Arteris, Inc. (ticker: AIP), a prominent player in the semiconductor IP industry, reported a steady start to 2024 with solid business results in the first quarter. Despite a slight year-over-year decline in total revenue, the company achieved positive free cash flow and secured significant licensing deals, half of which enable AI and machine learning design starts. The company's collaborations, including an expanded partnership with Arm and support for RISC-V processors, highlight its strategic initiatives to capitalize on the growing demand for sophisticated AI chips.
Key Takeaways
- Arteris posted an annual contract value plus royalties of $58.2 million for Q1 2024.
- Positive free cash flow was reported in the quarter, with expectations to maintain it throughout the year.
- Significant licensing deals were secured, with about 50% enabling AI and machine learning designs.
- The company announced strategic partnerships, including an expanded collaboration with Arm.
- Arteris provided guidance for Q2 and full-year 2024, with projected revenue and non-GAAP operating loss figures.
Company Outlook
- Arteris' long-term opportunity remains robust, with a focus on maintaining momentum and achieving positive free cash flow.
- Second-quarter guidance anticipates ACV plus royalties between $58 million and $62 million, with revenue between $13.2 million and $14.2 million.
- Full-year 2024 guidance projects ACV plus royalties to exit the year at $62 million to $68 million, with revenue between $54.5 million and $57.5 million.
Bearish Highlights
- Total revenue for Q1 2024 was down 2% year-over-year at $12.9 million.
- GAAP operating loss stood at $9.1 million, with a net loss of $9.4 million, or $0.25 diluted net loss per share.
- The non-GAAP operating loss for Q1 was $5.3 million.
Bullish Highlights
- The company achieved a non-GAAP gross margin of 91%.
- Positive free cash flow of $300,000 in Q1 exceeded expectations.
- Arteris secured significant wins with top 30 global technology companies.
Misses
- No specific misses were highlighted in the provided context.
Q&A Highlights
- CEO Karel Janac discussed the high demand for SoC consumption and the rapid pace of generative AI design cycles.
- The company's top 30 technology index is based on market capitalization, due to the lack of revenue data for system house chip revenue.
- Bookings for the quarter are expected to be well over $6 million to cover operating expenses and achieve cash flow positivity.
- A new product announcement is slated for the second half of the year, which is expected to impact revenue positively.
Arteris' first-quarter performance reflects the company's strategic focus on the burgeoning AI sector, with its product suite, including FlexNoC network-on-chip IP and Magillem SoC automation integration software, catering to the increasing complexity of AI chips. The company ended the quarter with a strong balance sheet, holding $53.4 million in cash, cash equivalents, and investments. While macroeconomic dynamics continue to influence business, Arteris' CEO remains optimistic about the company's trajectory and its role in the evolving landscape of automated driving and AI. With upcoming product innovations and a commitment to financial health, Arteris seems poised to navigate the challenges and opportunities that lie ahead.
InvestingPro Insights
Arteris, Inc. (AIP) has demonstrated resilience in a challenging economic environment, as reflected in its Q1 2024 performance. The InvestingPro data and tips provide further context to the company's financial health and market position.
InvestingPro Data:
- With a market capitalization of $315 million, Arteris is a notable entity in the semiconductor IP space.
- The company's gross profit margin stands impressively at 89.86%, indicating strong efficiency in its operations for the last twelve months as of Q1 2024.
- Arteris is trading near its 52-week high, with a price percentage of 99.64%, showcasing investor confidence in its stock performance.
InvestingPro Tips:
- Arteris' balance sheet reflects a positive sign as it holds more cash than debt, a reassuring signal for investors considering the company's financial stability.
- Despite analysts' concerns about profitability for the current year, Arteris has achieved an impressive gross profit margin, which could be a foundation for future profitability.
For investors seeking a more comprehensive analysis, additional InvestingPro Tips are available on the platform, including insights on the company's significant return over the past week and its high Price/Book multiple. For those looking to delve deeper into these metrics, use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro. With 11 additional tips listed, the service offers a thorough assessment of Arteris' financial standing and market potential.
Full transcript - Arteris (AIP) Q1 2024:
Operator: Good afternoon, everyone, and welcome to the Arteris First Quarter 2024 Earnings Call. Please note, this call is being recorded and simultaneously webcast. All material contained in the webcast is sole property and copyright of the 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.
