Group 1: Technology Sector Overview - Information technology is one of the top-performing sectors in 2025, but returns are unevenly distributed across the tech universe [1] - The Magnificent Seven, including major firms like Apple Inc. and Alphabet, have performed in line with the broader market, with the Roundhill Magnificent Seven ETF returning 9.6% compared to 9.3% for the S&P 500 year-to-date [2] Group 2: Indie Semiconductor Inc. - Indie Semiconductor, a specialized semiconductor maker for the automotive industry, has a market cap under $1 billion and reported a non-GAAP gross margin of 49.1% in Q2 2025 [3][4] - The company is preparing to scale production of its 77 GHz radar chipset and has found success with its LXM laser product, which could address a market worth up to $5 billion by 2030 [4] - Five out of six analysts have given indie a Buy rating, with a 12-month stock price forecast of $5.90, indicating a potential upside of 37.85% from the current price of $4.28 [5] Group 3: ACM Research Inc. - ACM Research, which specializes in chipmaking equipment, reported a revenue increase of over 6% year-over-year to over $215 million, driven by sales of its Ultra C WB wet bench tool [7][8] - The company has nearly doubled its long-term revenue forecast for its Chinese business to $2.5 billion, anticipating significant growth in the semiconductor space [8] - ACM shares have risen almost 14% year-to-date, with a consensus price target of $26.33, suggesting further upside potential [9] Group 4: Arteris Inc. - Arteris focuses on on-chip interconnect fabric technology and reported Q2 2025 revenue of $16.5 million, beating expectations despite a GAAP net loss of $9.13 million [10][11] - The company has a market cap under $400 million and is expected to have a significant impact in the AI chip industry, with all three analysts rating its shares as a Buy [12] - Analysts project a 12-month stock price forecast of $15.00 for Arteris, indicating a potential upside of 63.40% from the current price of $9.18 [10]

Financial Data and Key Metrics Changes - The company's turnover increased by 1% to R9.8 billion for the year, with a notable recovery in the second half driven by strong demand and improved operational performance [4][30] - Trading profit declined by 4% to R1.18 billion, recovering from a 17% decline reported at the half-year mark [6][33] - Headline earnings per share increased by 1.5% to 625.6 cents, supported by solid contributions from joint ventures and share repurchase impacts [6][35] Business Line Data and Key Metrics Changes - The Consumer division saw a 6% increase in trading profit, driven by strong performance in personal and home care products, particularly the EpiMax brand [12][41] - The Over-the-Counter (OTC) division's trading profit increased by 5% to R404 million, benefiting from an early flu season and normalized buying patterns [16][43] - The Prescription division's trading profit decreased by 25% to R265 million, although it showed recovery from a 52% decline at the half-year [18][45] - The Hospital division's revenue increased by 6.7% to R2.2 billion, supported by increased demand for renal products and intravenous fluids [22][46] Market Data and Key Metrics Changes - The company reported a gross margin decline to 33%, down from 33.4% the previous year, influenced by a less favorable sales mix and lower production levels at the Wadeville facility [5][32] - The OTC division holds a market share of about 20% and a volume share of almost 30% in South Africa [13] Company Strategy and Development Direction - The company is focusing on integrating the Lundbeck portfolio to strengthen its presence in the central nervous system pharmaceuticals market [19][20] - A commercial agreement with GSK South Africa aims to introduce a pipeline of vaccines, starting with Bexera for meningitis B prevention [20] - The company is investing in infrastructure improvements and regulatory compliance to enhance operational resilience [24][27] Management's Comments on Operating Environment and Future Outlook - Management noted a marked improvement in trading and financial performance in the second half, driven by strong demand and disciplined cost management [4][6] - The regulatory environment remains stable, with updates on codeine-containing medicines and ongoing assessments for orally administered phenylephrine products [7][8] - The company is optimistic about future growth, particularly in the hospital and prescription divisions, despite challenges faced in the past year [18][22] Other Important Information - The company has made significant investments in sustainability initiatives, including waste management and renewable energy projects [25][26] - A ten-year supply and distribution agreement with Medline has been signed to enhance the hospital division's offerings [25] Q&A Session Summary Question: Are there any questions from the conference call? - There were no questions from the conference call or the webcast, indicating a comprehensive overview was provided [49][50]

GROUP ANNUAL RESULTS FOR THE YEAR ENDED 30 JUNE 2025 Andy Hall, CEO & Dorette Neethling, CFO OVERVIEW ANDY HALL, CEO 2 PANADO PRODUCT OF THE YEAR Panado Syrups and Panado Adult effervescent pain relief TRANSFORMATION CHILD HEALTH ADULT PAIN RELIEF 3 PERFORMANCE FY2025 H2 vs H1 TURNOVER +7% TRADING PROFIT +30% TURNOVER +1% R9.8b TRADING PROFIT -4% R1.2b DIVIDEND +2% 280 cents HEPS +1% 626 cents HEPS +36% 4 CONSUMER REVENUE R1 802m +6% TRADING PROFIT R385m +6% 5 OTC REVENUE R2 442m -1% TRADING PROFIT R404m +5 ...

