AIP - Earnings call transcript Q2 2024

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Operator

Good afternoon, everyone, and welcome to the Arteris Second Quarter 2024 Earnings Call. Please note, this call is being recorded and simultaneously webcast. All material contained in the webcast is the sole property and copyright of Arteris with all rights reserved.

For opening remarks and introductions, I will now turn the call over to Erica Mannion at Sapphire Investor Relations. Please go ahead.

Erica Mannion

afternoon. good and you, Thank With me Officer, Janac, Executive are from Nick Hawkins, Arteris and Charlie Chief Chief today Financial Officer. with second XX, Charlie results begin a of review will the for the quarter XXXX. June ended brief business Nick full followed for the quarter the by XXXX. of the will quarter company's and financial review third for second results the year outlook

will open We then the call for questions.

call securities the like to material uncertainties will materially These during events you on this place and management meaning involve remind make within should to anticipated, statements federal that I'd undue reliance that you begin, statements. risks forward-looking we forward-looking that laws. actual Before statements could differ of are results not those statements and from cause or

certain Securities in could and including which Additional XX, release the information with reports prepared to in June measure to U.S. note, in call, found cause these loss, the measures that GAAP. not measures during the appear not as non-GAAP the cash measures issued evaluating to non-GAAP Arteris can this with Exchange The and operating will filed with time XXXX. regarding ended the be GAAP press non-GAAP company's company's from, for they superior GAAP. Commission. Please understanding in considered isolation management differ with measures we by quarter these press net prepared presented results should are risks, per a as documents that These measures reconciliation free or nearest share time and believe non-GAAP financial non-GAAP factors performance. actual release the how investors in in are provide means of for evaluates net the today flow, from the and substitutes of Arteris accordance and uncertainties measures, accordance non-GAAP and A to U.S. loss be cite we

who such as this the release for design confirmed press annual remaining indicators starts, definition for Relations used key and June ended the contract active XX, Investor XXXX, a visiting have see website. presentation by quarter of certain of the quarter XX, company's performance of of copy not the may please a the customers do release value, the section addition, XXXX. obtain a In in obligations, for ended Listeners press June performance copy

In addition, Presentations can the and QX which Investor earnings company's be section the management be will of referring to found in presentation, under Relations website XXXX Events tab.

Now to call turn I over Charlie. the will

Karel Janac

afternoon. of Erica, million. contract and royalties Thank to this XXXX, joining second the for call achieved thanks you, record we quarter on of In everyone annual the $XX.X us plus value

For the positive consecutive delivered flow. we cash quarter, free also second

expanded the quarter customer SoC demand computing IP quarter customer We the during in success second Our our along momentum our fueled other enterprise AI-driven products. verticals. growing in customers automotive with base seven with solutions, System new by Arteris for was and licensing

In comprised these companies. license we addition signed the who technology current of with four world's XX to new deals wins, top customers customer new

Highlighting our autonomous During for from with design the new momentum firm XX particularly market-leading overall connectivity. growing electronics for with block two capabilities the optimized and OEMs. building demonstrates functional We key autonomous System of this a automotive importance Arteris global applications being IP believe safety [stocks]. customers continued with the] activities quarter, customers the AI-enabled [for steady design in our experienced include industry, automotive our we driving,

these OEM by of is capitalization. global five a automotive top customers market One new

company. a customer market-leading a including the ADAS the two designs started other for robotaxi for second major notable In company addition, and quarter, in one

other and consumption in infrastructure center high in increased and the are verticals. ML the the energy house, by licenses a needs continue system electronics global compared to number traffic, compute expect demand with expanded trend reflecting bandwidth highest performance, demand quarter, enterprise in which vertical. communications application within higher relationship our major Arteris We designed AI for AI for of the securing innovation. automotive particularly networking our products data this given and data also to efficiency require for improved technology growing to fueled tariffs AI the computing the address. We high low performance illustrated

