Arteris Inc (AIP) 2024 Q2 法說會逐字稿

Good afternoon, everyone. 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.

大家下午好。歡迎參加 Arteris 2024 年第二季財報電話會議。請注意，本次通話正在錄音並同時進行網路直播。網路廣播中包含的所有資料均為 Arteris 的專有財產和版權，並保留所有權利。

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

對於開場白和介紹，我現在將把電話轉給 Sapphire 投資者關係部的 Erica Mannion。請繼續。

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, 2024. Nick will review the financial results for the second quarter, followed by the company's outlook for the third quarter and full year of 2024. We will then open the call for questions.

謝謝你，下午好。今天和我在一起的是來自 Arteris 的執行長 Charlie Janac；和財務長尼克霍金斯。Charlie 首先將簡要回顧截至 2024 年 6 月 30 日的第二季的業務表現。尼克將回顧第二季的財務業績，然後是公司第三季和 2024 年全年的展望。然後我們將開始提問。

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 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.

在我們開始之前，我想提醒您，管理層將在本次電話會議中發表聲明，這些聲明是聯邦證券法含義內的前瞻性聲明。這些陳述涉及重大風險和不確定性，可能導致實際結果或事件與預期有重大差異，而您不應過度依賴前瞻性陳述。

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.

有關這些風險、不確定性以及可能導致實際結果出現差異的因素的更多信息，請參閱 Arteris 今天發布的新聞稿以及 Arteris 不時向美國證券交易委員會提交的文件和報告。

Please note, during this call, we will cite certain non-GAAP measures, including non-GAAP net loss, non-GAAP net loss per share, and free cash flow, which are not measures prepared in accordance with US GAAP. The non-GAAP measures are presented as we believe that they provide investors with a 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 US GAAP.

請注意，在本次電話會議中，我們將引用某些非 GAAP 衡量標準，包括非 GAAP 淨虧損、非 GAAP 每股淨虧損和自由現金流，這些衡量標準並非根據美國 GAAP 制定。提出非公認會計原則措施是因為我們相信它們為投資者提供了一種評估和理解公司管理階層如何評估公司經營績效的方法。這些非公認會計原則措施不應孤立地考慮、替代或優於根據美國公認會計原則制定的財務措施。

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, 2024. In addition, for a definition of certain of key performance indicators used in this presentation, such as annual contract value, confirmed design starts, active customers, and remaining performance obligations, please see the press release for the quarter ended June 30, 2024.

這些非 GAAP 衡量標準與最接近的 GAAP 衡量標準的調整表可在截至 2024 年 6 月 30 日的季度新聞稿中找到。此外，有關本簡報中使用的某些關鍵績效指標的定義，例如年度合約價值、已確認的設計啟動、活躍客戶和剩餘履約義務，請參閱截至 2024 年 6 月 30 日的季度新聞稿。

Listeners who do not have a copy of the press release for the quarter ended June 30, 2024, may obtain a copy by visiting the Investor Relations section of the company's website. In addition, management will be referring to Q2, 2024 earnings presentation, which can be found in the Investor Relations section of the company's website under Events and Presentations tab.

沒有截至 2024 年 6 月 30 日的季度新聞稿副本的聽眾可以透過造訪本公司網站的投資者關係部分取得副本。此外，管理層將參考 2024 年第二季收益演示，該演示可在公司網站「投資者關係」部分的「活動和演示」標籤下找到。

Now I will turn the call over to Charlie.

現在我將把電話轉給查理。

Thank you, Erica. And thanks to everyone for joining us on the call this afternoon. In the second quarter of 2024, we achieved record annual contract value plus royalties of $60.1 million. For the second consecutive quarter, we also delivered positive free cash flow.

謝謝你，艾麗卡。感謝大家今天下午加入我們的電話會議。2024 年第二季度，我們實現了創紀錄的年度合約價值加上特許權使用費 6,010 萬美元。我們也連續第二季實現了正的自由現金流。

Our success during the quarter was fueled by customer demand for AI-driven Automotive and Enterprise Computing SoC Solutions, along with growing momentum in our other verticals. We expanded our customer base in the second quarter with seven new customers licensing our Arteris system IP products.

