EDP (OTCPK:EDPF.Y) 2025 Capital Markets Day November 06, 2025 05:00 AM ET Company ParticipantsArthur Sitibon - Wall Street analystRui Teixeira - CFOGonzalo Tarasido - DirectorMiguel Stilwell d'Andrade - CEOJavier Garrido - FX ArtistConference Call ParticipantsJenny Ping - Equity Research AnalystPablo Cuadrado - Managing Director and Equity Research AnalystManuel Palomo - Equity Research AnalystPedro Alves - Equity Research AnalystOperatorGood morning, ladies and gentlemen. Welcome to all of you, both here i ...

1 © 2025 Arteris, Inc. November 4, 2025 Disclaimer This presentation and the accompanying oral presentation have been prepared by Arteris, Inc. ("Arteris" or "the "Company") for informational purposes only and not for any other purpose. Nothing contained in this presentation is, or should be construed as, a recommendation, promise or representation by the presenter or Arteris or any officer, director, employee, agent or advisor of Arteris. This presentation does not purport to be all-inclusive or to contain ...

Core Insights - Arteris, Inc. (NASDAQ:AIP) is recognized as one of the 14 small publicly traded semiconductor companies worth investing in, with recent buy ratings from analysts [1][2][3] - The company reported strong second-quarter earnings, with an Annual Contract Value (ACV) plus royalties of $69.1 million, reflecting a 15% year-over-year increase, and remaining performance obligations (RPO) rising by 28% to $99.3 million [2][3] Analyst Ratings - Northland Securities maintained a Buy rating on Arteris, Inc. with a price target of $16 as of August 25 [1] - TD Cowen also reiterated a Buy rating and raised the price target from $12 to $15 on August 5 [1] Customer Acquisition - Arteris is expanding its customer base, notably securing AMD as a client, which will utilize the company's FlexGen technology for high-performance data transport [3] Market Potential - Analysts have set a 1-year median price target of $14.50 for Arteris, indicating a potential upside of 46.91% from current levels [3] Company Overview - Arteris, Inc. is a leading provider of semiconductor system IP and integration automation software for system-on-chip (SoC) development [4]

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]

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]

Core Insights - Arteris, Inc. has been awarded the "AI Engineering Innovation Award" for its FlexGen technology, which enhances system-on-chip (SoC) design for AI applications [1][4] - FlexGen automates the creation of network-on-chip (NoC) interconnects, addressing the complexities of AI-centric semiconductor designs [2][4] - Early adopters of FlexGen have reported significant productivity gains, including a 10x improvement in productivity, a 30% reduction in wire length, and a 10% reduction in latency compared to traditional methods [3] Company Overview - Arteris specializes in system IP for accelerating SoC development, focusing on enhancing performance, reducing power consumption, and speeding up time to market [6] - The company aims to simplify NoC design for chip designers, regardless of their prior experience, by automating critical aspects of NoC creation [4][6] - The AI Breakthrough Awards program received over 5,000 nominations in 2025, highlighting the competitive landscape and innovation within the AI sector [4]

Financial Data and Key Metrics Changes - The company has seen a shift in revenue concentration from China, dropping from 50% in 2019 to around 30% by early 2023, and currently closer to high teens percentage [66][70]. - The average selling prices (ASPs) are expected to reach around $1 million by 2026, driven by increasing design complexity and the adoption of more system IP [79]. Business Line Data and Key Metrics Changes - The FlexNOC product family is transitioning from FlexNOC 4 to FlexNOC 5, with a 30% list price increase for FlexNOC 5 over FlexNOC 4, and another 30% increase for FlexGen, which adds automation features [81][82]. - The company has approximately $90 million in remaining performance obligations, indicating a backlog of revenue to be recognized in the future [83]. Market Data and Key Metrics Changes - The company is experiencing growth in various geographical markets, particularly in the US, Japan, and Korea, which are offsetting declines in China [70][75]. - The automotive sector is highlighted as a significant area of growth, with Chinese EVs performing well in the market [75]. Company Strategy and Development Direction - The company is focusing on the shift from insourcing to outsourcing in the semiconductor design space, with expectations that commercial solutions will grow from 25% to potentially 75% over the next decade [22][24]. - The introduction of FlexGen aims to address industry challenges such as the lack of skilled engineers and high costs associated with chip design [29]. Management's Comments on Operating Environment and Future Outlook - Management acknowledges the ongoing trade tensions between the US and China but notes that there is no direct impact on the company's IP at the moment [62][64]. - The company sees AI and machine learning as integral to future growth, with half of customer design starts now related to these technologies [46]. Other Important Information - The company is exploring the incorporation of AI in system IP design, focusing on analytics and verification processes [48][50]. - Cybersecurity is a significant concern, with the company taking advanced measures to protect sensitive information [60]. Q&A Session Summary Question: How much of your top line is driven from China customers? - The company's revenue from China has decreased from 50% in 2019 to around 30% in early 2023, and is now in the high teens percentage range [66][70]. Question: What is the average deal size and pricing trends? - The average selling prices are expected to grow, with projections of reaching around $1 million by 2026 due to increasing complexity in designs [79].