for to continue technology advanced digital IP used customers licensing company that IP. Semiforce who recognize the customers connectivity system we December chosen We any previously acquisition by growing televisions. for large Andes announced working panel [on-ship] with across on This adoption further support the a followed One IP was OEM both the ArmvX Technology Arteris is help processors our our customers. Since a System partnership AI-enabled accelerate applications. Arm innovation. In SoC to providing growing customer other and proactively interface with ecosystem, hardware/software to internal expand ecosystem in Arteris the focus AI, growing This automotive architecture support such support processor RISC-V company expands and an Arteris Besides SoCs ecosystem technology. add XG is for developed seen traction, we've addition XXXX, applications. new number to of of RISC-V of customers for customer-driven by of value flat March,

applications. and is One integration because development software workflows. of automation integration Technologies silicon chose who of RISC-V provided of based high-performance, streamlined its computing Arteris and data energy-efficient reduction SoC and [error] enterprise AI design for center hardware/software these Esperanto for They high-performance automation efficiency, edge generative customers

of second We results of system areas Arteris autonomous to using that, IP pipeline opportunity the some by remains I'll and IP System Nick Index. technologies. With innovate world was supported strong AI the and scope financial In Arteris and robust, the driving to turn the technologies it over believe to in in included discuss in with such our solid the new a electronics largest addition, in in exciting continue our XXXX scale detail. long-term companies relationship generative quarter, as more of Russell who

Nicholas Hawkins

and Thank good you, everyone. Charlie, afternoon,

release, reconciliation non-GAAP a of GAAP under website non-GAAP Also, review quarter website. I'll earnings included referring be be today, earnings of A the which as Investor Presentations financials As found well to Events GAAP XQ our is referring metrics. reminder, second our as is and which I results company's I'll presentation, note be please XXXX can in our to today's to Relations tab. on in the as available section

value, Slide was million, X presentation. by the quarter, was plus driven of quarter. the revenue midpoint in revenue deal the end $XX.X to top quarter ACV, up sequentially activity annual early our royalties million, of second $XX.X or This above and the the XX% of range. higher-than-expected above was Turning the Total the end obligations, $XX.X for was at enabling of XX% to second we to the guidance within us XX%. end for million, strong recognize second the contract of the also Non-GAAP quarter, $XX.X the of At gross ever gross representing quarter reported. quarter or growing a was [XX]%. RPO, representing the gross of performance profit in the margin GAAP the representing high margin million, gross record a have range, guidance a million, $XX.X a level of increase our company. Remaining quarter highest profit was year-over-year

on of to $XX.X Slide in of million, the our lower XXXX, management flat was X% quarter for focus lower second than team's quarter X. turning expense quarter. expense the quarter the the GAAP operating Total compared million, prudent reflecting the operating first X% continued Now operating sequentially second and to expenses. Non-GAAP was $XX.X

quarter end $X.X As critical of loss our operating strategically compared prior or share was profitable guidance compared diluted million net was in of XX.X we the to of areas period. approximately is the on revenue weighted a per for loss than while million in $X.X the outstanding. or was diluted loss better million top average the ahead, second loss growth. GAAP year in loss million, investing to Non-GAAP continue net of in per $X.X loss shares year Non-GAAP $X.XX million prior we share loss to million look quarter a will the the period. diluted $X.X $X.X of was $X.X limit million the $X.XX. spending in to quarter Net which loss operating based net

This the includes cash, the X capital $XXX,XXX. flow. year We and XXXX. range in investments. free million the was be expenditure, Moving our above with of balance with line and midpoint goal Free equivalents full sheet cash $XX.X positive to cash Slide cash of is to for positive to the company's turning and guidance quarter flow which flow, and ended the cash in

I outlook third like our the X. Slide to quarter refer turn and XXXX to for Now to year and would the full

and For $XX.X the of XXXX, of ACV of to royalties quarter to million cash operating $X.X million million positive free of Revenue loss expect million. flow third non-GAAP non-GAAP $XX.X we million plus $X.X $X.X $XX.X million. to million; million of $X.X negative $XX.X to

million XXXX, $XX prior unchanged year million to $XX year-over-year our midpoint of at ACV the loss to full of midpoint guidance. first guidance $X improving income $XX XXXX million, that resulted positive million, royalties free as Non-GAAP of the between at guidance flow $XX and are increasing midpoint, plus follows: and the conclusion, in of cost the in by encouraged our in in of the and from half management the revenue negative million, our $X.X the and line above to year for and full operating $X.X top is operating by of million. XX% million year. million, we the increased from $XX up $X.X the million effective cash quarter $XX Revenue exit non-GAAP our prior guidance. In by the unchanged guidance For trajectory second our million guidance guidance performance

cash free for two Operator? the We quarters. With up the are open call questions. achieving for excited positive I it consecutive turn flow to will and operator particularly about that, back