Erica Mannion: Thank you, and good afternoon. With me today from Arteris are Charlie Janac, Chief Executive Officer; and Nick Hawkins (NASDAQ:HWKN), Chief Financial Officer. Charlie will begin with a brief review of the business results for the first quarter ended March 31, 2024. Nick will review the financial results for the first quarter followed by the company's outlook for the second quarter and full year of 2024. We will then open the call for questions. Before we begin, I'd like to remind you 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 materially differ 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 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 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. The non-GAAP measures are presented as we believe 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 December 31, 2024. In addition, for a definition of certain of the 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 March 31, 2024. Listeners who do not have a copy of the press release for the quarter ended March 31, 2024, may obtain a copy by visiting the Investor Relations section of the company's website. In addition, management will be referring to the Q1 2024 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.
Karel Janac: Thank you, Erica, and thanks to everyone for joining us on the call this afternoon. We're excited to report a solid first quarter of 2024 with annual contract value plus royalties of $58.2 million. I'd also like to highlight that we delivered a positive free cash flow quarter, where we're reaffirming our target of achieving positive free cash flow in 2024. This quarter's success was driven by continued robust licensing activity across all of our verticals, led in particular by enterprise computing and automotive deals. As with recent quarters, the rise in artificial intelligence is a driving factor for our customers, with approximately half of our first quarter license deals, enabling AI and machine learning design starts, increasingly supporting generative AI and large language model applications. We continue to expand our foothold, with large customers as 5 of our significant wins were with top 30 global technology companies. Each of these wins, with a major system and semiconductor companies, increasingly demonstrates the growing demand for commercial system IP vendors such as Arteris. We saw continued healthy design activity from our customers primarily in enterprise computing and automotive, followed by deployments for communications and industrial applications and consumer electronics. One of the enterprise computing wins in the first quarter, is one of our largest system IP deals with a top 10 semiconductor company. Specifically, it significantly expands the deployment of Arteris' network-on-chip IPs across a growing number of SoC designs. This business relationship continues our trend of securing relationships with major technology companies that can be expanded over time. As of today, approximately half of the top 30 semiconductor and technology companies are Arteris customers. As mentioned earlier, growth of AI is fueling the increasing adoption of our Arteris products, which we believe are well suited to tackle the growing design size, complexity, performance, power and cost requirements of AI chips. As an example of this trend, we announced that Rebellions, a pioneering AI semiconductor startup in Korea, has licensed FlexNoC network-on-chip IP and Magillem SoC automation integration Software, for its next generation neural processing unit aimed at generative AI. Rebellions chose Arteris per IP and our software enabling superior performance and design flexibility, for their inference chips while meeting energy efficiency requirements needed to deliver cost efficient AI hardware computing at scale. On the product front, our FlexNoc 5 network-on-chip launched in the middle of last year, continues to find solid adoption. This adoption spans across all our verticals and all of our main geographical markets from small to large customers. Building upon this momentum, we announced the release and immediate availability of the latest version of our Ncore cache coherent interconnect on chip IP. Arteris Ncore supports any processor IP, connects to Ncore supporting protocols, offering multiple protocols, flexible configurations, ISO 26262 functional safety and is utilized by Mobileye, a long-time customer who is at the forefront of the autonomous vehicle evolution. The expanded Ncore IP, also delivers on the previously announced Arm and Arteris automotive partnership. Targeting a broad range of automotive designs, from microcontrollers to autonomous driving chips. Collaboration results in pre-validation of Arteris Ncore, interconnect IP, integrating with and supporting various Armv9 based processor IPs for automotive semiconductors. The aim is to enable next generation of automotive electronics, including advanced driver assistance systems or ADAS, cockpit and infotainment systems, vision, radar, LiDAR, body and chassis control and more. By optimizing and pre-validating Arteris Ncore network-on-chip to work seamlessly with Arm's latest processor IPs, customers benefit from accelerated path to high performance, power efficient and safe automotive SoCs. Speaking of automotive collaboration, at the recent Automotive Computing Conference, Mercedes Benz (ETR:MBGn) presented a vision for standardization of automotive computing and multi-die chiplets supported by partners including Arm, Intel (NASDAQ:INTC) Foundry, Synopsys (NASDAQ:SNPS), Renesas, Arteris and others. We are excited to be partnering in pioneering a reference with Mercedes Benz for its network-on-chip, and last level cache implementations as part of the ADU platform, addressing a full range of autonomous driving applications. Another collaboration in the first quarter, included expanding our RISC-V ecosystem support, to help offer on-chip connectivity for companies deploying the Damo-XuanTie processor IP in their SoCs. This collaboration underscores Arteris capability to support processor choices made by our customers, including the support of both Arm and RISC-V processors on the same SoC. Currently, certain macroeconomic dynamics, including geopolitical uncertainties and the U.S. BIS restrictions concerning China, U.S. trade, continue to impact our business, though we are not seeing further deterioration at this time. While these dynamics do create near-term headwinds, we believe that the scale and scope of our long-term opportunity remains robust, supported by a strong product pipeline of new system IP technologies, and solid relationships 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 our Arteris system IP technologies. With that, I'll turn it over to Nick, to discuss our financial results in more detail.
