Now in terms of it being a new normal, I would say no, because all license deals or at least certainly the large ATAs, they have a very high conversion into royalties. So they typically, especially with the larger, more kind of mature companies, they typically are pretty good about turning those into design wins and then turning those into royalties. And because these deals are all in v9, they’re higher royalty rates than the older counterparts. So I would expect what we talked about back at IPO, when we would get in the next couple of years, get to royalties at 75-plus percent of our total revenue, that’s very much still the expectation. I would say we’re just starting to see as we get deeper into the v9 penetration life cycle and then also as we see the Compute Subsystems start to come online again at even higher royalty rates at the end of this year, that gives us a great setup for, I would say, a higher — much higher mix of royalties as we go into next year.
Gary Mobley: Thank you both.
Jason Child: Thank you.
Operator: And one moment for our next question. Our next question will come from Lee Simpson of Morgan Stanley. Lee, your line is open.
Lee Simpson: Great. Thanks for fitting me on here. I just want to take us back to the v9 profiles that you stood out for automotive, the automotive enhanced profiles, and that includes licensing from Texas, NXP, NVIDIA, et cetera. Just trying to understand how much of that licensing would have been recognized in Q4’s number? How much would have gone into RPO? And maybe just related to that, I don’t know if I heard correctly but you mentioned multiple customers are working on the CSS release for this in 2025? Thanks.
Rene Haas: Yes, So I’ll let Jason go into detail relative to the contribution of the automotive v9 AI technology from a licensing standpoint. On the CSS engagement, we have multiple partners who are engaged in that. The way to think about the automotive industry is that it is an extremely complex market that needs some degree of customization but also want some level of standardization. And each of the automotive OEMS would love to have a solution that supports a full software stack, that would have a number of different contributions relative to differentiation but also something that could be standardized. So to that level, we’ve had incredible engagement with lots of different OEMS across this level. And we’re very, very confident that the kind of demand that we’ve seen for CSSs in our other businesses will be there in automotive.
It just makes all kinds of sense when you think about the complexity of these devices, the cost involved but yet the need for supply chain resiliency. So I’ll let Jason address the question relative to the licensing revenue and how that all ties together.
Jason Child: Yes. So the licensing revenue for, in this case, for automotive is a little unique. Typically, we get around 50% of the booking — at the time of booking will be booked as revenue. In this case, since v9, it’s not quite delivered for auto, it’s coming very, very soon, that is actually delayed so it all is going into backlog. It will be released as soon as it’s launched, and we’ll announce when that happens.
Lee Simpson: Great. Thanks for clarifying.
Jason Child: Thank you.
Operator: One moment for our next question. Our next question will be coming from Timm Schulze-Melander of Redburn Atlantic. Your line is open.
Timm Schulze-Melander: Yes, hi. Thanks for taking my question. So I just wanted to dig back into the royalty outlook for next quarter, and just trying to maybe disaggregate a little bit the volume and the pricing impact. I think you talked about the mix increasing by about 5 percentage points a quarter, which, over the course of 2025 should give us a pretty decent tailwind. But I think you guided the royalties are going to grow somewhere in the sort of 25% range. Can you maybe just give us a little bit of color about how that breaks down between volume, price, and mix? Thank you.
Jason Child: Okay. So last quarter, if I look at all of our partners, their growth on average, and we don’t have all their details on mix, but their growth on average was around 2-ish percent. And obviously, we grew at 37%. So that differential is very much the mix of either more premium chips, higher royalties as well as the higher royalties related to v9. So in the — I would say, going into the next quarter, we’re expecting that our overall peer group that we get paid royalties on is probably in that 5-ish percent range. And then we’re now expecting that our royalties, as we said, will be somewhere in the 20% range. Obviously, mix, the v9 portion we have a decent handle on, but the mix across the different aspects of the market of premium is just very hard to know ahead of time.
So that’s — those are the key components. I would say, going forward, we do expect to see effectively unit growth because, again, I’m assuming that the mix across most of these other — that we don’t get all the detail, but I’m assuming that most of it is going to be pretty consistent. I would assume that we’re going to continue to have our royalty growth mostly because of the v9 and mix impacts continue to run pretty significantly ahead of the overall market unit growth.
Timm Schulze-Melander: Got it. Very helpful. Thank you.
Jason Child: Thank you.
Operator: And one moment for our next question. Our next question will be coming from Harlan Sur of JPMorgan. Harlan, your line is open.
Harlan Sur: Good afternoon. Thanks for taking my question. Your backlog was up 45% year-over-year, strong Q4 ACV, so very, very strong end to the year. Obviously, a combination of some large renewals, but more importantly, customers. It seems like across all of your end markets, right, adopting the higher value-added compute and Compute Subsystems IP as they sort of look towards their future chip design programs. As you look at your renewal pipeline, discussion with customers and their program timing, looks like you are going to drive strong licensing growth again this year, but does the pipeline suggest that the team can grow total backlog this fiscal year?
