Arteris, Inc.

Good afternoon, everybody, and welcome to Arteris' fourth quarter and full year 2022 earnings call. Please note this call is being recorded and simultaneously webcast. All material contained in the webcast is sole property and copyright of Arteris Incorporated, with all rates reserved. For opening remarks and introductions, I will now turn the call over to Erica Mannion of Sapphire Investor Relations. Please go ahead.

Thank you, and good afternoon. With me today from Arteris 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 and full year ended December 31, 2022. Nick will review the financial results for the fourth quarter and full year, followed by the company's outlook for the first quarter and full year of 2023. 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 the 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 terrorists issued today. and in the documents and reports filed by our tariffs 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 December 31, 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 December 31, 2022. Listeners who do not have a copy of the press release for the quarter ended December 31, 2022 may obtain a copy by visiting the investor relations section of the company's website. Now I will 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 a strong finish to 2022 with annual contract value plus trailing 12-month royalties of $52.4 million, up 22% year-over-year when adjusted to exclude high silicon and DJI as discussed in previous calls. We continue our growth in 2022, illustrated by adding 38 active customers and reaching 82 design stars during the year and over 3 billion systems shipped with SOCs connected by our TerraSystem IP since inception. We continued our progress in automotive semiconductor electronics by closing eight automotive customer licenses in 2022. Demonstrating the continued demand for our solutions, we had a total of 24 confirmed SOC project design starts in the fourth quarter. We also added 14 new customers in the quarter, contributing to the 20% year-to-year increase in customers deploying Arteris IP. 2022 deals were driven by strong demand for Arteris products across all of our core markets, and led in particular by automotive and consumer electronics, followed by enterprise computing, industrial, and communication applications. In Q4, we also continued to see Arteris technology sales to automotive OEMs, including in China, where Arteris IP was licensed for next generation electric vehicle designs. Besides OEMs, we also saw strong automotive momentum with Pier Ones and numerous semiconductor companies. For example, Telechip licensed Arteris IP in the fourth quarter for advanced automotive solutions. These solutions help to ensure security requirements are met when designing Telechip's new business area solutions such as advanced driver assistance systems, ADAS, and microcontroller units, MCUs. Advanced SoCs require best-in-class network-on-chip technology for low power and safe connectivity, and we're excited that the Arteris products continue to be the leading choice for high-performance, innovative solutions in the advanced SoC automotive markets. Besides automotive, other applications are also getting more sophisticated for growing AI and machine learning electronics, including smart edge devices. The advanced SoCs that power them typically use ARM or RISC-V processor IP and tend to increasingly require Arteris network-on-chip interconnect IP for SoC connectivity. To that end, Arteris and Sci-5 announced a partnership to accelerate RISC-V SoC designs for edge applications to speed up electronics product innovation for consumer electronics and industrial markets. Turning to our product portfolio, we are very excited about our new FlexNoc 5 innovations and the 74 acquisition. Over the last several years, as semiconductor manufacturing process technology went beyond 17 nanometer, with many new SOC designs starting at 5 nanometer and increased 3 nanometer ramp-up, the associated physical effects have started to impact how engineers design SOCs by causing physical layout driven network on chip connectivity iterations, which have a growing impact on project schedules. To address this growing challenge our customers face, we announced FlexNOC 5, physically aware network on chip IP with unique and patented technology. This fifth generation of our core interconnect technology provides customers with up to five times faster physical convergence over manually driven physical iterations for new and derivative designs across automotive, communications, consumer electronics, enterprise computing, and industrial applications. Continuing our efforts to expand the scope of IP and SoC solutions, in the fourth quarter we acquired Semifor, a leader in hardware software interface automation, providing register management technology. SEMIFOR is used by customers to effectively design, verify, document, and help in the validation of the hardware-software integration that is essential to every SOC and is used by leading semiconductor and system companies across automotive, consumer electronics, communication, enterprise computing, and other applications. The addition of SEMIFOR complements both our Magilum IP deployment automation and our network-on-chip IP, and expands our SOC solutions by providing a critical SOC integration layer, which in turn allows customers to accelerate hardware, software development and convergence. With the new FlexNOC 5 innovations and SEMIFOR acquisition, we expect our customers to be able to accelerate their SOC designs. We are physically aware IP connectivity and to better integrate SOC hardware and software layers, improving the overall SOC economics while reducing project schedules and risks of costly redesign. As previously discussed, we are seeing short-term macroeconomic uncertainties and global recessionary impacts, particularly in the first half of 2023. We're also seeing headwinds from the tightening U.S. BIS regulations with respect to U.S.-China trade. However, we believe that Arteris is well-positioned to continue to make progress even in this challenging economic environment as our customers innovate in areas such as automotive, consumer electronics, and machine learning across all applications driving the need for use of commercial system IP. With that, I'll turn it over to Nick to discuss our financial results in more detail.