我們在本季的成功得益於客戶對人工智慧驅動的汽車和企業運算 SoC 解決方案的需求，以及我們其他垂直領域的成長動能。我們在第二季擴大了客戶群，並獲得了 7 位新客戶的 Arteris 系統 IP 產品授權。

In addition to these new customer wins, we signed four new license deals with current customers who comprised of the world's top 30 technology companies. During the quarter, we experienced steady design activity from our customers with 21 confirmed design starts.

除了贏得這些新客戶之外，我們還與包括全球 30 大科技公司的現有客戶簽署了四項新的授權協議。本季度，我們的客戶進行了穩定的設計活動，已啟動 21 個已確認的設計。

Highlighting our continued momentum in the automotive industry, particularly for AI enabled autonomous driving, our new customers include two market-leading global automotive OEMs. We believe this demonstrates the growing importance of optimized electronics in autonomous applications with our Arteris system IP with functional safety capabilities being a key building block for overall connectivity.

我們的新客戶包括兩家市場領先的全球汽車原始設備製造商，突顯了我們在汽車行業，特別是人工智慧自動駕駛領域的持續發展勢頭。我們相信，這表明優化電子裝置在自主應用中的重要性與日俱增，我們的 Arteris 系統 IP 的功能安全功能是整體連接的關鍵建構模組。

One of these new customers is a top five global automotive OEM by market capitalization. In addition, two notable customer designs started in the second quarter, including one for a major robotaxi company and the other for a market-leading ADAS company.

這些新客戶之一是全球市值排名前五的汽車原始設備製造商。此外，第二季開始了兩個著名的客戶設計，其中一個是為一家大型機器人計程車公司設計的，另一個是為一家市場領先的 ADAS 公司設計的。

We expect this trend to continue given growing demand for Automotive AI innovation. AI also fueled the demand for our Arteris technology in enterprise computing in the quarter, particularly in the data center application, illustrated by securing the highest number of licenses compared to other verticals.

鑑於汽車人工智慧創新需求不斷增長，我們預計這一趨勢將持續下去。本季度，人工智慧也推動了企業運算領域對 Arteris 技術的需求，特別是在資料中心應用程式中，與其他垂直領域相比，我們獲得了最多數量的許可證就說明了這一點。

AI and ML electronics require high performance, low energy consumption, and high bandwidth data traffic, which Arteris products are designed to address. We expanded our relationship with a major global networking infrastructure system house, reflecting the increased compute needs for higher performance and improved efficiency within the communications vertical.

AI 和 ML 電子產品需要高效能、低能耗和高頻寬資料流量，Arteris 產品旨在解決這些問題。我們擴大了與全球主要網路基礎設施系統公司的關係，反映了通訊垂直領域對更高效能和更高效率的運算需求的增加。

We continue to add large technology company customers that previously used internal developed system IP. One such company is a new OEM licensing Arteris system IP for advanced flat panel AI-enabled digital televisions.

我們不斷增加以前使用內部開發的系統IP的大型科技公司客戶。其中一家公司是一家新的 OEM 授權 Arteris 系統 IP，用於先進的平板人工智慧數位電視。

Besides growing customer traction, Arteris is proactively working to expand the IP ecosystem to help customers accelerate innovation. In March, we announced support for Armv9 processors with focus on automotive applications. This was followed by an ecosystem partnership with ADAS Technology to support the growing adoption of RISC-V SoCs for AI, 5G, and other applications.

除了不斷增長的客戶吸引力外，Arteris 還積極致力於擴展 IP 生態系統，以幫助客戶加速創新。3 月份，我們宣布支援 Armv9 處理器，並專注於汽車應用。隨後與 ADAS Technology 建立了生態系統合作夥伴關係，以支援 RISC-V SoC 在人工智慧、5G 和其他應用中的日益普及。

This customer-driven addition further expands Arteris support across both Arm and RISC-V processor ecosystems, providing on-chip connectivity for any SoC architecture chosen by our customers.

