Arteris, Inc.

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

Thank you and good afternoon. With me today from our terrace 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 third quarter ended September 30, 2022. Nick will then review the financial results for the third quarter followed by the company's outlook for the fourth 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 differ materially 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 terrorists issued today and in the documents and reports filed by our terrorists 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, non-GAAP net loss per share, and free cash flow, which are not measures prepared in accordance with U.S. GAAP. The non-GAAP measures are presented as we believe that they provide investors with a 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 September 30, 2022. In addition, for a definition of key performance indicators used in this presentation, such as annual contract value, confirmed design start, active customers, and remaining performance obligations, please see the press release for the quarter ended September 30, 2022. Listeners who do not have a copy of the press release for the quarter ended September 30, 2022 may obtain one by visiting the investor relations section of the company's website. I will now turn the call over to Charlie.

Thank you, Erica, and thanks to everyone for joining us on the call this afternoon. We're excited to report solid results for the third quarter with annual contract value plus trailing 12-month royalties of $53.2 million, up 17% year-over-year. This is despite iSilicon's contract ending in Q2, which removed $3.3 million of annual contract value as previously announced. We achieved a major company milestone with over 3 billion systems shipped with SOCs connected by our TerraSystem IP since inception. Demonstrating market demand for our solution, we added 10 active customers in a quarter, a company record. Total confirmed design starts were 21 SOC projects in the third quarter. Deals in the third quarter were driven by strong demand for our Terra system IP and deployment software across our core markets, including multiple transactions in automotive, consumer electronics, enterprise data center, communications, machine learning, and industrial applications. We're also seeing increasing demand for space-oriented applications. We closed a direct automotive OEM licensing deal with a major new international electric car manufacturer. This customer selected Arteris because of our track record of successful completion of automated driving SOCs by multiple customers and our ability to provide flexible technology, enabling the potential for this customer to create differentiated value and to meet their project goals and safety compliance. Arteris also extended and expanded a long-term automotive semiconductor agreement and saw strong automotive electronic demand globally. Arteris was also selected for a major space-oriented program due to the combination of technology, performance, and reliability. In addition, our resilience technology was a primary reason for Arteris being selected for this environmentally challenging application. Additionally, Arteris was chosen by a leading 5G communications OEM to deploy our network on-chip interconnect technology. CIMA.ai also highlighted the use of Arteris IP for flexibility and adaptability as part of their new machine learning system on-chip platform for the embedded edge announced in August. Furthermore, Microchip entered into a multi-year agreement licensing Arteris IP to enhance performance, security, configurability, and to lower power for the next generation of microcontrollers used for aerospace, embedded vision, embedded computing, and machine learning. Also, we expanded our partnership with Arm in the automotive space to leverage leading-edge Arm processor IP with our Terra system IP to enable best-in-class solutions for autonomous driving, cockpit, and infotainment, vision, radar, and LIDAR, automotive communication, and other automotive subsystems. The partnership delivers solutions that should accelerate our mutual customer's ability to realize SOCs with high performance and power efficiency for complex and demanding safety critical tasks with different workloads while reducing project schedules and costs. Arteris and Arm expanded technical collaboration including early access to next generation of automotive processor IT to ensure customer success via well-aligned roadmaps, CMOS integration, and optimized flows with the highest quality of results. This will in turn enable the more efficient creation of ISO 26262 compliant systems with the most rigorous automotive safety integrity levels to address today's and tomorrow's vehicle electronics design challenges. Lastly, as we recently announced, we are very excited to have strengthened our management team with the addition of Crystal Moffitt-Smith as our new Executive Vice President of Global Sales. Crystal comes to us with an extensive sales leadership background in cadence and synopsis. While there are macroeconomic uncertainties, including the latest U.S. commerce regulations with respect to China, we believe that our terrace is well-positioned to make progress even in challenging economic environments. Despite potential headwinds, our customers are continuing to innovate in areas such as automotive, machine learning, and 5G, driving the need for increased use of commercial system IP. With that, I'll turn it over to Nick to discuss our financial results in more detail.