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Good afternoon, everyone, and welcome to the Arteris Second Quarter 2025 Earnings Call. Please note that this call is being recorded and simultaneously webcast. All material contained in the webcast is sole property and copyright of Arteris, Inc. with 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 Janac, Chief Executive Officer; and Nick Hawkins, Chief Financial Officer. Charlie will begin with a brief review of the business results for the second quarter ended June 30, 2025. Nick will review the financial results for the second quarter, followed by the company's outlook for the third quarter and 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 are based on management's current expectations and assumptions and 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 actual results to differ, appear in the press release Arteris issued today and in the documents and reports filed by Arteris from time to time with the Securities and Exchange Commission. Please note, during this call we will cite certain non-GAAP measures, including, among others, 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. These 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, 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 June 30, 2025. In addition, for a definition of certain of the key performance indicators used in this presentation, such as annual contract value, confirmed design starts and remaining performance obligations, please see the press release for the quarter ended June 30, 2025. These key performance indicators are presented for supplemental informational purposes only, should not be considered a substitute for financial information presented in accordance with GAAP and may differ from similarly titled metrics or measures used by other companies, securities analysts or investors. Listeners who do not have a copy of the press release for the quarter ended June 30, 2025, may obtain a copy by visiting the Investor Relations section of the company's website. In addition, management will be referring to Q2, 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 second quarter of 2025, we achieved record annual contract value plus royalties of $69.1 million. We exited the quarter with $99.3 million in remaining performance obligations or RPO, highlighting the growing demand for our system IP technology. During the second quarter, we saw increased adoption, particularly in enterprise computing and automotive applications, driven largely by proliferation of AI computing, where the speed and reliability of data movement enabled by Arteris is paramount. One of these strategic wins was AMD, a global leader in high-performance and adaptive computing and a top 10 semiconductor company by revenue, which signed an agreement to utilize Arteris FlexGen, smart network-on-chip IP, the technology we announced earlier this year. FlexGen will aim to provide high-performance data transport in AMD chiplets, powering AI across AMD's broad portfolio, which spans from data centers to edge and end devices. It will also be used in combination with AMD Infinity Fabric interconnect, underscoring the increasing complexity of modern SoCs and chiplet-based architectures, which now require multiple highly specialized interconnects or NoCs. In addition to the AMD relationship, we now have over 2 dozen FlexGen installations at multiple customers and anticipate that this product will contribute to our revenue over time. We believe FlexGen is a breakthrough technology in terms of productivity and optimization of SoC data movement. I'm proud that Arteris was recently recognized in the 8th Annual AI Breakthrough Awards, with FlexGen winning the AI Engineering Innovation Award from among the over 5,000 global nominations. FlexGen was recognized for its ability to successfully automate critical aspects of NoC IP creation, ensuring rapid, correct-by-design interconnect fabrics that optimize performance and efficiency of AI-driven SoCs. Another recent AI-related customer win was Whalechip, a fabless semiconductor provider that specializes in developing data center ASICs and processors for high-bandwidth applications, including cloud servers, interconnect computing and blockchain computing, among others. As the semiconductor industry accelerates efforts to increase performance and efficiency, especially driven by AI workloads, we are seeing a growing shift from traditional monolithic chips toward multi-die or chiplet architectures in the AI era. Consequently, during the second quarter, we announced an expansion of our multi-die solution, which we believe delivers further foundational technology for rapid chiplet-based innovation. This includes broader standard support for the Universal Chiplet Interconnect Express, or UCIe, collaboration and extended support for Arm AMBA protocols, chiplet interface collaborations with Synopsys and Cadence, and RISC-V ecosystem support with partners such as Andes, SiFive and Tenstorrent. Moreover, the Arteris expanded multi-die solution has been developed in close partnership with key customers who are increasingly designing chiplets such as Renesas. For example, Arteris technologies is used to provide underlying data transport and connectivity in the fifth generation of the R-Car automotive silicon developed by the high-performance computing SoC business unit. Arteris multi- die solutions help Renesas deliver on the integration and scalability offered by multi-die SoCs as AI applications push the limit of performance and power efficiency. Lastly, as the number of chiplets in multi-die SoCs increases, so does the underlying number of individual IP blocks. As such, it becomes increasingly important to properly and reliably package and prepare hundreds or even thousands of these IP components for effective integration and reuse across SoCs, chiplets and complex IP subsystems. To capitalize on this trend in the second quarter, we announced Magillem Packaging, a new software product designed to automate IP packaging to simplify and speed up the process of assembling silicon chiplets and chips. Utilizing the latest version of the IEEE 1685 IP-XACT standard, Magillem Packaging is designed to work seamlessly with industry tools and silicon IP with the goal of helping companies meet increasing design demands, while reducing costly errors and delays associated with integrating an ever-growing number of IP blocks, and the associated rising system complexity. We believe the scale and scope of our opportunity remain robust, supported by our current products and strong product pipeline of new silicon system IP technologies, as well as growing relationships with the largest and most advanced electronics companies in the world. Our customers continue to innovate in exciting high-growth areas, including across multiple applications of AI from data centers to the edge, autonomous driving, advanced communications, consumer and industrial use cases. While we continue to diligently monitor the current global economic uncertainty, this did not lead to any deal cancellations or delays in the second quarter. In addition, we are seeing opportunities for customers to accelerate outsourcing of their system IP needs to Arteris, in order 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'd like to turn it over to Nick to discuss our financial results in more detail.