這項由客戶驅動的新增功能進一步擴展了 Arteris 對 Arm 和 RISC-V 處理器生態系統的支持，為客戶選擇的任何 SoC 架構提供片上連接。

Since the acquisition of Semifore in December 2022, we've seen a growing number of customers recognize the value of our hardware, software interface technology. One of these customers is Esperanto Technologies, who provided RISC-V based silicon for development of high-performance, energy-efficient Generative AI and high-performance computing with data center and enterprise Edge applications. They chose Arteris SoC integration, automation software because of its hardware/software integration automation efficiency, error reduction, and streamlined design workflows.

自 2022 年 12 月收購 Semifore 以來，我們看到越來越多的客戶認識到我們的硬體、軟體介面技術的價值。Esperanto Technologies 就是這些客戶之一，該公司提供基於 RISC-V 的晶片，用於開發高效能、節能的生成式 AI 以及資料中心和企業邊緣應用程式的高效能運算。他們選擇了 Arteris SoC 整合自動化軟體，因為它的硬體/軟體整合自動化效率高、錯誤少並且簡化了設計工作流程。

In addition, in the second quarter, Arteris was included in the Russell 2000 Index. We believe the scale and scope of our long-term opportunity remain robust, supported by a strong pipeline of new system IP technologies and solid relationship with some of the largest electronics companies in the world who continue to innovate in exciting areas, such as Generative AI and Autonomous Driving, using Arteris system IP technologies.

此外，第二季度，Arteris被納入Russell 2000指數。我們相信，在新系統IP 技術的強大管道以及與世界上一些最大的電子公司的牢固關係的支持下，我們長期機會的規模和範圍仍然強勁，這些公司繼續在生成人工智能等令人興奮的領域進行創新以及使用 Arteris 系統 IP 技術的自動駕駛。

With that, I'll turn it over to Nick to discuss our financial results in more detail.

接下來，我將把它交給尼克，更詳細地討論我們的財務表現。

Thank you, Charlie. Good afternoon, everyone. As I review our second quarter results today, please note 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 a reminder, I will be referring to the 2Q, 2024 earnings presentation, which can be found in the Investor Relations section of the company's website under the Events and Presentations tab.

謝謝你，查理。大家下午好。當我今天回顧第二季業績時，請注意，我將指的是 GAAP 和非 GAAP 指標。今天的收益報告中包含了 GAAP 與非 GAAP 財務數據的調整表，可在我們的網站上查看。另外提醒一下，我將指的是 2024 年第二季的收益演示，您可以在公司網站「投資者關係」部分的「活動和演示」標籤下找到該演示。

Turning to slide 4 of the presentation, total revenue for the second quarter was $14.6 million, up 13% sequentially, and above the top end of our guidance range. This was driven by strong deal activity early in the quarter, enabling us to recognize higher than expected revenue within the quarter.

轉向簡報的幻燈片 4，第二季的總收入為 1,460 萬美元，比上一季增長 13%，高於我們指導範圍的上限。這是由本季度初強勁的交易活動推動的，使我們能夠在本季度內確認高於預期的收入。

At the end of the second quarter, annual contract value, or ACV plus royalties, was $60.1 million, above the midpoint of our guidance range, a record high for the company. Remaining performance obligations, or RPO, at the end of the second quarter was $77.5 million, representing a 19% year-over-year increase, also growing to the highest level we have ever reported.

第二季末，年度合約價值（ACV 加上特許權使用費）為 6,010 萬美元，高於我們指導範圍的中點，創下了公司的歷史新高。第二季末的剩餘履約義務（RPO）為 7,750 萬美元，年增 19%，也成長至我們報告過的最高水準。

GAAP gross profit for the quarter was $13.1 million, representing a gross margin of 90%. Non-GAAP gross profit in the quarter was $13.4 million, representing a gross margin of 92%.

該季度 GAAP 毛利為 1,310 萬美元，毛利率為 90%。該季度非 GAAP 毛利為 1,340 萬美元，毛利率為 92%。

Now turning to slide 5. Total GAAP operating expense for the second quarter was $20.6 million, flat compared to the first quarter. Non-GAAP operating expense in the quarter was $16.8 million, 1% lower sequentially, and 6% lower than the second quarter of 2023, reflecting the team's continued focus on prudent management of our operating expenses.