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $16,500,000, up 28% year over year, exceeding guidance [17] - Annual contract value (ACV) plus royalties reached $66,800,000, a 15% increase year over year, marking a record high [17] - Remaining performance obligations (RPO) were $88,900,000, representing a 19% year over year increase, also a new high for the company [17] - Non-GAAP gross profit was $15,300,000 with a gross margin of 92% [17] - Non-GAAP operating loss was $3,200,000, a 40% improvement compared to the prior year [20] - Free cash flow was positive at $2,700,000 for the quarter, benefiting from early customer payments [21] Business Line Data and Key Metrics Changes - The company achieved several key design wins, including major contracts from top global technology companies and automotive OEMs [8][9] - Adoption of technology in advanced semiconductor companies continues to grow, with significant projects in AI and automotive sectors [9][10] - The FlexGen product, an AI-driven smart NOC IP technology, is being evaluated by over 20 customers, with expectations for revenue generation in the second half of the year [10] Market Data and Key Metrics Changes - The automotive sector remains robust, with ongoing design projects for future vehicles, including electric and autonomous driving technologies [12][13] - The company is seeing increased outsourcing of silicon system IP needs as customers seek efficiency and cost reduction [15][22] - The global economic uncertainty has not led to deal cancellations but may impact royalty revenues due to customer confidence [14][22] Company Strategy and Development Direction - The company is focusing on innovation and expanding ecosystem collaborations, including joining the Intel Foundry Accelerator Program [12] - The strategy includes enhancing customer support and product development through new engineering centers and partnerships [13] - The company aims to remain a neutral player in the system IP market, capitalizing on the trend of outsourcing due to increasing design complexity [42][73] Management's Comments on Operating Environment and Future Outlook - Management acknowledges economic uncertainty but maintains that licensing activity remains robust [30][32] - The company has not adjusted its overall FY 2025 revenue guidance, citing strong customer demand despite potential short-term headwinds [22][26] - There is optimism regarding the deal pipeline and customer interest in outsourcing system IP products [26][73] Other Important Information - The company received multiple awards for innovation, highlighting its technological advancements and market recognition [11] - The opening of a new engineering and customer support center in Krakow, Poland, aims to enhance product development and customer service [13] Q&A Session Summary Question: Changes in customer behavior due to tariffs and trade environment - Management noted some replanning of projects in China but observed an increased willingness to outsource system IP to commercial vendors [29][30] Question: Expectations for FlexGen revenue and traction - Management reported positive feedback from customers evaluating FlexGen, anticipating substantial bookings and revenue in the second half of the year [35][36] Question: Accelerated decision timelines by customers - Management indicated that while design cycles are being accelerated, licensing activity remains steady without significant changes in decision-making timelines [41][42] Question: Interest from joining the Intel Foundry Alliance - Management expects increased business opportunities from joining the alliance, particularly with Intel's commitment to commercial solutions [46] Question: Market size for system IP - Management estimated the system IP market to be between $1 billion and $1.2 billion, with significant growth potential as more companies outsource [59][60] Question: Underlying technological changes prompting outsourcing - Management highlighted the increasing complexity of designs, particularly with AI and chiplets, driving the need for commercial IP solutions [62][63]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $16,500,000, representing a 28% year-over-year increase, exceeding guidance [17] - Annual contract value (ACV) plus royalties reached a record high of $66,800,000, up 15% year-over-year [17] - Remaining performance obligations (RPO) at the end of Q1 were $88,900,000, a 19% year-over-year increase [17] - Non-GAAP gross profit was $15,300,000 with a gross margin of 92% [17] - Non-GAAP operating loss for Q1 was $3,200,000, a 40% improvement compared to the prior year [20] - Free cash flow was positive at $2,700,000 for the quarter [21] Business Line Data and Key Metrics Changes - The company achieved several key design wins, including contracts with top global technology companies and automotive OEMs [6][7] - Adoption of technology in automotive, enterprise computing, and communications sectors is increasing, driven by design complexity and AI applications [6][8] - The company is seeing strong momentum in the microcontroller (MCU) system IP market, with initial royalties received from a top five MCU manufacturer [9] Market Data and Key Metrics Changes - The automotive sector remains a significant focus, with 10 automotive OEMs now as direct customers [8] - The company is expanding its presence in the AI market, with over 55% of total business now related to AI projects [72][78] - The semiconductor industry is experiencing a shift towards outsourcing system IP needs due to increasing design complexity and cost pressures [42][46] Company Strategy and Development Direction - The company is focusing on innovation and expanding ecosystem collaborations, including joining the Intel Foundry Accelerator Program [11] - The introduction of FlexGen, an AI-driven smart NOC IP technology, is expected to enhance productivity and performance in semiconductor designs [9] - The company aims to maintain its position as a neutral player in the system IP market while capitalizing on the growing demand for outsourced solutions [74] Management's Comments on Operating Environment and Future Outlook - Management acknowledges global economic uncertainty but reports no deal cancellations or delays in Q1 [13] - The company anticipates potential short-term headwinds in royalties due to customer confidence and tariffs [14] - Despite economic challenges, management remains optimistic about long-term growth and customer interest in outsourcing [15][26] Other Important Information - The company opened a new engineering and customer support center in Krakow, Poland, to enhance product development and customer support [12] - The company received multiple awards for innovation, including recognition for its NOC IP technologies [10] Q&A Session Summary Question: Changes in customer behavior due to tariffs and trade environment - Management noted some replanning of projects in China but observed an increased willingness among larger companies to outsource system IP to commercial vendors [29][30] Question: Expectations for FlexGen's revenue and ACV - Management reported positive feedback from customers evaluating FlexGen, with expectations for substantial bookings and revenue in the second half of the year [36][37] Question: Accelerating decision timelines by customers - Management indicated that while design cycles are being accelerated, licensing activity remains steady without significant changes in decision-making timelines [42] Question: Interest from joining the Intel Foundry Alliance - Management expects that joining the alliance will lead to additional business opportunities over the next twelve months [47] Question: Market size for system IP - Management estimated the system IP market to be between $1 billion and $1.2 billion, with significant growth potential as complexity increases [60] Question: Underlying technological changes prompting outsourcing - Management highlighted the increasing complexity of designs, particularly with the rise of AI and chiplets, as key factors driving the shift towards outsourcing [62][64]