Nicholas Hawkins: Thank you, Charlie and good afternoon everyone. As our review of our first quarter results today, please note I will 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. As a reminder, I will be referring to the first quarter 2024 earnings presentation, which can be found in the Investor Relations section of the company's website under the Events and Presentations tab. Turning to Slide 4 of the presentation. Total revenue for the first quarter was $12.9 million, down 2% year-over-year, but up 4% sequentially, and above the midpoint of our guidance range. If we take into account the change to ratable revenue treatment in the second quarter of 2023, the year-over-year revenue growth would have been 16%. At the end of the first quarter, annual contract value or ACV plus royalties was $58.2 million, also above the midpoint of our guidance range. Remaining performance obligations or RPO at the end of the first quarter were $74.7 million, representing a 30% year-over-year growth growing to the highest level we have ever reported, and reflecting a solid quarter in terms of new license deals. GAAP gross profit for the first quarter was $11.5 million, representing a gross margin of 89%. Non-GAP gross profit in the quarter was $11.7 million, representing a gross margin of 91%. Now moving to Slide 5. Total GAAP operating expense for the first quarter is $20.6 million, compared to $20.3 million in the fourth quarter. Non-GAAP operating expense in the quarter, was $17 million up 1% sequentially, but 4% lower than the first quarter of 2023, reflecting the team's continued focus on prudent management of our operating expenses. We'll continue to limit spending to strategically critical areas, while investing in profitable revenue growth. GAAP operating loss for the first quarter was $9.1 million compared to a loss of $8.8 million in the prior year period. Non-GAAP operating loss was $5.3 million or 41% compared to a loss of $5.6 million in the prior year period. Net loss in the quarter was $9.4 million, or diluted net loss per share of $0.25. Non-GAAP net loss in the first quarter, was $5.6 million or diluted net loss per share of $0.15, based on approximately $37.7 million weighted average diluted shares outstanding. Moving to Slide 6 and turning to the balance sheet and cash flow. We ended the quarter, with $53.4 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 in the current year. I would now like to turn to our outlook for the second quarter and full year 2024 and refer now to Slide 7. I would draw your attention to the fact that our guidance methodology has changed, to guiding operating loss and free cash flow in terms of dollars instead of percent of revenue. For the second quarter, we expect ACV plus royalties of $58 million to $62 million, revenue of $13.2 million to $14.2 million with non-GAAP operating loss of $6.5 million to $4.5 million. Non-GAAP free cash flow of negative $1.4 million to positive $1.6 million, reflecting strong sales in the first quarter. For the full year 2024, our guidance is as follows: ACV plus royalties to exit 2024 at $62 million to $68 million, up 16% year-over-year at the midpoint; revenue of $54.5 million to $57.5 million; non-GAAP operating loss of between $23.4 million to $19.4 million; non-GAAP free cash flow of negative $2.4 million to positive $2.6 million. In conclusion, we are encouraged by the strong start to 2024, in our top line and our effective cost management, which has resulted in above guidance performance in all financial metrics for the first quarter. I'm particularly encouraged by the positive free cash flow generated in the quarter. We aim to maintain this momentum for the remainder of the year. With that, I will turn the call over to the operator to open it up for questions.
Operator: [Operator Instructions] Your first question comes from the line of Matt Ramsay from TD Cowen.