Thank you, Charlie, and good afternoon, everyone. As I review our second quarter results today, please note that I'll be referring to GAAP as well as non-GAAP metrics. A reconciliation of GAAP to non-GAAP financials is included in today's earnings release, which is available on our website. Also, as a reminder, I will be referring to the 2Q 2025 earnings presentation, which can be found on the Investor Relations section of our company's website under the Events and Presentations tab. We had a strong second quarter characterized by meeting or beating our guidance on all key financial metrics. Turning to Slide 5 of the presentation. Total revenue for the second quarter was $16.5 million, up 13% year-over-year, and at the top end of our guidance range. At the end of the second quarter, annual contract value, or ACV, plus royalties was $69.1 million, up 15% year-over-year, above the midpoint of our guidance range and a record high for the company. Remaining performance obligations, or RPO, at the end of the second quarter were $99.3 million, representing a 28% year-over-year increase, once again, a new high. Non-GAAP gross profit for the quarter was $15 million, representing a gross margin of 91%. GAAP gross profit in the quarter was $14.8 million, representing a gross margin of 89%. Now turning to Slide 6. Non-GAAP operating expense in the quarter was $18.6 million, roughly flat sequentially and 10% higher year-over-year. We continue to scale investments in our R&D and field application engineering teams that drive technology innovations and solution support. Total GAAP operating expense for the second quarter was $23 million, representing a 12% year-over-year increase. As we look ahead, we plan to focus spending on strategically critical areas, in particular, to help drive new product development, enhance customer support and expand the geographic and key account reach of our global sales team. We believe that these ongoing investments can help accelerate our top line growth in the coming years. At the same time, we are delivering operating leverage by controlling our G&A spending, which has remained broadly flat on a non-GAAP basis for approximately 3 years. Non-GAAP operating loss in the quarter was $3.5 million, in line with our guidance and flat year-over-year. GAAP operating loss for the second quarter was $8.2 million compared to a loss of $7.4 million in the prior year period. Non-GAAP net loss for the quarter was $4.4 million or diluted net loss per share of $0.11 based on approximately 41.8 million weighted average diluted shares outstanding. GAAP net loss for the quarter was $9.1 million or diluted net loss per share of $0.22. Moving to Slide 7 and turning to the balance sheet and cash flow. We ended the quarter with $53.9 million in cash, cash equivalents and investments and have no financial debt. Free cash flow, which includes capital expenditure was negative $2.8 million for the second quarter, approximately at the midpoint of our guidance range. I would now like to turn to the outlook for our third quarter and the full year 2025, and refer now to Slide 8. For the third quarter of 2025, we expect ACV plus royalties of $69.5 million to $72.5 million, revenue of $16.8 million to $17.2 million, with non-GAAP operating loss of $3 million to $4 million and non-GAAP free cash flow of $0.5 million to $3.5 million. For the full year 2025, our guidance is as follows. ACV plus royalties to exit 2025 at $72 million to $78 million, revenue of $66 million to $70 million, non-GAAP operating loss of between $10.5 million to $15.5 million and non-GAAP free cash flow of $1 million to $7 million. Our OpEx is currently running higher than previously expected, predominantly as a result of the weakening U.S. dollar, especially against the euro. Although the U.S. dollar has strengthened somewhat in recent days, in assessing our non-GAAP operating loss guidance, we have assumed that the recent prevailing foreign exchange rates remain at these levels for the remainder of 2025. Despite the near-term impact of foreign exchange fluctuations, we remain encouraged by our strong deal execution, witnessed by the 28% year-over-year growth in RPO at the end of the second quarter. Reiterating the point raised earlier by Charlie, we are seeing promising signs of accelerated interest by some major customers to increase their outsourcing of system IP products to Arteris. With that, I will turn the call back to the operator for the Q&A portion of our call. Operator?

[Operator Instructions] Your first question comes from the line of Joshua Buckler from TD Cowen.