Core Insights - Arteris, Inc. has been awarded the Gold Stevie® Award for Most Innovative Tech Company of the Year at the 22nd Annual International Business Awards® [1][3] - The company's FlexGen smart NoC IP received a Silver Stevie® for Achievement in Technology Innovation, while its Magillem Registers integration automation software earned a Bronze Stevie® for Achievement in Product Innovation [1][3] Company Overview - Arteris is a leading provider of semiconductor system IP, focusing on accelerating the development of chiplet and system-on-chip (SoC) technologies [1][4] - The company's technologies, including NoC interconnect IP and SoC integration automation software, enhance product performance, reduce energy consumption, and shorten time to market [3][4] - Arteris aims to improve total cost of ownership (TCO) and overall economics for semiconductor companies, facilitating innovation in areas such as AI data centers and smart edge applications [3]

Group 1 - The investment community often undervalues enabling technologies that support advanced semiconductor technologies despite the prominence of AI chipmakers [1] - The focus is on identifying asymmetric risk-reward opportunities through quantitative analysis and market intuition [1] - The investment philosophy emphasizes exploiting market anomalies and emerging opportunities while maintaining disciplined risk management [1] Group 2 - Sector coverage includes technology disruptors, undervalued small-cap companies, and those benefiting from long-term structural trends [1] - There is a particular interest in businesses with strong competitive moats, innovative technologies, and capable management teams [1]

Financial Data and Key Metrics Changes - Total revenue for Q2 2025 was $16.5 million, up 13% year over year, at the top end of guidance range [15] - Annual contract value (ACV) plus royalties reached $69.1 million, a 15% year-over-year increase, marking a record high for the company [16] - Remaining Performance Obligations (RPO) at the end of Q2 were $99.3 million, representing a 28% year-over-year increase, also a new high [16] - Non-GAAP gross profit for the quarter was $15 million, with a gross margin of 91% [16] - GAAP gross profit was $14.8 million, with a gross margin of 89% [16] - Non-GAAP operating loss for the quarter was $3.5 million, flat year over year [18] - GAAP operating loss for Q2 was $8.2 million, compared to a loss of $7.4 million in the prior year [18] - Non-GAAP net loss for the quarter was $4.4 million, or diluted net loss per share of $0.11 [19] - GAAP net loss for the quarter was $9.1 million, or diluted net loss per share of $0.22 [19] - Free cash flow was negative $2.8 million for Q2, approximately at the midpoint of guidance range [19] Business Line Data and Key Metrics Changes - Increased adoption of Arteris' technology in enterprise computing and automotive applications, driven by AI computing [8] - Over two dozen FlexGen installations at multiple customers, expected to contribute to revenue over time [9] - Expansion of multi-die solutions announced, supporting chiplet architectures and collaborations with major industry players [10][11] - Introduction of Magellan Packaging, a new software product aimed at automating IP packaging for silicon chiplets [12] Market Data and Key Metrics Changes - The semiconductor industry is shifting from traditional monolithic chips to multi-die or chiplet architectures, particularly driven by AI workloads [10] - Anticipation of a growing number of heterogeneous chiplet projects, with current estimates at about 30 projects out of 600 to 700 SoCs [44] Company Strategy and Development Direction - Focus on strategic investments in R&D and customer support to drive technology innovations and expand market reach [18] - Ongoing development of new silicon system IP technologies and strong relationships with leading electronics companies [12] - Monitoring global economic uncertainty while capitalizing on opportunities for customers to outsource system IP needs [12] Management's Comments on Operating Environment and Future Outlook - Management remains encouraged by strong deal execution, evidenced by a 28% year-over-year growth in RPO [21] - Despite foreign exchange fluctuations impacting operating expenses, the company sees promising signs of accelerated interest from major customers [21] - Guidance for Q3 2025 includes