Matthew Ramsay: First of all, Nick, congrats on the free cash flow. I wanted to ask just a general question around the RPO. It's almost $75 million and looks like up 30% year-over-year. And just given some of the accounting changes and different things like that, I just wanted to revisit RPO, and how deals are flowing into RPO and what that 30% growth is, that sort of a sustainable level that you guys think, can be reflective of the business going forward. And just kind of remind us, how that should sort of peanut butter its way into revenue over time, and give sort of confidence in what those free cash flow numbers are in a directional basis?
Nicholas Hawkins: Yes. Hi, Matt. Happy earnings day. As always, a great question. The way that just remind the way that RPO works, is as deals flow in, they flow into RPO as they get recognized into revenue, RPO amortizes. So generally, if deals are coming in faster than revenues being recognized, then RPO increases. We have had a sort of a special tailwind by the shift to [ ratable ] revenue treatment, because that throttled back the speed at which RPO is being recognized into GAAP revenue. Nevertheless, all that $74.7 million of RPO will flow into revenue at some point. So it gives you some sort of understanding of the strength of the future revenue pipeline, if there is such a thing. And that represents somewhere close to 1.5 year worth of run rate revenue, which is essentially in backlog if you want -- for want of a better word. So yes, we're pretty encouraged by that. As your question of can you expect that rate of increase to go on ad infinitum, the answer is logically not really. It will continue to increase, because deal flow is still very strong. But the 30% is in part, because of the shift to ratability. But don't expect it to suddenly die and stop growing. It will continue to grow and could grow quite strongly.
Matthew Ramsay: No, it's helpful Nick. Just remind me really quickly -- which quarter will you guys report where the RPO number year-over-year will be sort of an apples-to-apples?
Nicholas Hawkins: That's another very good question. So the second quarter of '23 was when we shifted completely. We did have a couple of vestigial deals in the third quarter, and a little in the fourth quarter of '23, where we hadn't quite managed to stem the non-ratable deals. But now they have gone completely. So, but to all intents and purposes, we will be apples-to-apples lapping right size numbers by -- end of this quarter essentially. So going to third quarter we will be like-for-like comparable, and there won't be this confusion anymore of well -- if it hadn't been for the shift to ratability growth would have been X. Right now, if we don't point that out, I think it will be misleading. So when we're reporting third quarter essentially, you'll see true life line.
Matthew Ramsay: Got it. My second question, Charlie we've obviously what's happening in AI across, starting in the data center, but then I think gradually getting into client side devices, automotive, the edge, networking, all the other markets over time. The AI leader in the industry seems to be speeding up its roadmap and innovation keeps moving at a quicker and quicker pace. I'm wondering if you're seeing that reflected in the interactions that, you guys are having with the customer base, in terms of the faster things move, it would seem the more likely and more value, it would be for folks to use third-party IP for some of these very complicated systems, where it's been stressing internal teams as it was. Are you seeing that speeding up of the treadmill affecting any of your business conversations especially as you roll out new products to license?
Karel Janac: Yes, I mean one of the things that we're learning as we talk to customers is that -- yes we talked about automotive being kind of slow, right, which is both an advantage and a disadvantage in certain sense. Generative AI on the other hand is just the opposite. It's extremely quickly moving, because the large language model evaluations and the algorithms are changing very, very quickly. So the silicon has to be done really, really fast in order to make sense for the customers. And then of course, the lifetime of those designs may be relatively short, compared to automotive as well. So the answer is yes, things are moving. There's a lot of different approaches. And there's a lot of innovations and -- I think we said that half the design starts that we saw in a quarter, were basically machine learning designs and people are trying to get to very, very fast design cycles, which essentially puts a premium on automation and productivity of system IP generation. So it's an opportunity for sure.
Matthew Ramsay: No, that totally makes sense. I guess my last question and I thought it was very clear in your script Charlie that there are still some headwinds in China, but things have certainly stabilized and there's not any additional things. I guess my question, is that -- do you feel like where we are right now in China for you guys, is sort of a permanent steady state, or if there were catalysts to I don't know -- unlock the roadblock there. And to have things return to a little bit more normal, what would those be, and are they even remotely on the table or likely?
