[Part I. Financial Information](index=4&type=section&id=Part%20I.%20Financial%20Information) [Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) The unaudited statements show Q2 2025 revenue of $16.5 million, a net loss of $9.1 million, and a stockholders' deficit of $7.5 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | **Total Current Assets** | $61,543 | $69,083 | | **Total Assets** | $106,880 | $106,135 | | **Total Current Liabilities** | $62,559 | $59,282 | | **Total Liabilities** | $114,409 | $107,323 | | **Total Stockholders' Deficit** | $(7,529) | $(1,188) | Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | $16,502 | $14,575 | $33,034 | $27,522 | | **Gross Profit** | $14,760 | $13,117 | $29,766 | $24,596 | | **Loss from Operations** | $(8,248) | $(7,441) | $(15,956) | $(16,575) | | **Net Loss** | $(9,130) | $(8,344) | $(17,251) | $(17,747) | | **Net Loss Per Share** | $(0.22) | $(0.22) | $(0.42) | $(0.47) | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $375 | $788 | | **Net cash provided by investing activities** | $584 | $7,545 | | **Net cash provided by financing activities** | $1,456 | $99 | | **Net increase in cash, cash equivalents and restricted cash** | $2,415 | $8,432 | [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=23&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes revenue growth from new licenses, key performance indicators, and a 13% YoY revenue increase alongside rising operating expenses [Overview](index=23&type=section&id=Overview) - Arteris is a leading provider of System-on-Chip (SoC) System IP, with growth driven by increasing SoC complexity, chiplet disaggregation, and AI/ML applications[89](index=89&type=chunk) - The company's SoC Integration Automation software complements its interconnect IP by automating the integration and assembly of IP blocks into an SoC[90](index=90&type=chunk) [Key Performance Indicators](index=26&type=section&id=Key%20Performance%20Indicators) Key Performance Indicators Comparison | Metric | As of June 30, 2025 | As of June 30, 2024 | | :--- | :--- | :--- | | Annual Contract Value (ACV) | $63.9 million | $56.1 million | | ACV plus royalties (TTM) | $69.1 million | $60.1 million | | Remaining Performance Obligations (RPO) | $99.3 million | $77.5 million | - Confirmed Design Starts, a metric for customer activity, totaled **25 in Q2 2025**, compared to 21 in Q2 2024, indicating growth in new semiconductor designs[104](index=104&type=chunk) [Results of Operations](index=29&type=section&id=Results%20of%20Operations) Revenue Breakdown - Q2 Comparison (in thousands) | Revenue Source | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Licensing, support and maintenance | $15,088 | $13,553 | $1,535 | 11% | | Variable royalties | $1,402 | $971 | $431 | 44% | | **Total Revenue** | **$16,502** | **$14,575** | **$1,927** | **13%** | Revenue Breakdown - Six Months Comparison (in thousands) | Revenue Source | H1 2025 | H1 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Licensing, support and maintenance | $30,423 | $25,292 | $5,131 | 20% | | Variable royalties | $2,569 | $1,789 | $780 | 44% | | **Total Revenue** | **$33,034** | **$27,522** | **$5,512** | **20%** | - Operating expenses for Q2 2025 **increased by 12% YoY to $23.0 million**, primarily due to higher employee-related costs from increased headcount in R&D (up $1.5 million) and S&M (up $1.3 million)[129](index=129&type=chunk)[130](index=130&type=chunk)[131](index=131&type=chunk) [Liquidity and Capital Resources](index=35&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2025, the company had **$38.0 million in cash, cash equivalents, and short-term investments**, which management believes is sufficient for at least the next 12 months[150](index=150&type=chunk)[151](index=151&type=chunk) Cash Flow Summary - Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $375 | $788 | | Net cash provided by investing activities | $584 | $7,545 | | Net cash provided by financing activities | $1,456 | $99 | - Net cash from operating activities **decreased to $0.4 million in H1 2025** from $0.8 million in H1 2024, driven by a net loss of $17.3 million offset by non-cash charges and changes in operating assets[154](index=154&type=chunk)[155](index=155&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=37&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exempt from providing market risk disclosures as a smaller reporting company - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[165](index=165&type=chunk) [Controls and Procedures](index=37&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded disclosure controls were effective as of June 30, 2025, with no material changes to internal controls during the quarter - Based on an evaluation as of the end of the reporting period, the CEO and CFO concluded that the company's disclosure controls and procedures were **effective at the reasonable assurance level**[166](index=166&type=chunk) - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[167](index=167&type=chunk) [Part II. Other Information](index=39&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=39&type=section&id=Item%201.%20Legal%20Proceedings) A patent infringement complaint was dismissed without prejudice, though the court retains jurisdiction for discovery purposes - Regarding the complaint from Network System Technologies, LLC (NST), the court **dismissed all claims against the company without prejudice** on September 4, 2024, retaining jurisdiction solely for enforcing discovery[63](index=63&type=chunk)[170](index=170&type=chunk) [Risk Factors](index=39&type=section&id=Item%201A.%20Risk%20Factors) Key risks include intense competition, a history of net losses, semiconductor industry cyclicality, and geopolitical tensions affecting key markets - **Business & Competition:** The company faces significant competition from larger companies (e.g., Arm, Cadence) and customers' internal development, and is exposed to the cyclical semiconductor industry[173](index=173&type=chunk)[175](index=175&type=chunk)[221](index=221&type=chunk) - **Financial Performance:** The company has a history of net losses, with an **accumulated deficit of $154.1 million** as of June 30, 2025, and may not achieve or maintain future profitability[179](index=179&type=chunk) - **Geopolitical & Regulatory:** A significant portion of revenue (**25.0% for H1 2025**) comes from China, creating exposure to risks from U.S. export controls and trade tensions[210](index=210&type=chunk)[294](index=294&type=chunk)[298](index=298&type=chunk) - **Intellectual Property & Cybersecurity:** The business depends on protecting its proprietary technology and faces risks of infringement claims and potential cybersecurity attacks[256](index=256&type=chunk)[260](index=260&type=chunk)[268](index=268&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=75&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company reports no unregistered equity sales and no material change in the planned use of its IPO proceeds - The company completed its IPO on October 29, 2021, receiving **net proceeds of approximately $71.1 million**, with no material change in the planned use of these funds[346](index=346&type=chunk)[348](index=348&type=chunk) [Other Information](index=76&type=section&id=Item%205.%20Other%20Information) Several company insiders adopted or modified Rule 10b5-1 trading plans during the quarter - In June 2025, several insiders established or modified Rule 10b5-1 trading plans, including the General Counsel, CFO, and a Director, for the potential sale of company shares[351](index=351&type=chunk)[352](index=352&type=chunk)[353](index=353&type=chunk)[354](index=354&type=chunk)