expected ACV plus royalties of $69.5 million to $72.5 million and revenue of $16.8 million to $17.2 million [20] Other Important Information - The company was recognized with the AI Engineering Innovation Award for FlexGen at the AI Breakthrough Awards [9] Q&A Session Summary Question: Details on AMD announcement and scope of partnership - AMD chose Arteris' FlexGen technology for various products, including AI data center chiplets, after extensive evaluation against competitors [26][27] Question: Impact of AMD's decision on internal teams and performance metrics - AMD will continue using its internal cash coherent fabric while augmenting it with Arteris technology for non-coherent applications [36] Question: Customer adoption of FlexGen and support for decision-making - There are over two dozen FlexGen installations, with expectations for sales to begin in the second half of the year [37] Question: Update on heterogeneous chiplet projects - Currently, about 30 heterogeneous chiplet projects are identified, with expectations for growth in the coming years [44]

[Part I. Financial Information](index=4&type=section&id=Part%20I.%20Financial%20Information) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The unaudited statements show Q2 2025 revenue of $16.5 million, a net loss of $9.1 million, and a stockholders' deficit of $7.5 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $61,543 | $69,083 | | **Total Assets** | $106,880 | $106,135 | | **Total Current Liabilities** | $62,559 | $59,282 | | **Total Liabilities** | $114,409 | $107,323 | | **Total Stockholders' Deficit** | $(7,529) | $(1,188) | Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | $16,502 | $14,575 | $33,034 | $27,522 | | **Gross Profit** | $14,760 | $13,117 | $29,766 | $24,596 | | **Loss from Operations** | $(8,248) | $(7,441) | $(15,956) | $(16,575) | | **Net Loss** | $(9,130) | $(8,344) | $(17,251) | $(17,747) | | **Net Loss Per Share** | $(0.22) | $(0.22) | $(0.42) | $(0.47) | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $375 | $788 | | **Net cash provided by investing activities** | $584 | $7,545 | | **Net cash provided by financing activities** | $1,456 | $99 | | **Net increase in cash, cash equivalents and restricted cash** | $2,415 | $8,432 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes revenue growth from new licenses, key performance indicators, and a 13% YoY revenue increase alongside rising operating expenses [Overview](index=23&type=section&id=Overview) - Arteris is a leading provider of System-on-Chip (SoC) System IP, with growth driven by increasing SoC complexity, chiplet disaggregation, and AI/ML applications[89](index=89&type=chunk) - The company's SoC Integration Automation software complements its interconnect IP by automating the integration and assembly of IP blocks into an SoC[90](index=90&type=chunk) [Key Performance Indicators](index=26&type=section&id=Key%20Performance%20Indicators) Key Performance Indicators Comparison | Metric | As of June 30, 2025 | As of June 30, 2024 | | :--- | :--- | :--- | | Annual Contract Value (ACV) | $63.9 million | $56.1 million | | ACV plus royalties (TTM) | $69.1 million | $60.1 million | | Remaining Performance Obligations (RPO) | $99.3 million | $77.5 million | - Confirmed Design Starts, a metric for customer activity, totaled **25 in Q2 2025**, compared to 21 in Q2 2024, indicating growth in new semiconductor designs[104](index=104&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Revenue Breakdown - Q2 Comparison (in thousands) | Revenue Source | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Licensing, support and maintenance | $15,088 | $13,553 | $1,535 | 11% | | Variable royalties | $1,402 | $971 | $431 | 44% | | **Total Revenue** | **$16,502** | **$14,575** | **$1,927** | **13%** | Revenue Breakdown - Six Months Comparison (in thousands) | Revenue Source | H1 2025 | H1 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Licensing, support and maintenance | $30,423 | $25,292 | $5,131 | 20% | | Variable royalties | $2,569 | $1,789 | $780 | 44% | | **Total Revenue** | **$33,034** | **$27,522** | **$5,512** | **20%** | - Operating expenses for Q2 2025 **increased by 12% YoY to $23.0 million**, primarily due to higher employee-related costs from increased headcount in R&D (up $1.5 million) and S&M (up $1.3 million)[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2025, the