Karel Janac: Yes, I mean obviously as a management team we consider a number of scenarios, right? There's the scenario where there's some unpleasantness around Taiwan, which will make things worse. But there's also a scenario that U.S. and China will come to some kind of an accommodation, where things could get better. On those sort of scenarios, the one that we're banking on is that things stay the same. That basically the business is going to continue at the current level. We're going to keep getting new customers in China, new design wins, but that it's not going to go to the, I would say the previous bonanza, before the headwinds sort of started between China and the U.S. So we're planning for things to stay the same. We're planning for status quo in terms of our Chinese business.
Operator: Your next question comes from the line of Hans Mosesmann from Rosenblatt.
Hans Mosesmann: Can you give us a sense on ASP trends over the past quarter, licensing, royalties, how's that trend or how's it looking as the year progresses?
Karel Janac: So the ASPs have been growing nicely. We're pretty much on track -- with the ASP trends that we discussed on the IPO couple of years ago, whereas we get more products into the market, with higher ASPs and as the chips get more complex and use more system IP, the ASP is growing very nicely. And I think our financials show that. So that trend continues. And what we said is that we're going to be at $1 million average by 2026 ASP and I think that can very easily happen.
Hans Mosesmann: And right now they're around half of that?
Karel Janac: Yes, so right now I would say it's a little bit, I think last year we were somewhere around $460,000. Now we're probably over $500,000, probably 550,000, something like this. But the reason that we know we're on track, is that a number of the deals are over $1 million. And so, it's definitely not, it's actually probable that eventually the average deal will be over $1 million. So the ASPs are growing well.
Nicholas Hawkins: This is Nick. Nice to catch up again. One other piece of color in addition to Charlie's commentary there is when you look at royalties, we've had this conversation before, royalties, the ASP in royalties, is also in the ascendancy. As we have transitioned away from several years ago into being dominated by the mobility market, the cell phone, smartphone market with very small royalty rates. Now to more -- dominated by automotive, which has probably 3x the royalty rate of smartphones and similar devices. So and some are much higher than that as Charlie likes to point out, the space type application has substantially higher ASP. So that's another drag factor to the upside.
Hans Mosesmann: Okay. That's helpful. And just a question back in the IPO, you guys, and since then, I guess, you've been saying that in automotive platforms, you could see as many SoCs per car north of 20, or maybe between 20 and 25 from what it was a few years ago, maybe 3 or 4. Is that still seen to happen over the next several years?
Nicholas Hawkins: Yes, absolutely. And I think we're pretty much on track to where that was originally conceived in terms of the timeline.
Karel Janac: And it can be more. I mean, we had a discussion with a customer, and they were telling us that they need 46 cameras for level 4 driving, right? So that would imply SoC consumption way in advance of basically having 4 camera SoCs, right? So, yes, we feel pretty comfortable with that projection.
Hans Mosesmann: Okay. Then the last question, and I'll go back in the queue. The time from licensing to tape out, or from time to license to production for your customer engagements, has that changed over the past couple of years?
Karel Janac: So, it has. I mean, in a particular vertical, it has not, right? So, the automotive design still takes 2.5, 3 years. What has changed is that as people do more generative AI designs, and those designs, the large language models and the algorithmic of technologies that are being employed, have impact on the underlying silicon. And so that segment is moving very, very fast, much faster than any other segment that we've seen. People are looking for 9 months design cycles or less, and product life cycles probably of 1 or 2 years only. And so, that segment is moving very, very fast, and that would, on the average, lower the design term. But within each individual segment, we're not seeing much change because we enable people to go faster, but the chips are more complex, right? So there's a constant fight between automation and productivity and complexity within each segment.
Operator: [Operator Instructions] Your next question comes from the line of Kevin Garrigan from WestPark Capital.
Kevin Garrigan: Let me echo my, congrats on the progress. Going off of Hans' question regarding kind of SoCs and cars, I know you gave an example of a customer looking for multiple vision cameras. You're seeing a lot more automotive OEMs kind of introduce, I would say, infotainment features right now, while ADAS may be taking a little bit longer than kind of expected. So is there kind of one category that you're seeing more designs for currently than others, like maybe infotainment or the design starts kind of focusing on all functions across the board?