Financial Performance - Q2 2025 - Revenue reached $16.5 million, a 13% year-over-year increase[11] - ACV (Annual Contract Value) plus Royalties hit $69.1 million, up 15% year-over-year[9, 11] - Remaining Performance Obligation (RPO) reached $99.3 million, a 28% year-over-year increase[9, 11] - Non-GAAP Gross Profit was $15.0 million, with a 91% margin[11] - Non-GAAP Operating Expenses were $18.6 million, a 10% year-over-year increase[12] - Non-GAAP Operating Loss was $3.5 million, flat year-over-year[12] - Free Cash Flow was negative $2.8 million[13] - Cash, Cash Equivalents & Investments remained at $53.9 million[13] Guidance - Q3 2025 ACV plus Royalties guidance is $69.5 million to $72.5 million[15] - Q3 2025 Revenue guidance is $16.8 million to $17.2 million[15] - FY 2025 ACV plus Royalties guidance is $72 million to $78 million[15] - FY 2025 Revenue guidance is $66 million to $70 million[15]

[Second Quarter 2025 Performance Overview](index=1&type=section&id=Second_Quarter_2025_Performance_Overview) Arteris reported strong Q2 2025 performance, with ACV plus royalties, RPO, and revenue growth, driven by strategic AI chiplet licenses - The company achieved record Annual Contract Value (ACV) plus royalties of **$69.1 million** and Remaining Performance Obligations (RPO) of **$99.3 million**, representing a **28%** year-over-year increase in RPO[2](index=2&type=chunk) Q2 2025 Financial Highlights | Metric | Q2 2025 (USD) | Change (YoY) | | :--- | :--- | :--- | | Revenue | $16.5 million | +13% | | ACV + Royalties | $69.1 million | +15% | | RPO | $99.3 million | +28% | | Operating Loss | $8.2 million | Increased from $7.4M | | Non-GAAP Operating Loss | $3.5 million | Flat | | Net Loss per Share | $0.22 | Flat | | Non-GAAP Net Loss per Share | $0.11 | N/A | - Key business achievements in Q2 2025 include: - AMD licensed FlexGen smart network-on-chip IP for its AI-powering chiplets - Secured a key AI win with Whalechip, licensing FlexNoC 5 for high-performance AI computing - Expanded multi-die solutions to support UCIe, Arm AMBA, and RISC-V ecosystems - Announced Magillem Packaging, a new software for automating IP packaging and accelerating chiplet assembly[6](index=6&type=chunk) [Financial Guidance for Q3 and Full Year 2025](index=2&type=section&id=Financial_Guidance_for_Q3_and_Full_Year_2025) Arteris provided Q3 and updated FY2025 financial guidance, forecasting growth in key metrics, Non-GAAP operating loss, and positive free cash flow Estimated Q3 and Updated FY 2025 Guidance | Metric (in millions USD) | Q3 2025 Estimate (millions USD) | FY 2025 Updated Guidance (millions USD) | | :--- | :--- | :--- | | ACV + royalties | $69.5 - $72.5 | $72.0 - $78.0 | | Revenue | $16.8 - $17.2 | $66.0 - $70.0 | | Non-GAAP operating loss | $3.0 - $4.0 | $10.5 - $15.5 | | Free cash flow | $0.5 - $3.5 | $1.0 - $7.0 | [Consolidated Financial Statements (Unaudited)](index=5&type=section&id=Consolidated_Financial_Statements_%28Unaudited%29) The unaudited consolidated financial statements for Q2 2025 detail the company's revenue, net loss, balance sheet changes, and cash flow performance [Condensed Consolidated Statements of Operations](index=5&type=section&id=Condensed_Consolidated_Statements_of_Operations) Q2 2025 statements show increased revenue but a wider loss from operations and net loss due to higher operating expenses in R&D and sales Statement of Operations Highlights (Three Months Ended June 30) | (In thousands USD) | 2025 (thousands USD) | 2024 (thousands USD) | | :--- | :--- | :--- | | Total revenue | $16,502 | $14,575 | | Gross profit | $14,760 | $13,117 | | Total operating expenses | $23,008 | $20,558 | | Loss from operations | $(8,248) | $(7,441) | | Net loss | $(9,130) | $(8,344) | | Net loss per share | $(0.22) | $(0.22) | [Condensed