Operator

the we One Ladies Q&A and gentlemen, we will now the Instructions.) prepare session. moment (Operator question-and-answer roster. while begin

Matt The first of Cowen. Mr. the from TD question Ramsay from is line

Matthew Ramsay

domain. I guys solid and you afternoon, free focused results on lots guess the semiconductor see. budget flow very of keep there, and on that AI whatnot. sort design products there's associated to on different are of Congrats delivering the and are But the segments lot in having guys of and great Good for everybody. of around cyclicality my in activity activity. is also the licensing ADAS metrics, feeling the think particular, the first emergence a of market, cash which and with time, I automotive on the same you mean cyclicality industry a of cuts is -- There's I but at question segments and set

base Are customer continuing maybe they for Charlie, And projects base? licensing cyclicality new other design but customer of the the on been invest and how new face there it. in interesting, AI, and activity or to some the Any the got be Thanks. appreciate to potential around I in perspective just invest, your it'd hear thoughts your increasingly activity what's follow-up. a chip continuing the So, might or on industry challenging looks is programs side? to so customer for base the

Karel Janac

thanks, -- is Matt. This

of terms geographies, been is highly terms applications. size, being this have of on diversified why of of we customer in in record terms in So, track of terms in always the applications,

major still are we for And so, but for seeing are these We're there -- or anything -- one, down in not some volumes example. design relatively activity revenue. companies on years percentage decline, the years three impact royalties some -- design we're our royalties essentially But are we a revenue for shipment seeing seven down side road is in automotive. on the from four the results automotive, the road because, small of issues to

And typically, design recessions. design have invest side, of to continues. out activity on so, shipment the the to challenges any people their in they way when R&D tend And

bit with we AI So, can But starts the is much be seeing majority industrial activity we're than design design quarter, of the with sorry, little two as far applications actually see. -- the -- automotive the being pretty last a unaffected quarters. we overall, this I'm less as are

Matthew Ramsay

whatnot a topic couple within as shift Nick. -- Are whatnot. on a semis, is maybe with On topic, seeing back interesting external there that I -- is cash IP lot quarters follow-up you of as Maybe want in Charlie, the to follow-up flow. much the non-GAAP conversation to for just of we've and then not really question teams affecting a that internal more industries grow of at and guess the extend get as little for customer given condition guys movement macro bit. I and That's that profitability free the think just a that there to to base invest my have sort know that an that any maybe environment you potentially business all? a of of to kind you now goals and to economic And then out vendor. some you and had the in Nick, Is of -- target

one next important of have think over thoughts you that because you. you've If the updated gotten an any was in I hurdle of that's there because sort front

Karel Janac

And they some investment scrutinizing guys have should been right? we with we like And make buy as saying, right? in on it the in essentially when of big of to the from Or keep So, trend have few system basically a IP, Arteris we closing you we're companies for that said budgets, Nick less? of right, internal developing the terms progress, in these internal IP? XXX% that continuing should so, large previously, corporations, kind internal call, So, okay, are continues.

the So, -- gets kind beneficiary save and on and unit economy also people we unit when we're both also cost on of R&D because costs. difficult, money on actually a on OpEx R&D

bad then is little squirrely So, the your for a not economy necessarily being question? bit Arteris. And Nick,

