flows for new designs and incremental changes which accelerate their delivery of new SoC platforms and derivative chips. We also delivered a framework for automatic SOC assembly scripting, which lowers the difficulty and cost of integration for internal design automation groups. While there are macroeconomic uncertainties, we believe that Arteris IP is well positioned to make progress even in challenging economic environments. We are seeing increased silicon content of electronic systems as they are engineered to be smarter and in some cases autonomous. One of these markets is the automotive market where vehicles are becoming endpoints of a vast transportation network. Furthermore, we see ever higher levels of silicon integration to the point where electronic systems are made up of complex semiconductors on relatively few circuit boards. This is driving system houses to become involved in silicon design at some level, either by themselves or together with partners. Before turning over the call to Nick, I'd like to mention in the second quarter we announced the addition of Claudia Fan-Munchie to the Arteris IP's board of directors. Claudia contributes a wealth of experience which includes a distinguished 30-year career at IBM, where she held various positions, including executive roles in engineering, IP licensing, and IBM Ventures. She is also a Stanford University lecturer and sits on the board of directors of major public companies. With that, I'll turn it over to Nick to discuss our financial results in more detail.