Consolidated Balance Sheets](index=6&type=section&id=Condensed_Consolidated_Balance_Sheets) As of June 30, 2025, total assets increased, liabilities grew from deferred revenue, and the stockholders' deficit expanded Balance Sheet Highlights (As of June 30, 2025) | (In thousands USD) | June 30, 2025 (thousands USD) | Dec 31, 2024 (thousands USD) | | :--- | :--- | :--- | | Cash and cash equivalents | $16,100 | $13,684 | | Total current assets | $61,543 | $69,083 | | TOTAL ASSETS | $106,880 | $106,135 | | Deferred revenue (current + noncurrent) | $81,947 | $75,622 | | Total liabilities | $114,409 | $107,323 | | Total stockholders' deficit | $(7,529) | $(1,188) | | TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT | $106,880 | $106,135 | [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed_Consolidated_Statements_of_Cash_Flows) For the six months ended June 30, 2025, net cash from operating activities decreased, with investing and financing activities contributing to the ending cash balance Cash Flow Highlights (Six Months Ended June 30) | (In thousands USD) | 2025 (thousands USD) | 2024 (thousands USD) | | :--- | :--- | :--- | | Net cash provided by operating activities | $375 | $788 | | Net cash provided by investing activities | $584 | $7,545 | | Net cash provided by financing activities | $1,456 | $99 | | Net increase in cash | $2,415 | $8,432 | | Cash, cash equivalents and restricted cash, end of period | $16,487 | $22,516 | [Non-GAAP Financial Measures and Other Metrics](index=8&type=section&id=Non-GAAP_Financial_Measures_and_Other_Metrics) This section defines non-GAAP financial measures and key business metrics, providing reconciliations and explanations for performance evaluation [Reconciliation of GAAP to Non-GAAP Measures](index=10&type=section&id=Reconciliation_of_GAAP_to_Non-GAAP_Measures) Q2 2025 GAAP to non-GAAP reconciliations detail adjustments to operating loss for stock-based compensation and amortization, resulting in a flat Non-GAAP operating loss GAAP to Non-GAAP Reconciliation (Three Months Ended June 30, 2025) | (In thousands USD) | GAAP (thousands USD) | Adjustments (thousands USD) | Non-GAAP (thousands USD) | | :--- | :--- | :--- | :--- | | Gross profit | $14,760 | $282 | $15,042 | | Loss from operations | $(8,248) | $4,714 | $(3,534) | | Net loss | $(9,130) | $4,714 | $(4,416) | [Free Cash Flow Reconciliation](index=12&type=section&id=Free_Cash_Flow_Reconciliation) Q2 2025 free cash flow, calculated as net cash from operating activities minus capital expenditures, showed an outflow, a decrease from positive free cash flow in the prior year Free Cash Flow (Three Months Ended June 30) | (In thousands USD) | 2025 (thousands USD) | 2024 (thousands USD) | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | $(2,485) | $311 | | Purchase of property and equipment | $(355) | $(47) | | Free cash flow | $(2,840) | $264 | [Definitions of Key Business Metrics](index=9&type=section&id=Definitions_of_Key_Business_Metrics) This section defines key business metrics used by Arteris for performance tracking, including ACV, Confirmed Design Starts, and RPO - **Annual Contract Value (ACV):** The total fixed fees under a customer agreement divided by the term in years. ACV plus royalties includes trailing-twelve-months variable royalties[26](index=26&type=chunk) - **Confirmed Design Starts:** Occurs when customers confirm and notify Arteris of the commencement of new semiconductor designs using its interconnect IP, indicating customer activity and future royalty potential[27](index=27&type=chunk) - **Remaining Performance Obligations (RPO):** The amount of contracted future revenue that has not yet been recognized, including both deferred revenue and other unbilled contracted amounts[28](index=28&type=chunk)

