Ethan Potasnick's questions to Arteris Inc (AIP) leadership • Q4 2024
Question
Ethan Potasnick of TD Cowen requested more detail on the licensing and royalty results amid the current macro environment, particularly in the automotive sector. He also asked about the company's profitability trajectory and progress toward its free cash flow positive target for 2025.
Answer
Executive Nick Hawkins clarified that while total royalties were slightly down due to one-time audit benefits in the prior year, variable royalties grew 20% year-over-year, or over 30% when excluding the impact of Mobileye's inventory correction. He affirmed confidence in achieving positive free cash flow for the full year 2025, driven by high-teens to low-20s revenue growth while constraining OpEx growth to about half that rate. He also noted that cash flow is typically weighted to the second half of the year.