Nicholas Hawkins

question. flow On the excellent cash

we sure Not just free genuinely are -- So, I'm flow cash as overused because focus but flow, it on yes, pays cash flow. you the period phrase the completely that cash bills. focused laser just really know, people laser

on set I'm that out third that would it quarter. first in absolutely quarter it. well, anybody as guiding on that regularly we're quarter just we're did not to then made the we second focused now the slightly but make quarter which We're so, we to third super because And we totally is positive making full sure for it the why it. achieve and And believed running, year. focused

math, to I'll the ask and the you which of will, question. you If the so, bother you do the math just sure I'm then save do having

in quarter. And the the go that's in free that, away], amount small plus quarter, in plus work small our plus a in on full not the amount If quarter plus amount a that in doesn't you the -- full wanted amount quite small unless for a second cash year, to you third do in with see intention. first out the fourth negative [game I small a you'll quarter flow, math the equals guidance give

a are of we of sort cash So, of management on -- steadfastly on are flow flow. cash we sort keeping very prudent very

Matthew Ramsay

Thank I days Really last the focused very I'll your given color And has the time Nick. much, say I'm what you on all and weekend. laser appreciate guys. get the say, just been, like, use XX

you guys So, to on well talk soon.

Operator

from question from WestPark comes line next Your Instructions.) (Operator Garrigan Capital. the of Kevin

Kevin Garrigan

my the me echo results. Let congrats on solid

waiting? of time and start, some to are you signed you're reasons that of I them have prospects mean So, the what the that saving some in as both they're customers, money.

they're there product is bring a reasons So, of for to I or are waiting Or mean, that you the that to feature you're like the development what a market? getting? some of

Karel Janac

mean... I

progress generation. the making system quarter. for in -- next think decisions people the are that enhance are I good of are large every to but getting down of making sort corporations sufficiently IP, of companies they the that list these their rid it not we're not knocking It's

internal expensive think we -- to too of establishing specialized, it's And technology There But are taking from a there's so, that directions the feel that place the just that Arteris. few opposition corporate don't IP making us or system And essentially some takes politics, next where requirements good there's companies are go reasons. variety for where we're progress I few But are generation specific sort rejection, of to time. right, there's large a a in beachheads of the a group. follow So, in these it they're quarter. every right? companies I in too

Kevin Garrigan

a No, Got sense. it. that Yes. ton makes of

Nicholas Hawkins

increasingly back this of they to in the earlier to relevant make bit decision-making Charlie's a current sort do I lives have CFOs climate, their are to I to part that well do that because is little -- a process. circling for more just think commentary how play about whole us. comment plays have from to And to going perspective. in profitability players that up increasingly, which the measures efficient a face is aggressive semi an

Kevin Garrigan

Yes. these cost of going No, up everything that sense, makes pretty are as especially days. much

So, that how benefits can I definitely you guys. see

what since mean, any you're updates I China guys better kind on gotten Okay. ago? has kind XX any there? of days for worse the or of Perfect. then any and region And seeing you

Karel Janac

China. better. There crunch It capital hasn't gotten in gotten a is hasn't and worse No.

So, -- start-ups the China. robust that for sort in continues, tension is design political gone capital. have of insufficient a trouble business semiconductor there been of but Chinese number have The a out of There's getting companies activity capital.

And China on better, it steady it we're of what so, kind from worse, of business that on a amount plan of seeing that's essentially on. and steady. That's didn't We kind and is didn't we we any planned getting. plan we're getting what getting

Kevin Garrigan

Okay. Got it. Yes.

pretty So, much quo. status

I just And if then Okay. question, last can.

new through front? over we're the Any the year. product updates halfway little So, a on

Karel Janac

-- very ready about No updates. it, progress, but to deliveries started good we making have are talk But we not to have we and we're customers.

Kevin Garrigan

Yes, figured ask. Okay. just Thanks, Got I guys. I'd it.

Operator

There Charlie remarks. to Mr. are ahead. questions no Please further hand time. I'll call over Janac the for this go closing at

Karel Janac

Well, thank forward And keeping very to you, everyone. updated our you progress, Thank you we Thank much. appreciate your Arteris. on you support. we for and following are looking

Operator

much call. gentlemen, you Ladies for participation. your today's this and conference very concludes Thank

You now may disconnect.

Arteris (AIP) 1 Aug 242024 Q2 Earnings call transcript