Core Insights - Arteris, Inc. reported record Annual Contract Value (ACV) plus royalties of $69.1 million for Q2 2025, marking a 15% year-over-year increase, and a Remaining Performance Obligation (RPO) of $99.3 million, up 28% year-over-year [2][7] - The company anticipates Q3 2025 ACV plus royalties in the range of $69.5 million to $72.5 million and full-year 2025 revenue guidance of $66.0 million to $70.0 million [6] Financial Highlights - Revenue for Q2 2025 was $16.5 million, reflecting a 13% increase year-over-year [7] - Non-GAAP operating loss for Q2 2025 was $3.5 million, unchanged from Q2 2024 [7] - Net loss for Q2 2025 was $9.1 million, or $0.22 per share, compared to a net loss of $8.3 million in Q2 2024 [7][18] Business Highlights - The company secured a licensing agreement with AMD for its FlexGen smart network-on-chip IP, aimed at enhancing data transport for AI chiplets [7] - Arteris announced a significant customer win with Whalechip, which is licensing FlexNoC 5 for high-performance AI computing [7] - The company expanded its multi-die solution to support Universal Chiplet Interconnect Express (UCIe) and collaborated with major partners for chiplet interface support [7] Guidance - Estimated Q3 2025 revenue is projected between $16.8 million and $17.2 million, with a full-year revenue forecast of $66.0 million to $70.0 million [6] - Non-GAAP operating loss for Q3 2025 is expected to be between $3.0 million and $4.0 million, with a full-year estimate of $10.5 million to $15.5 million [6] Cash Flow and Liquidity - Free cash flow for Q2 2025 was negative at $2.8 million, compared to positive free cash flow of $0.3 million in Q2 2024 [34] - The company ended Q2 2025 with cash and cash equivalents of $16.1 million, an increase from $13.7 million at the end of Q4 2024 [20]

Market Overview - US stock indices opened mixed on August 5, later experiencing a collective drop, with all major indices turning negative by the time of reporting [1] - The Dow Jones Industrial Average closed at 44,004.55, down 169.09 points (-0.38%); the Nasdaq Composite at 20,995.61, down 57.97 points (-0.28%); and the S&P 500 at 6,307.92, down 22.02 points (-0.35%) [2] Chinese Stocks Performance - The Nasdaq China Golden Dragon Index saw a slight increase, with notable gains from several companies: Ascentage Pharma rose nearly 10%, Sohu increased over 6%, and Zhihu and Zai Ding Pharma both rose over 3% [3][4] Corporate Earnings and Stock Movements - Pfizer's stock rose over 5% after reporting Q2 revenue of $14.65 billion, a 10% year-over-year increase, driven by core drug sales growth [6][8] - Palantir Technologies experienced a significant increase of nearly 10%, with a market capitalization exceeding $400 billion, reporting Q2 revenue of $1.004 billion, a 48% year-over-year growth [9][10] - Arteris saw a surge of over 40% in its stock price, attributed to AMD's adoption of its new FlexGen interconnect technology for AI chip design [11][12]