現在轉到投影片 5。第二季 GAAP 營運費用總額為 2,060 萬美元，與第一季持平。本季非 GAAP 營運費用為 1,680 萬美元，比上一季下降 1%，比 2023 年第二季下降 6%，反映出團隊繼續致力於謹慎管理營運費用。

As we look ahead, we will continue to limit spending to strategically critical areas, while investing in profitable revenue growth. GAAP operating loss for the second quarter was $7.4 million, compared to a loss of $8.7 million in the prior year period. Non-GAAP operating loss was $3.5 million, which is better than the top end of our guidance, compared to a loss of $4.2 million in the prior year period.

展望未來，我們將繼續限制策略關鍵領域的支出，同時投資於獲利性收入成長。第二季 GAAP 營運虧損為 740 萬美元，去年同期營運虧損為 870 萬美元。非 GAAP 營運虧損為 350 萬美元，優於我們指引的上限，而去年同期虧損為 420 萬美元。

Net loss in the quarter was $8.3 million or diluted net loss per share of $0.22. Non-GAAP net loss in the quarter was $4.4 million or diluted net loss per share of $0.11, based on approximately 38.5 million weighted average diluted shares outstanding.

本季淨虧損為 830 萬美元，攤薄後每股淨虧損 0.22 美元。根據約 3,850 萬股加權平均稀釋後流通股計算，本季非 GAAP 淨虧損為 440 萬美元，攤薄後每股淨虧損為 0.11 美元。

Moving to slide 6, and turning to the balance sheet and cash flow. We ended the quarter with $53.9 million in cash, cash equivalents and investments. Free cash flow, which includes capital expenditure was positive $300,000. This was above the midpoint of our guidance range and in line with the company's goal to be free cash flow positive for the full year of 2024.

前往投影片 6，轉向資產負債表和現金流量。本季結束時，我們的現金、現金等價物和投資為 5,390 萬美元。自由現金流（包括資本支出）為正 300,000 美元。這高於我們指引範圍的中點，符合公司 2024 年全年自由現金流為正的目標。

Now, I would like to turn to our outlook for the third quarter and the full year 2024, and refer to slide 7. For the third quarter of 2024, we expect ACV plus royalties of $58.5 million to $62.5 million, revenue of $14.2 million to $15.2 million, non-GAAP operating loss of $5.5 million to $3.5 million, and non-GAAP free cash flow of negative $1.4 million to positive $1.6 million.

現在，我想談談我們對第三季和 2024 年全年的展望，請參閱投影片 7。對於2024 年第三季度，我們預計ACV 加特許權使用費為5,850 萬美元至6,250 萬美元，營收為1,420 萬美元至1,520 萬美元，非GAAP 營運虧損為550 萬美元至350 萬美元，非GAAP 自由現金流為負140 萬美元至正 160 萬美元。

For the full year of 2024, our guidance is as follows: ACV plus royalties to exit 2024, $62 million to $68 million, up 16% year-over-year at the midpoint, unchanged from the prior guidance. Revenue of $56 million to $58 million, increasing the midpoint of our guidance by $1 million. Non-GAAP operating loss of between $22 million and $18 million, improving the midpoint of our guidance by $1.4 million, and non-GAAP free cash flow of negative $2.4 million to positive $2.6 million, unchanged from prior guidance.

對於 2024 年全年，我們的指導如下：到 2024 年退出的 ACV 加上特許權使用費為 6,200 萬美元至 6,800 萬美元，中點同比增長 16%，與先前的指導持平。收入為 5,600 萬美元至 5,800 萬美元，使我們的指導中位數增加了 100 萬美元。非 GAAP 營運虧損在 2,200 萬美元至 1,800 萬美元之間，將我們指導的中點提高了 140 萬美元，非 GAAP 自由現金流為負 240 萬美元至正 260 萬美元，與先前的指導持平。

In conclusion, we are encouraged by our top line trajectory and our effective cost management in the first half of the year that resulted in the above guidance performance in the second quarter, and the increased guidance in revenue and operating income for the full year. We are particularly excited about achieving positive free cash flow for two consecutive quarters.

