Arteris, Inc.

Good afternoon, everyone, and welcome to the Arteris third quarter 2024 earnings call. Please note this call is being recorded and simultaneously webcasted. All material contained in the property and copyright of Arteris is all rights 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 third quarter ended September 30, 2024. Nick will review the financial results for the third quarter, followed by the company's outlook for the fourth quarter and full year of 2024. 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 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 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 US 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, 2024. 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 September 30, 2024. Listeners who do not have a copy of the press release for the quarter ended September 30, 2024 may obtain a copy by visiting the investor relations section of the company's website. In addition, management will be referring to the Q3 2024 earnings presentation which can be found in the investor relations section of the company's website under the events and presentations tab. Now I will turn the call over to Charlie.

Thank you, Erica. And thanks to everyone for joining us on our call today. In the third quarter of 2024, we achieved a record annual contract value plus royalties of 60.5 million. We also delivered positive free cashflow of 1.1 million, making it our third consecutive quarter of positive free cash flow. Our success during the quarter was in particular fueled by demand for AI driven enterprise computing and automotive SOC solutions, along with growing momentum in our other verticals. Business in the third quarter was primarily driven by increasing adoption of our technology by our current customer base. As an example, a top five global technology company increased their deployment of our first products to enable development of their high-end AI chiplets and SOCs. This expanded engagement provides our customers with a broader access to our system IT. We expect to see designs from this customer used in a wide range of products such as hyperscale cloud data center applications, as well as high volume consumer electronics. Similarly, NIO, a pioneer and a leading company in the global smart electric vehicle market, deployed Arteris technology for its next generation of ADAS and LiDAR SOCs, using our physically-aware-not technology to reduce silicon implementation risks and schedule. This is yet another example of our continued success in accelerating automotive electrification and autonomous driving, with over nine carmakers already using Arteris directly as the gold standard for functionally safe high-end automotive computing. During the quarter, we also announced the adoption of our terrorist NOC IP and SOC integration automation software products by Tier 4 for intelligent vehicle SOC, then Starin for next generation of chiplet-based AI solutions, and VeriSilicon for HPC data center SOCs. Majority of the new designs in the third quarter came from enterprise computing, followed by automotive, consumer electronics, and communications verticals. The demand for multiple type of AI chips and chiplets, from data centers to endpoint devices, including the smart edge, continues to be a key factor in our success this year. Nearly half of our license deals in dollar terms in the year have enabled AI SoC development more than doubling year over year. We continue to work with market-leading customers to further advance our technology, accelerating the broad shift towards smarter electronics. Accordingly, in October, we announced the addition of NOC tiling, supported by Mesh, an innovation in our IP products to accelerate the design of AISOCs by providing scalable performance, power reduction, and increased design reuse. By organizing network interface units, or NIUs, into modular, repeatable blocks, both FlexNoc and NCore IP users can replicate verified functional modules into larger AI compute clusters. These support sophisticated workloads for vision, machine learning, deep learning, natural language processing, including large language models and generative AI, both for training and inference applications. Earlier this year, we announced expanded support for ARMv9 architecture CPUs with Arteris NCore IP extensions for Jory customers. Additionally, we announced a partnership with Andes Technologies to accelerate RISC-V SoC adoption and are pleased to have been named by them as Partner of the Year. We recently expanded our collaboration with Sci-5, announcing pre-verified RISC-V solutions for data centers with our NCORE product providing faster, lower risk SOC design for AI workloads and power efficiency requirements. Moreover, Arteris joined the Synopsys Arc Access program. The aim is to provide interoperable and optimized solution for mutual customers using Synopsys processors and Arteris Knox. Our strategy of supporting mid and high-end SOCs and expanding our footprint within large customers appears to be paying off. In dollar terms, the majority of our license deals in the quarter were with the top 10 technology companies as they create ever more sophisticated electronics that increasingly need AI-enabled, high-performance, and energy-efficient SOCs. To further expand our footprint at large customers, we have broadened our focus to include the support of microcontroller chips, many of which are now complex enough to benefit from our system IP technology. These designs are numerous and are often produced in large volumes. As microcontrollers are used to control the operation of electronic systems, such as industrial machinery, automotive functions, and IoT devices, they require low latency and low power consumption. To address these requirements, we have achieved the ability to create data packets with zero latency penalty for these types of devices. This strategy aims to expand customer usage of Arteris technology from complex SOCs to their mid- to upper-range microcontroller product lines and demonstrates the technological flexibility and scalability of our products. We are also aiming to address an even broader set of designs at our large customers. We believe the scale and scope of our long-term opportunity remain robust, supported by our current products and strong product pipeline of new system IP technologies as well as growing relationships with some of the largest and most advanced electronics companies in the world. Our customers continue to innovate in exciting growth areas, such as generative AI and autonomous driving using Arteris technologies. Before I hand the call over to Nick, we're excited to have two seasoned individuals join our leadership team. We recently announced that Joachim Kunkel joined our board of directors, having most recently served as a general manager of the IP Business Unit at Synopsys, where he grew revenue from nearly zero to over $1.5 billion. In addition, Ken Wei joined as our Terrace EVP of Sales, leading our global and application engineering force, bringing with him a wealth of experience and industry knowledge gained from Acronix, Xilinx, Freescale, and others. With that, I'll turn it over to Nick to discuss our financial results in more detail.