Core Insights - Arteris, Inc. has announced a licensing agreement with AMD for its FlexGen network-on-chip (NoC) interconnect IP, aimed at enhancing the performance of AMD's next-generation AI chiplet designs [1][3] - The collaboration emphasizes the growing complexity of modern system-on-chip (SoC) and chiplet architectures, which require multiple specialized interconnects to meet the demands of contemporary electronic systems [2] Company Overview - Arteris is recognized as a leader in semiconductor system IP, focusing on accelerating the creation of high-performance, power-efficient silicon [5] - The FlexGen NoC IP technology is designed to optimize wire length, reduce latency, and improve power efficiency, addressing the needs of complex multi-die and chiplet-based designs [3][4] Strategic Collaboration - The integration of Arteris' FlexGen NoC IP with AMD's Infinity Fabric™ interconnect is expected to enhance performance and scalability for diverse applications, from data centers to edge devices [2][3] - This partnership aims to automate interconnect configuration and enable seamless connectivity among SoC components, strengthening AMD's AI compute portfolio [3] Technological Innovation - FlexGen leverages AI automation to improve design productivity and streamline iteration cycles, positioning companies to tackle the complexities of modern computing systems [4] - The technology can function as an independent interconnect solution or in conjunction with proprietary interconnect technologies, facilitating faster design iterations and market readiness [3]

Company Overview - Arteris, Inc. (AIP) shares increased by 12.2% to $10.6 in the last trading session, with a notable trading volume, contrasting with a 0.8% loss over the past four weeks [1] - The company is experiencing growth due to rising demand for commercial semiconductor system IP products, driven by the complexity of chiplet and SoC designs, the proliferation of AI applications, and outsourcing trends [1] Financial Expectations - Arteris is projected to report a quarterly loss of $0.11 per share, unchanged from the same quarter last year, with expected revenues of $16.4 million, reflecting a 12.6% increase year-over-year [2] - The consensus EPS estimate for Arteris has remained stable over the last 30 days, indicating that stock price movements may not sustain without trends in earnings estimate revisions [3] Industry Context - Arteris operates within the Zacks Internet - Software industry, where another company, Paylocity (PCTY), saw a 2.2% increase in its stock price, closing at $190.36, with a 2.8% return over the past month [3] - Paylocity's consensus EPS estimate has increased by 1.8% to $1.38, although this represents a 6.8% decrease compared to the previous year, and it currently holds a Zacks Rank of 4 (Sell) [4]

Core Viewpoint - Arteris, Inc. is set to release its financial results for Q2 2025 on August 5, 2025, after market close, with a conference call scheduled for the same day to discuss these results [1]. Company Overview - Arteris, Inc. is a leading provider of system IP aimed at accelerating system-on-chip (SoC) development, focusing on enhancing product performance while reducing power consumption and time to market [3]. - The company's network-on-chip (NoC) interconnect IP and SoC integration automation technology are designed to improve SoC economics, allowing customers to innovate further [3]. Investor Relations - A live webcast of the conference call will be available on the Investor Relations section of Arteris' website, and a replay will be accessible approximately two hours after the call for 30 days [2]. - Interested parties can join the conference call by dialing the provided toll-free and international numbers [1].

FlexNoC 5 network-on-chip interconnect IP from Arteris licensed by Whalechip, providing connectivity and enabling superior performance, area, and power for custom ASIC WHALECHIP Co., Ltd. is a fabless semiconductor and system solutions provider dedicated to technological innovation. They specialize in the development of HPC ASICs and processors and deliver HPC computing system-level solutions. Learn more at www.whalechip.com. © 2004-2025 Arteris, Inc. All rights reserved worldwide. Arteris, Arteris IP, the ...

Accelerating The Creation Of Semiconductors Corporate Overview Charlie Janac CEO Nick Hawkins CFO November 2024 1 © 2024 Arteris, Inc. Disclaimer This presentation and the accompanying oral presentation have been prepared by Arteris, Inc. ("Arteris IP" or "the "Company") for informational purposes only and not for any other purpose. Nothing contained in this presentation is, or should be construed as, a recommendation, promise or representation by the presenter or Arteris IP or any officer, director, employ ...