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Record performance was driven by the rapid integration of AI into electronics, with two-thirds of current customer engagements now focused on AI chips.

The enterprise computing sector, including data centers and high-bandwidth memory, has become the company's largest licensing vertical, surpassing automotive.

Royalty revenue grew 67% year-over-year, fueled by a diversifying base of high-volume customers in automotive, consumer, and enterprise computing.

Management attributes increased adoption to the rising complexity of chiplets and multi-die systems, which require advanced network-on-chip technology for efficient data movement.

The acquisition of Semifore has strategically positioned the company to address critical cybersecurity vulnerabilities during the chip development phase.

Operational leverage is being achieved by limiting operating expense growth to 50% of revenue growth, specifically through disciplined G&A spending.

Management expects to reach the strategic milestone of non-GAAP operating profitability as early as the fourth quarter of 2026.

Guidance for 2026 was raised across all top and bottom-line metrics based on a strong start to Q2 and an upward trend cycle in the semiconductor market.

The company plans to deploy two new products for optimized chiplet and multi-die system IP into production during 2026, targeting AI and ADAS designs.

Future royalty growth is expected to benefit from shorter design cycles in the data center and AI infrastructure segments compared to traditional automotive timelines.

The company will no longer provide quarterly free cash flow guidance due to fluctuations caused by increasing average deal sizes, focusing instead on annual targets.

CFO Nick Hawkins announced his retirement effective August 31, 2026, following a seven-year tenure that included the company's IPO and three acquisitions.

The first quarter results included $3 million in deal consideration and fees related to the closing of the Semifore acquisition.

Cost of revenue now includes subcontractor costs for the first time, specifically related to certain security government contracts.

Management highlighted that while data center chips command higher prices, they typically have shorter lifecycles and lower volumes than automotive products.

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Management noted that data center design cycles are typically 2 to 3 years, significantly faster than the 6-year cycles often seen in automotive.

While these products have faster churn and shorter lifecycles, they are increasingly high-priced and high-volume compared to previous generations.

The raise is supported by a 100% year-over-year increase in Q1 royalties and the strongest April on record for deal flow.

April's deal flow was approximately 4x larger than any previous April, indicating a very robust pipeline for the remainder of the year.

Early results include closing existing government orders and seeing promising commercial deals for the second quarter.

Management believes the cybersecurity product has cross-selling potential across their entire base of over 200 semiconductor design customers.