Arteris, Inc. Q2 FY2025 earnings call

• Achieved record annual contract value plus royalties of $69.1 million in Q2 2025 with $99.3 million in remaining performance obligations.
• Saw increased adoption in enterprise computing and automotive applications, driven by AI computing needs. Secured a strategic win with AMD, using Arteris FlexGen smart network-on-chip IP in AMD chiplets for AI applications.
• Over 2 dozen FlexGen installations at multiple customers, and FlexGen won the AI Engineering Innovation Award. Announced expansion of multi-die solution with broader standard support for UCIe, extended Arm AMBA protocols support, and RISC-V ecosystem support.
• Launched Magillem Packaging to automate IP packaging. Scaling investments in R&D and field application engineering teams, focusing spending on strategic areas to drive growth.

In the second quarter of 2025, total revenue was $16.5 million, up 13% year-over-year. Annual contract value plus royalties reached $69.1 million, and remaining performance obligations (RPO) ended the quarter at $99.3 million, a 28% year-over-year increase.

• Third quarter 2025 outlook: ACV plus royalties $69.5M-$72.5M, revenue $16.8M-$17.2M, non-GAAP operating loss $3M-$4M, non-GAAP free cash flow $0.5M-$3.5M.
• Full year 2025 guidance: ACV plus royalties $72M-$78M, revenue $66M-$70M, non-GAAP operating loss $10.5M-$15.5M, non-GAAP free cash flow $1M-$7M. Focus on controlling G&A spending for operating leverage.

Q: Congrats on the results on the AMD announcement yesterday. Any details you can share on the scope? How are you guys bringing to the table and what led them to need to use you guys more expansively going forward?

A: In February, Arteris announced the FlexGen product. AMD extensively evaluated it, choosing it over competitive alternatives. Arteris brings the new FlexGen technology, which AMD is applying to various products including AI data center chiplets.

Q: How should we think about this layering into the model from a timeline and magnitude perspective?

A: This deal was already in the works when guidance was set in the first quarter. Arteris has one or 2 major deals every quarter.

Q: Can you comment on whether the decision by AMD was because they're looking to expand their NoC internal team or if this was more surrounding not being able to hit performance metrics?

A: AMD is going to continue using their cash coherent fabric and augment it with Arteris technology for non-coherent applications, a mix-and-match approach.

Q: As you guys previously noted about 20 customers who are experimenting with FlexGen and you talked about how large customers are looking to accelerate adoption of Arteris product. Is there anything else that you guys can do to get these customers over the finish line?

A: FlexGen involves changes in methodologies; some evaluations are faster than others. There are more than 2 dozen FlexGen installations, with sales anticipated in the second half besides the AMD deal.

Q: Just in terms - is this primarily for chiplet implementations or heterogeneous implementations?

A: It's going to be used in a variety of products, including AI - data center oriented chiplets and chiplet SoCs.

Q: Looking at RPO and a couple of other things, it looks like book-to-bill was probably north of 1.5 in the quarter. Is that a fair guess?

A: Nick Hawkins didn't specifically monitor book-to-bill but noted RPO growth to nearly $100 million is a great outcome as RPO is a leading indicator of growth