company had **$38.0 million in cash, cash equivalents, and short-term investments**, which management believes is sufficient for at least the next 12 months[150](index=150&type=chunk)[151](index=151&type=chunk) Cash Flow Summary - Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $375 | $788 | | Net cash provided by investing activities | $584 | $7,545 | | Net cash provided by financing activities | $1,456 | $99 | - Net cash from operating activities **decreased to $0.4 million in H1 2025** from $0.8 million in H1 2024, driven by a net loss of $17.3 million offset by non-cash charges and changes in operating assets[154](index=154&type=chunk)[155](index=155&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exempt from providing market risk disclosures as a smaller reporting company - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[165](index=165&type=chunk) [Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of June 30, 2025, with no material changes to internal controls during the quarter - Based on an evaluation as of the end of the reporting period, the CEO and CFO concluded that the company's disclosure controls and procedures were **effective at the reasonable assurance level**[166](index=166&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[167](index=167&type=chunk) [Part II. Other Information](index=39&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) A patent infringement complaint was dismissed without prejudice, though the court retains jurisdiction for discovery purposes - Regarding the complaint from Network System Technologies, LLC (NST), the court **dismissed all claims against the company without prejudice** on September 4, 2024, retaining jurisdiction solely for enforcing discovery[63](index=63&type=chunk)[170](index=170&type=chunk) [Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) Key risks include intense competition, a history of net losses, semiconductor industry cyclicality, and geopolitical tensions affecting key markets - **Business & Competition:** The company faces significant competition from larger companies (e.g., Arm, Cadence) and customers' internal development, and is exposed to the cyclical semiconductor industry[173](index=173&type=chunk)[175](index=175&type=chunk)[221](index=221&type=chunk) - **Financial Performance:** The company has a history of net losses, with an **accumulated deficit of $154.1 million** as of June 30, 2025, and may not achieve or maintain future profitability[179](index=179&type=chunk) - **Geopolitical & Regulatory:** A significant portion of revenue (**25.0% for H1 2025**) comes from China, creating exposure to risks from U.S. export controls and trade tensions[210](index=210&type=chunk)[294](index=294&type=chunk)[298](index=298&type=chunk) - **Intellectual Property & Cybersecurity:** The business depends on protecting its proprietary technology and faces risks of infringement claims and potential cybersecurity attacks[256](index=256&type=chunk)[260](index=260&type=chunk)[268](index=268&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=75&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered equity sales and no material change in the planned use of its IPO proceeds - The company completed its IPO on October 29, 2021, receiving **net proceeds of approximately $71.1 million**, with no material change in the planned use of these funds[346](index=346&type=chunk)[348](index=348&type=chunk) [Other Information](index=76&type=section&id=Item%205.%20Other%20Information) Several company insiders adopted or modified Rule 10b5-1 trading plans during the quarter - In June 2025, several insiders established or modified Rule 10b5-1 trading plans, including the General Counsel, CFO, and a Director, for the potential sale of company shares[351](index=351&type=chunk)[352](index=352&type=chunk)[353](index=353&type=chunk)[354](index=354&type=chunk)

Financial Performance - Q2 2025 - Revenue reached $16.5 million, a 13% year-over-year increase[11] - ACV (Annual Contract Value) plus Royalties hit $69.1 million, up 15% year-over-year[9, 11] - Remaining Performance Obligation (RPO) reached $99.3 million, a 28% year-over-year increase[9, 11] - Non-GAAP Gross Profit was $15.0 million, with a 91% margin[11] - Non-GAAP Operating Expenses were $18.6 million, a 10% year-over-year increase[12] - Non-GAAP Operating Loss was $3.5 million, flat year-over-year[12] - Free Cash Flow was negative $2.8 million[13] - Cash, Cash Equivalents & Investments remained at $53.9 million[13] Guidance - Q3 2025 ACV plus Royalties guidance is $69.5 million to $72.5 million[15] - Q3 2025 Revenue guidance is $16.8 million to $17.2 million[15] - FY 2025 ACV plus Royalties guidance is $72 million to $78 million[15] - FY 2025 Revenue guidance is $66 million to $70 million[15]

