Arteris, Inc.

Good afternoon, everyone, and welcome to the Arteris First Quarter 2025 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 rights reserved. For opening remarks and introductions, I will now turn the call over to Erica Mannion of Software Investor Relations. Please go ahead.

Thank you, and good afternoon. With me today from Arteris Charlie Janik chief executive officer and Nick Hawkins chief financial officer Charlie will begin with a brief review of the business highlights for the first quarter ended March 31 2025 Nick will review the financial results for the first quarter followed by the company's outlook for the second quarter in the full year of 2025 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 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 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 or 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 March 31, 2025. In addition, for a definition of certain of the key performance indicators used in this presentation, such as annual contract value, contract design starts, and remaining performance obligations, please see the press release for the quarter ended March 31, 2025. Listeners who do not have a copy of the press release for the quarter ended March 31, 2025 may obtain a copy by visiting the investor relations section of the company's website. In addition, management will be referring to the Q1 2025 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 first quarter of 2025, we achieved another record annual contract value plus royalties of $66.8 million and generated $2.7 million in non-GAAP positive free cash flow as demand for commercial semiconductor system IP products continues to grow. Our success during the quarter saw steady adoption across enterprise computing, communications, and automotive semiconductors, driven by growing chiplet and SOC design complexity, as well as proliferation of AI applications. During the quarter, we had several key design wins. Four came from top 30 global technology companies expanding their deployment of Arteris products. The largest win included Magilum SoC integration automation software as well as interconnect IP for various applications including memory controllers and consumer electronic projects. Another of the large wins came from an expanded reorder from a top five technology company with products and services including hyperscale computing and consumer electronics. Also, a major automotive OEM expanded its use of Arteris product portfolio for its next generation of EV vehicles. Another key win, and one of the three new Arteris customers in the quarter, was with an industry-leading Japanese automotive OEM. This customer licensed our products to support their new in-house development of autonomous driving SOCs that include AI and functional safety capabilities. They selected Arteris based on the combination of our product's superior performance, lower power, area efficiency, and high resilience for their mission-critical applications. With this latest addition, we now have 10 automotive OEMs as direct Arteris customers. Adoption of our technology also continues to be strong with advanced semiconductor companies. For example, our physically aware FlexNoc IP with AI and functional safety support was chosen for the development of next-chips, next-generation vision-based ADAS technology to realize the future of autonomous driving with sustainability. We are seeing increased movement from internal system IP solutions to commercial vendors such as Arteris as customers desire resource efficiency, quality, and faster solutions delivery. I am pleased to report that our penetration of the increasingly complex microcontroller MCU system IP market continues with initial receipt of royalties from a top five MCU manufacturer. This penetration is driven by continued increases in MCU complexity, as well as ever more stringent latency and cost requirements. In addition to our customer momentum, we continue to deliver new technology. In the last earning call, we announced FlexGen, our AI-driven smart NOC IP technology, which has the potential to revolutionize semiconductor designs by delivering up to 10x engineering productivity, lowering power consumption, and improving overall performance. We now have over 20 customer SOC projects evaluating FlexGen, which is a promising start for this innovative product, which we expect will generate revenue and ACV in the second half of the year. In the first quarter, Arteris also released the latest generation of Magilem register management automation software used for semiconductor hardware and software integration. This latest technology provides a single source of data for development of SOCs and chiplets by chip architects, hardware designers, firmware engineers, verification teams, and documentation teams, helping to mitigate the silicon failure risks associated with the unfortunate and quite common instances of out-of-date specifications, interpretation differences across various teams, and user errors. The latest product improves performance and scalability to address the needs of any semiconductor design, ranging from simple IoT devices to state-of-the-art complex artificial intelligence SOCs, FPGAs, and chiplets. I'm also proud to see that our focus on innovation being recognized in three prominent categories in the 23rd Annual American Business Awards out of 3,600 nominations. These included the Gold Award for the Most Innovative Tech Company of the Year, another Gold Award for Technical Innovation of the Year for our NCore NOC IP with its support for ARM, RISC-V, x86, and mixed architectures, and the Silver Award in the Product Innovation category for our FlexNOC and NCore NOC Tiling Technology in support of advanced AI computing in the data center and the edge. Beyond actively driving in-house innovation, Arteris continues to expand ecosystem collaboration to provide full solutions to our customers, including leveraging our product's physical awareness to support the faster development of advanced electronics with more predictable power, performance, and area, or PPA, for SOCs and chiplets. We recently announced that Arteris joined the Intel Foundry Accelerator Program, becoming members of the IP Alliance, enabling silicon designs using Intel's 18A Advanced Process Node to collaborate on physically aware NOCs for future nodes. Additionally, Arteris also became a founding member of Intel Foundry's new Chiplet Alliance, which aims to create a robust network of ecosystem partners to ensure interoperability and to accelerate creation of a wide range of multi-die silicon applications. Similarly, Arteris also joined the IMEC-sponsored Automotive Chiplet Forum, whose goal is to share insights and ensure industry alignment and interoperability for automotive chiplet-based architectures, where our NOC products with ISO 26262 functional safety capabilities will play an increasingly important role moving forward. Lastly, we announced the opening of our new Engineering and Customer Support Center in Krakow, Poland. This new location will support the development of network-on-chip IP and SoC integration automation software for the semiconductor industry. Arteris has hundreds of customers worldwide who are supported by workforce across 11 countries. The addition of a hub in Poland will expand the company's global footprint and provide Arteris with expanded access to top engineering talent for product development, validation, and customer support. We believe the scale and scope of our long-term opportunity remain robust and are supported by our current products and strong product pipeline of new silicon 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 high-growth areas, such as generative AI, autonomous driving, 5G and 6G communications, using Arteris products and global support. We are diligently monitoring the current global economic uncertainty, although this did not lead to any deal cancellations or delays in the first quarter. Nevertheless, we do see greater potential for variability in financial outcomes for the year due to this economic uncertainty. The clearest impacts are potential short-term headwinds to royalties as a result of waning customer global confidence and automotive and other tariffs. Additionally, our overseas-based OPEX is likely to increase should the recent weakness of the U.S. dollar persist or worsen. As a potential offsetting factor, we are seeing opportunities for our customer base to accelerate outsourcing of their silicon system IP needs to our tariffs to accelerate their products' time to market, reduce their own costs, and increase their operating efficiencies. Nick will cover these impacts more when he discusses our guidance. With that, I'll turn it over to Nick to discuss our financial results in more detail.