總之，我們對上半年的營收軌跡和有效的成本管理感到鼓舞，這導致了第二季上述的指導業績，以及全年收入和營業收入指引的增加。我們對連續兩季實現正自由現金流感到特別興奮。

With that, I will turn the call back to the operator and open it up for questions. Operator.

這樣，我會將電話轉回給接線員並打開詢問問題。操作員。

Ladies and gentlemen, we will now begin the question-and-answer session. (Operator Instructions)

女士們、先生們，我們現在開始問答環節。（操作員說明）

Matt Ramsay, TD Cowen.

馬特·拉姆齊，TD·考恩。

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

大家下午好。嘿，查理。嗨，尼克。尼克，祝賀您取得了一系列非常可靠的結果和自由現金流指標。我認為你們繼續在那裡交付，這很高興看到。我想我的第一個問題是關於許可活動和某種設計活動。你們關注市場的許多細分市場，但特別關注人工智慧產品和汽車 ADAS 領域的出現。但同時，半導體產業的許多不同領域都感受到了週期性，並進行了與週期性相關的預算削減等。

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

因此，查理很想聽聽您對許可活動和設計活動如何尋找您的客戶群或潛在客戶群的看法。他們是否會繼續投資或越來越多地圍繞人工智慧進行投資？但是，面對產業面臨的一些具有挑戰性的週期性，客戶群是否會繼續投資新專案和新晶片專案？如果有任何想法，我會很感激，我會得到跟進。謝謝。

Thanks Matt. So, this is why we have always been on the track record of being highly diversified in terms of applications, in terms of geographies, in terms of customer size, in terms of applications. And so, we are not seeing – we’re seeing some impact on royalties from the shipment volumes decline. There's some issues in automotive, for example. But royalties are still a relatively small percentage of our revenue.

謝謝馬特。因此，這就是為什麼我們一直在應用程式、地理位置、客戶規模和應用程式方面保持高度多元化的記錄。因此，我們沒有看到出貨量下降對特許權使用費產生一些影響。例如，汽車領域存在一些問題。但特許權使用費在我們的收入中所佔的比例仍然相對較小。

We're not seeing anything major on the design side, because one, design activity is essentially results in revenue for these companies three to four years down the road or seven years down the road for automotive, and so the design activity continues. And typically, when people have challenges on the shipment side, they tend to invest in R&D to design their way out of any recessions.

我們在設計方面沒有看到任何重大的事情，因為第一，設計活動本質上是這些公司三到四年或汽車七年後的收入，所以設計活動仍在繼續。通常，當人們在運輸方面遇到挑戰時，他們傾向於投資研發，以設計擺脫經濟衰退的方法。

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

因此，本季度，我們看到工業應用實際上大部分設計都是從汽車開始的——我很抱歉，人工智慧比前兩個季度要少一些。但總體而言，據我們所知，設計活動幾乎沒有受到影響。

No. Thank you for that, Charlie. That's really interesting. Maybe a follow-up there on that topic and then a question for Nick. On that topic Charlie, just to kind of extend that conversation a little bit, are you seeing any movement within the customer base to potentially, just given the macro environment and whatnot, to maybe not want to invest in internal teams as much and think of you maybe more as an external IP vendor? Is the economic condition in a lot of industries and semis, is that affecting that shift at all?

不。謝謝你，查理。這真的很有趣。也許是關於該主題的後續行動，然後向尼克提出問題。關於這個主題，查理，我想稍微擴展一下這個主題，您是否看到客戶群內部有任何潛在的變化，考慮到宏觀環境等因素，可能不想對內部團隊進行太多投資並考慮您也許更像是一個外部IP 供應商？許多工業和半成品的經濟狀況是否會影響這種轉變？

And then, I guess, my follow-up for Nick. We've had a couple of quarters now of free cash flow. I know you guys have some target goals out there as you grow the business to get back to sort of non-GAAP profitability and whatnot. If you have any updated thoughts there, because I think that's sort of an important next hurdle, because you've gotten over the one that was in front of you. Thanks.