[Second Quarter 2025 Performance Overview](index=1&type=section&id=Second_Quarter_2025_Performance_Overview) Arteris reported strong Q2 2025 performance, with ACV plus royalties, RPO, and revenue growth, driven by strategic AI chiplet licenses - The company achieved record Annual Contract Value (ACV) plus royalties of **$69.1 million** and Remaining Performance Obligations (RPO) of **$99.3 million**, representing a **28%** year-over-year increase in RPO[2](index=2&type=chunk) Q2 2025 Financial Highlights | Metric | Q2 2025 (USD) | Change (YoY) | | :--- | :--- | :--- | | Revenue | $16.5 million | +13% | | ACV + Royalties | $69.1 million | +15% | | RPO | $99.3 million | +28% | | Operating Loss | $8.2 million | Increased from $7.4M | | Non-GAAP Operating Loss | $3.5 million | Flat | | Net Loss per Share | $0.22 | Flat | | Non-GAAP Net Loss per Share | $0.11 | N/A | - Key business achievements in Q2 2025 include: - AMD licensed FlexGen smart network-on-chip IP for its AI-powering chiplets - Secured a key AI win with Whalechip, licensing FlexNoC 5 for high-performance AI computing - Expanded multi-die solutions to support UCIe, Arm AMBA, and RISC-V ecosystems - Announced Magillem Packaging, a new software for automating IP packaging and accelerating chiplet assembly[6](index=6&type=chunk) [Financial Guidance for Q3 and Full Year 2025](index=2&type=section&id=Financial_Guidance_for_Q3_and_Full_Year_2025) Arteris provided Q3 and updated FY2025 financial guidance, forecasting growth in key metrics, Non-GAAP operating loss, and positive free cash flow Estimated Q3 and Updated FY 2025 Guidance | Metric (in millions USD) | Q3 2025 Estimate (millions USD) | FY 2025 Updated Guidance (millions USD) | | :--- | :--- | :--- | | ACV + royalties | $69.5 - $72.5 | $72.0 - $78.0 | | Revenue | $16.8 - $17.2 | $66.0 - $70.0 | | Non-GAAP operating loss | $3.0 - $4.0 | $10.5 - $15.5 | | Free cash flow | $0.5 - $3.5 | $1.0 - $7.0 | [Consolidated Financial Statements (Unaudited)](index=5&type=section&id=Consolidated_Financial_Statements_%28Unaudited%29) The unaudited consolidated financial statements for Q2 2025 detail the company's revenue, net loss, balance sheet changes, and cash flow performance [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed_Consolidated_Statements_of_Operations) Q2 2025 statements show increased revenue but a wider loss from operations and net loss due to higher operating expenses in R&D and sales Statement of Operations Highlights (Three Months Ended June 30) | (In thousands USD) | 2025 (thousands USD) | 2024 (thousands USD) | | :--- | :--- | :--- | | Total revenue | $16,502 | $14,575 | | Gross profit | $14,760 | $13,117 | | Total operating expenses | $23,008 | $20,558 | | Loss from operations | $(8,248) | $(7,441) | | Net loss | $(9,130) | $(8,344) | | Net loss per share | $(0.22) | $(0.22) | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed_Consolidated_Balance_Sheets) As of June 30, 2025, total assets increased, liabilities grew from deferred revenue, and the stockholders' deficit expanded Balance Sheet Highlights (As of June 30, 2025) | (In thousands USD) | June 30, 2025 (thousands USD) | Dec 31, 2024 (thousands USD) | | :--- | :--- | :--- | | Cash and cash equivalents | $16,100 | $13,684 | | Total current assets | $61,543 | $69,083 | | TOTAL ASSETS | $106,880 | $106,135 | | Deferred revenue (current + noncurrent) | $81,947 | $75,622 | | Total liabilities | $114,409 | $107,323 | | Total stockholders' deficit | $(7,529) | $(1,188) | | TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $106,880 | $106,135 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed_Consolidated_Statements_of_Cash_Flows) For the six months ended June 30, 2025, net cash from operating activities decreased, with investing and financing activities contributing to the ending cash balance Cash Flow Highlights (Six Months Ended June 30) | (In thousands USD) | 2025 (thousands USD) | 2024 (thousands USD) | | :--- | :--- | :--- | | Net cash provided by operating