Arteris, Inc. Q4 FY2024 earnings call

• Record annual contract value plus royalties of $65.1 million in Q4 2024 due to growing demand for commercial semiconductor system IP products. • Increased adoption in AI-driven enterprise computing, automotive, and microcontroller (MCU) verticals. Notable customer wins include a global top five technology company, major automotive OEM, Infineon, GigaDevice, Tenstorrent, and Menta. • Strategic expansion into MCU space with Infineon and GigaDevice adopting Arteris NoC for automotive MCUs. • Launch of FlexGen Smart NoC IP, which reduces manual iteration by over 90%, providing expert-level NoC topologies in hours/days instead of weeks, with over 10 companies evaluating it. • Partnership with MIPS to provide preverified RISC-V reference platform to support mutual customers, improving interoperability and shortening SoC integration for various applications.

Total revenue for the fourth quarter was $15.5 million, up 24% year-over-year. Annual contract value plus royalties for the year was $65.1 million. Revenue growth was driven by increased adoption of AI-driven enterprise computing and automotive SoCs, as well as new customer additions and increased penetration in existing customer base. Key customer wins included a global top five technology company, a major automotive OEM, Infineon, GigaDevice, Tenstorrent, and Menta.

• Q1 2025 outlook: ACV plus royalties $65.5 million to $67.5 million; revenue $15.7 million to $16.1 million; non-GAAP operating loss $4 million to $3 million; non-GAAP free cash flow negative $2 million to positive $2 million. • Full year 2025 guidance: ACV plus royalties to exit 2025 at $73 million to $77 million; revenue $66.0 million to $70 million; non-GAAP operating loss $12.5 million to $8.5 million; non-GAAP free cash flow positive $1 million to positive $7 million.

• Forward-looking statements involve material risks and uncertainties that could cause actual results to differ from anticipated. Risks include those related to market adoption of products, competition, and changes in semiconductor industry trends.

Q: Gus Richard asked about bookings and FlexGen.

A: Nick Hawkins said they don't specifically track bookings but noted strong deal flow in Q4. Charlie Janac explained FlexGen is based on FlexNoC 5, feeds connectivity map, floor plan to generate NoC topology in minutes/hours vs days, improving productivity, wire length, latency, and power.

Q: Kevin Garrigan asked about ASP trends.

A: Charlie Janac said ASPs for complex SoCs are on track for $1 million, excluding MCUs which have lower ASPs. MCU design starts have different dynamics than automotive/AI SoCs.

Q: Ethan Potasnick asked about licensing/royalties and free cash flow.

A: Nick Hawkins said variable royalties were up 20% YOY, excluding Mobileye, variable royalties grew over 30%. Free cash flow is expected to flip positive in 2025 with cash inflow weighted to second half due to seasonality in cash outflows.

Q: Gus Richard asked about x86 architecture and mixing NoCs.

A: Charlie Janac said they are in PC chipset designs. Arteris products are designed for mix and match, with many designs using mix of different interconnects like Arm CMN with FlexNoC.