然後，我想，我對尼克的後續行動。我們已經有幾季的自由現金流了。我知道你們在發展業務時有一些目標，以恢復非公認會計原則獲利能力等等。如果你有任何更新的想法，因為我認為這是一個重要的下一個障礙，因為你已經克服了擺在你面前的障礙。謝謝。

So, in terms of the investment in internal IP, right. So, when you have guys like Nick in some of these big corporations scrutinizing the budgets, right, they are basically saying, okay, should we keep developing internal system IP or should we buy it from Arteris for less. And we are continuing to make progress as we said on the call, with essentially closing few large companies that have been 100% internal previously, right. And so that trend kind of continues.

所以，就內部智慧財產權的投資而言，是的。所以，當像尼克這樣的人在一些大公司審查預算時，對吧，他們基本上是在說，好吧，我們應該繼續開發內部系統 IP，還是應該以更少的價格從 Arteris 購買它。正如我們在電話會議上所說，我們正在繼續取得進展，基本上關閉了幾家之前 100% 內部化的大公司，對吧。所以這種趨勢仍在持續。

So, when the economy gets difficult, we're actually kind of a beneficiary, because we save people money, both on OpEx and also on R&D cost and also on unit costs. So the economy getting a little bit squirrely is not necessarily bad for our tariffs.

因此，當經濟變得困難時，我們實際上是受益者，因為我們為人們節省了金錢，無論是營運支出、研發成本還是單位成本。因此，經濟稍微放緩並不一定對我們的關稅不利。

And then Nick, -- .

然後尼克，——。

So yeah, on the excellent cash flow question. So yeah, people, as I'm sure you know, completely overused the phrase laser focused, but we are really genuinely laser focused on cash flow. Not just free cash flow, but just cash flow, period because it pays the bills. And so, we set out to achieve that in the first quarter and made it.

是的，關於出色的現金流問題。所以，是的，我相信你知道，人們完全過度使用了「雷射聚焦」這個詞，但我們確實真正專注於現金流。不僅僅是自由現金流，而且只是現金流，因為它可以支付帳單。因此，我們著手在第一季實現這一目標，並做到了。

I'm not sure that everybody totally believed that we would make it the second quarter running, but we did, because we are just super focused on it. We are now absolutely rigidly focused on making it for the third quarter as well, which is why we're guiding slightly positive for the third quarter and then the full year.

我不確定每個人都完全相信我們會在第二季度實現這一目標，但我們做到了，因為我們非常專注於它。我們現在絕對專注於第三季的目標，這就是為什麼我們對第三季和全年的指導略顯積極。

If you do the math, which I'm sure you will, so I'll just save you the bother of having to do the math and then ask the question. If you do the math on the guidance for free cash flow, you'll see that plus a small amount in first quarter, plus a small amount in second quarter, plus a small amount in the third quarter equals plus a small amount in the full year doesn't quite work out, unless you gave negative in the fourth quarter. And without wanting to give the game away, that's not our intention. So, we are keeping very steadfastly on cash flow on a very prudent management of cash flow.

如果你做數學，我相信你會的，所以我會省去你先做數學然後問問題的麻煩。如果你對自由現金流的指導進行數學計算，你會發現加上第一季度的少量，加上第二季度的少量，加上第三季度的少量，等於加上全部的少量。 ，除非你在第四季給了負值。不想放棄遊戲，這不是我們的意圖。因此，我們非常謹慎地管理現金流，並堅定地保持現金流。

Thank you very much, Nick. Really appreciate all the color guys. And I just say, given what the last 10 days has been like, I'll use your term and say, I'm laser focused on getting to the weekend. So, well done guys. Talk to you soon.

非常感謝你，尼克。真的很欣賞所有的顏色傢伙。我只是說，考慮到過去 10 天的情況，我會用你的術語說，我全神貫注於週末的到來。所以，幹得好，夥計們。很快就和你談談。

Kevin Garrigan, WestPark Capital.