activities | $375 | $788 | | Net cash provided by investing activities | $584 | $7,545 | | Net cash provided by financing activities | $1,456 | $99 | | Net increase in cash | $2,415 | $8,432 | | Cash, cash equivalents and restricted cash, end of period | $16,487 | $22,516 | [Non-GAAP Financial Measures and Other Metrics](index=8&type=section&id=Non-GAAP_Financial_Measures_and_Other_Metrics) This section defines non-GAAP financial measures and key business metrics, providing reconciliations and explanations for performance evaluation [Reconciliation of GAAP to Non-GAAP Measures](index=10&type=section&id=Reconciliation_of_GAAP_to_Non-GAAP_Measures) Q2 2025 GAAP to non-GAAP reconciliations detail adjustments to operating loss for stock-based compensation and amortization, resulting in a flat Non-GAAP operating loss GAAP to Non-GAAP Reconciliation (Three Months Ended June 30, 2025) | (In thousands USD) | GAAP (thousands USD) | Adjustments (thousands USD) | Non-GAAP (thousands USD) | | :--- | :--- | :--- | :--- | | Gross profit | $14,760 | $282 | $15,042 | | Loss from operations | $(8,248) | $4,714 | $(3,534) | | Net loss | $(9,130) | $4,714 | $(4,416) | [Free Cash Flow Reconciliation](index=12&type=section&id=Free_Cash_Flow_Reconciliation) Q2 2025 free cash flow, calculated as net cash from operating activities minus capital expenditures, showed an outflow, a decrease from positive free cash flow in the prior year Free Cash Flow (Three Months Ended June 30) | (In thousands USD) | 2025 (thousands USD) | 2024 (thousands USD) | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(2,485) | $311 | | Purchase of property and equipment | $(355) | $(47) | | Free cash flow | $(2,840) | $264 | [Definitions of Key Business Metrics](index=9&type=section&id=Definitions_of_Key_Business_Metrics) This section defines key business metrics used by Arteris for performance tracking, including ACV, Confirmed Design Starts, and RPO - **Annual Contract Value (ACV):** The total fixed fees under a customer agreement divided by the term in years. ACV plus royalties includes trailing-twelve-months variable royalties[26](index=26&type=chunk) - **Confirmed Design Starts:** Occurs when customers confirm and notify Arteris of the commencement of new semiconductor designs using its interconnect IP, indicating customer activity and future royalty potential[27](index=27&type=chunk) - **Remaining Performance Obligations (RPO):** The amount of contracted future revenue that has not yet been recognized, including both deferred revenue and other unbilled contracted amounts[28](index=28&type=chunk)

Core Insights - Arteris, Inc. reported record Annual Contract Value (ACV) plus royalties of $69.1 million for Q2 2025, marking a 15% year-over-year increase, and a Remaining Performance Obligation (RPO) of $99.3 million, up 28% year-over-year [2][7] - The company anticipates Q3 2025 ACV plus royalties in the range of $69.5 million to $72.5 million and full-year 2025 revenue guidance of $66.0 million to $70.0 million [6] Financial Highlights - Revenue for Q2 2025 was $16.5 million, reflecting a 13% increase year-over-year [7] - Non-GAAP operating loss for Q2 2025 was $3.5 million, unchanged from Q2 2024 [7] - Net loss for Q2 2025 was $9.1 million, or $0.22 per share, compared to a net loss of $8.3 million in Q2 2024 [7][18] Business Highlights - The company secured a licensing agreement with AMD for its FlexGen smart network-on-chip IP, aimed at enhancing data transport for AI chiplets [7] - Arteris announced a significant customer win with Whalechip, which is licensing FlexNoC 5 for high-performance AI computing [7] - The company expanded its multi-die solution to support Universal Chiplet Interconnect Express (UCIe) and collaborated with major partners for chiplet interface support [7] Guidance - Estimated Q3 2025 revenue is projected between $16.8 million and $17.2 million, with a full-year revenue forecast of $66.0 million to $70.0 million [6] - Non-GAAP operating loss for Q3 2025 is expected to be between $3.0 million and $4.0 million, with a full-year estimate of $10.5 million to $15.5 million [6] Cash Flow and Liquidity - Free cash flow for Q2 2025 was negative at $2.8 million, compared to positive free cash flow of $0.3 million in Q2 2024 [34] - The company ended Q2 2025 with cash and cash equivalents of $16.1 million, an increase from $13.7 million at the end of Q4 2024 [20]