Karel Janac: So we're seeing, I mean, the automotive progress continues, right? So we're seeing some more Tier 1s starting to build chips. We're starting to see some more OEMs build chips, right? In terms of categories, there's a lot of noise and publicity about automated driving, but we don't see the design activity really changing a whole lot, right? Because those electronic decisions are made 7 to 8 years before deployment. So on the design side, we're not seeing any slowdown in the automotive driving direction. It's just that people are realizing, and we've been saying, I've been feeling this all along, is that the automated driving in a city environment is going to be exceedingly difficult without changing the cities, and therefore will take a lot longer. But on highways and secondary -- highways, primary highways and secondary highways, automated driving is highly useful and very practical and very valuable. And that will continue.
Kevin Garrigan: Okay. Perfect. I appreciate that color. And just as a follow-up, so you noted that there are several more evaluations and prospective customers in the pipeline for FlexNoC 5. Do you expect many of these customers to kind of decide sooner rather than later whether to use Arteris, or is it more kind of maybe an end-of-year phenomenon?
Nicholas Hawkins: No, I mean, FlexNoC 5 has been doing very well, right? So the penetration is meeting expectations. The second-generation physical awareness provides very valuable capability to customers below 60 nanometer. And so FlexNoC 5 has a 30% pricing uptick, and so that's a combination of value and ASP increase that really helps the business. And what we're looking forward to is sometime this year, to announce some further innovation that will further provide additional value.
Operator: Your next question comes from the line of Gus Richard from Northland.
Auguste Richard: And congratulations on entering the Promised Land, a positive free cash flow.
Karel Janac: Yes, we promised it, and we're doing our absolute best to make it happen.
Auguste Richard: You delivered. In the press release, you mentioned 5 deals with 30 of the top global technology companies, and I was just wondering if you could explain exactly what you mean by top 30 global tech companies. Is it semis? Is it hyperscalers? Is it by market cap? Is it by revenue? Just a little bit more color on that statement.
Karel Janac: Yes. So in order to have a sort of a unified methodology, we're going by market cap. And so, it's basically top 20 semiconductor companies by market cap, and then Top 10 system houses by market cap. And together, they make up what we call the top 30. It's the Arteris top 30 technology index.
Auguste Richard: Got it. And then which buckets were those 5 companies in? The semi companies or the system houses?
Karel Janac: Both sides. The reason we want to do revenue, we go by revenue, is because the revenue from the public semiconductor companies is available, but you don't know what the system house chip revenue really is, right? So that's why -- you just made market cap made sense from a sort of unified methodology perspective.
Auguste Richard: Got it. And then just looking at the numbers and sort of realizing how your cash works, is it reasonable to assume that the bookings in the quarter are on the order of $6 million?
Nicholas Hawkins: So ask that question again, Gus. I didn't get the tail end of it?
Auguste Richard: Sure. Just looking at sort of your accounting and making some back of the envelope calculations, is it reasonable to assume that bookings were on the order of $6 million in the quarter?
Nicholas Hawkins: No. Hopefully a lot more than that.
Karel Janac: Yes. A lot more than that.
Nicholas Hawkins: Because that means our OpEx runs at sort of high 70s. Sorry, not high 70s -- 17s in the quarter. So yes. But basically, TCV of bookings, total contract value, has to run in terms of collections in excess of that to be cash flow positive in the quarter. And then you've got plus or minus working capital shifts at the end of the quarter and the beginning of the quarter, which can sometimes mess things up a little bit. But that's the basic deal. So bookings, which is what we would call TCV, plus and royalties we would throw into that bucket, so it's everything together, have to be north of the OpEx number. The non-GAAP OpEx and it has to be the non-GAAP OpEx, because obviously the SBC is not a cash expense, if that makes sense.
Karel Janac: Does that make sense, Gus?
Auguste Richard: Yes, absolutely. Yes, that does indeed. And then typically you guys announce a new product every year, and I'm just wondering, are there any thoughts on sort of when and what, new product might be this year?
Karel Janac: Not ready to announce, but what we said is that we expect there to be impact on revenue in the second half. And that's not changed from the fourth quarter to this quarter. We've been working very hard. We've been making progress, and we still feel that we're going to make a good understatement.
Auguste Richard: Got it.
Karel Janac: And we're very excited about it.
Operator: There are no further questions at this time. I will now turn the call over to Charlie Janac for closing comments.
Karel Janac: Thank you, everyone, for the good questions and being on the call. And we look forward to seeing most of you at the upcoming conferences that we're participating in. And we look forward to updating you on the progress of the company. Thank you very much.
Operator: That concludes our question-and-answer session. Have a great call, and you may now disconnect.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.