凱文·加里根，西園資本。

Hey Charlie and Nick. Good afternoon and let me echo my congrats on the solid results. So to start, some of the prospects that you haven't signed as customers, what are some of the reasons that they are waiting? I mean, you are saving them both time and money. So, I mean, is there like a product or a feature in development that they are waiting for you to bring to market? What are some of the reasons that you are getting?

嘿查理和尼克。下午好，讓我對所取得的紮實成果表示祝賀。首先，您尚未簽約的一些潛在客戶，他們等待的原因是什麼？我的意思是，您為他們節省了時間和金錢。那麼，我的意思是，他們是否有正在開發的產品或功能正在等待您將其推向市場？您得到的一些原因是什麼？

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

我的意思是，我認為我們在每個季度淘汰公司名單方面都取得了良好進展。這些大公司的人們並不是要放棄他們的系統智慧財產權，而是他們正在做出決定，不為下一代充分增強它。所以下一代或一些特定的要求都會交給 Arteris。

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

但在我們認為有某種拒絕權利的地方，有公司政治，有來自內部系統智慧財產權組織的反對。有一些公司正在採取的技術方向對我們來說成本太高而難以遵循，但我們並沒有——他們太專業了，對吧。所以原因是多種多樣的。但我認為，我們每個季度在這些大公司中的一些大公司中基本上建立灘頭陣地方面都取得了良好進展，這需要時間。

Got it. Yeah, no, that makes a ton of sense.

知道了。是的，不，這很有道理。

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

好吧，我確實認為，回到查理之前關於財務長如何在整個決策過程中發揮作用的評論。我確實認為，在當前的環境下，這是一種越來越相關的評論，也就是說，對於半玩家來說有點激進，因為他們將越來越多地不得不面對透過盈利來提高生活效率的措施的觀點，這對我們來說很有效。

Yeah, no that makes a ton of sense, especially as costs of pretty much everything are going up these days. So I can definitely see how you know that benefits you guys. Okay, perfect. And then any kind of updates on China and what you are seeing there? I mean, has the region kind of gotten any worse or any better for you guys since 90 days ago?

是的，不，這很有道理，尤其是現在幾乎所有東西的成本都在上漲。所以我絕對可以看出你是如何知道這對你們有好處的。好的，完美。那麼關於中國以及您在那裡所看到的情況有什麼最新消息嗎？我的意思是，自 90 天前以來，這個地區對你們來說是變得更糟還是更好了？

Nope, it hasn't gotten worse and it hasn't gotten better. There is a capital crunch in China, so startups have trouble getting capital. There's been a number of Chinese semiconductor companies that have gone out of business for insufficient capital. The sort of the political tension continues, but there's a robust design activity in China. And so we're seeing essentially a steady amount of business from China that is steady. That's kind of what we planned on. We didn't plan on it getting any worse, and we didn't plan on it getting any better, and that's kind of what we're getting.

不，情況沒有變得更糟，也沒有變得更好。中國存在資金緊縮，新創企業很難獲得資金。已有多家中國半導體企業因資金不足而倒閉。這種政治緊張局勢仍在繼續，但中國的設計活動卻很活躍。因此，我們看到來自中國的業務量基本上是穩定的。這就是我們的計劃。我們沒有計劃讓它變得更糟，我們也沒有計劃讓它變得更好，這就是我們所得到的。

Okay, got it. Yeah, so pretty much status quo. Okay. And then just last question, if I can. We're a little over halfway through the year. Any updates on the new products front?

好的，明白了。是的，現狀差不多如此。好的。最後一個問題，如果可以的話。今年已經過半了。新產品方面有什麼更新嗎？

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

-- 沒有更新，但我們正在取得非常好的進展。我們還沒有準備好談論它，但我們已經開始向客戶發貨。

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

目前沒有其他問題。我將把電話轉交給 Charlie Janac 先生做總結發言。請繼續。

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

嗯，謝謝大家。感謝您關注 Arteris，我們期待向您通報我們的最新進展，感謝您的支持。非常感謝。

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

女士們、先生們，今天的電話會議到此結束。非常感謝您的參與。您現在可以斷開連線。