Congrats on the results on the AMD announcement yesterday. I wanted to ask about that. Any details you can share on the scope? The press release names pretty much all of their products. I believe AMD had been an existing partner of yours. So maybe you could talk through how they're using your IP and they've been providing chiplets for a while. So what are you guys bringing to the table? And what led them to need to use you guys more expansively going forward?

I don't know whether we have lost Charlie. Charlie, you're on mute.

Apologies. Sorry about that. So, yes. So in February, we announced the FlexGen product, which basically allows higher levels of productivity and also some advantages in PPA in terms of wire length. Basically, AMD extensively evaluated this product, including some benchmarks against competitive alternatives. And they basically chose that as the best product for them going forward. So what we bring to the table is the new, innovative FlexGen technology and AMD basically decided to apply it to a variety of products, including AI data center chiplets.

Okay. And then for my follow-up, how should we think about this layering into the model from a time line and magnitude perspective? I believe FlexGen has an ASP that's up 30% gen-to-gen. So how meaningful can this be to the model? Congrats again.

Charlie, should I speak to that one?

Yes, please do.

Josh, thanks for joining. Great to speak to you again. We do secure a fairly decent number of what we refer to as whale deals, major deals in a year. This is one of those. When we formed -- when we put our guidance out at the end of the first quarter, this was -- this deal was already in the works. It has been in the works for many months. And so it was already baked in the guidance at that point. I wouldn't want you to think this is the only big deal we have. We have one or 2 every quarter of major deals. So this is -- this was already contemplated when we guided previously. [ It's very helpful and ]...

Your next question comes from the line of Kevin Garrigan from Rosenblatt Securities.

Congrats on the solid results. I was kind of wondering, 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 -- just kind of not being able to hit performance metrics, so they're looking for another solution?

Not at all. So, as we mentioned, FlexGen is going to work with the AMD's Infinity Fabric, which is their cash coherent solutions, which is made internally. So, basically, the decision that AMD came to is that they are going to continue to use their very capable cash coherent fabric, and that they are going to augment that with the Arteris technology for their non-coherent applications. So it's a mix- and-match approach.

Got it. Okay. That makes sense. And then as a follow-up, 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. I mean is there anything else that you guys can do to get these customers over the finish line? Or are you pretty much kind of [ waiting ] in the wings for them to make a decision?

Yes. I mean, FlexGen involves in certain senses, changes in methodologies. And so, some of these evaluations are faster than others. But there's a fair number of FlexGen in a [indiscernible], more than -- as we said, more than 2 dozen. And we anticipate that they're going to result in sales starting in the second half in addition to the AMD deal.

I just want to add something really quick, Kevin. This is Nick again. Thank you for joining. The validation by such a great company as AMD on this technology will certainly be helpful to our cause.

Yes. No, I completely agree. I mean the pioneer of the chiplet era is huge.

[Operator Instructions] For your next question, it will come from the line of Gus Richard from Northland.

Just in terms -- I'm sorry, keep on asking about AMD. Is this primarily for chiplet implementations or heterogeneous implementations?

I think it's going to be used in a variety of products. But one of the ones that is certainly going to be used is on AI -- data center AI- oriented chiplets, chiplet SoCs. But it's a multi-license deal, and so it's going to be used on a variety of products. But chiplets are certainly one of them.

Got it. And then just, can you give us a little bit of an update on sort of how many heterogeneous chiplet projects you see out there now?

So, there is -- so what we see and what other people see is a little bit different. There's about 600 to 700 SoCs out there. And at this time, we're seeing probably 30 projects right now. So there's probably more than that, but what we see is about 30%. So it's about 5% of the total. But we are anticipating that over the next couple of years, chiplet projects are going to be probably 30% of the overall SoC design starts. But today, we see maybe 5% of that number.

So -- Okay. And that's chiplets in general, not heterogeneous chiplets?

So that's -- now, you're asking [ enough ] question [ because ] -- some of these chiplets have been in production for a while, right? This would be more in the heterogeneous chiplet category.

Got it. And then one for you, Nick, just and I'll go. Just 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?

Yes, I don't really monitor book-to-bill specifically. And so I certainly wouldn't comment on that one, Gus. But it is a very positive indicator to have your -- the leading indicator of growth, which is the way we characterize RPO, essentially as our backlog of future revenue. To grow to nearly $100 million and 28% year-over-year is a great outcome.

There are no further questions at this time. Please continue, Mr. Charlie Janac.

Yes. So we'd love to thank you for your interest in Arteris. We look forward to meeting with you in the upcoming investor conferences that we're participating in through the next couple of months. And we look forward to updating you all on our business progress in the quarters to come. So thank you very much for your support.