The Spaniard decided to swap wingers Bukayo Saka and Pepe for the clash at St. Mary's, with both players ending up on the scoresheet in the 3-1 victory.
And Arteta believes Pepe is starting to look 'more settled and convincing' for the Gunners.
Questioned on his Pepe decision, Arteta said: "It was a little bit of the game plan, of how [Southampton] play and how we could expose them a little bit more.
“Nico's played on the right but played on the left today and I think he was really good. He looks much more settled and convincing. He looked more confident so overall I'm delighted.
"It was a really strong performance against a really good side. We started the game really strong, creating a big chance for Laca one against one with the keeper. He missed it and that was a big disappointment. Then at the other end of the pitch we conceded from a set-piece, but the team reacted the way we are."