Core Insights - Arteris, Inc. has been awarded the "AI Engineering Innovation Award" for its FlexGen technology, which enhances system-on-chip (SoC) design for AI applications [1][4] - FlexGen automates the creation of network-on-chip (NoC) interconnects, addressing the complexities of AI-centric semiconductor designs [2][4] - Early adopters of FlexGen have reported significant productivity gains, including a 10x improvement in productivity, a 30% reduction in wire length, and a 10% reduction in latency compared to traditional methods [3] Company Overview - Arteris specializes in system IP for accelerating SoC development, focusing on enhancing performance, reducing power consumption, and speeding up time to market [6] - The company aims to simplify NoC design for chip designers, regardless of their prior experience, by automating critical aspects of NoC creation [4][6] - The AI Breakthrough Awards program received over 5,000 nominations in 2025, highlighting the competitive landscape and innovation within the AI sector [4]

CAMPBELL, Calif., June 23, 2025 (GLOBE NEWSWIRE) -- Arteris, Inc. (Nasdaq: AIP), a leading provider of system IP for accelerating semiconductor creation, today announced the immediate availability of Magillem Packaging, a new software product designed to simplify and speed up the process of building advanced chips used in everything from AI data centers to edge devices. As chip design becomes increasingly complex with more components, higher performance demands and tighter timelines, Magillem Packaging help ...

Core Viewpoint - Arteris, Inc. is expanding its multi-die solution to meet the increasing computational demands of AI, transitioning from traditional monolithic die designs to chiplet-based architectures, which are essential for high-performance computing and automotive applications [2][8]. Industry Impact - The semiconductor industry is experiencing a shift towards multi-die systems as Moore's Law slows down, necessitating architectural innovation to enhance performance and efficiency, particularly for AI workloads [2][8]. - Arteris' technology reduces design time for chiplets and SoCs, optimizing power, performance, and area bottlenecks through key Network-on-Chip (NoC) IP technology [3][8]. Technological Capabilities - The expanded multi-die solution supports the Universal Chiplet Interconnect Express (UCIe) specification and various protocols, ensuring robust ecosystem compatibility [4][5]. - Key capabilities include non-coherent FlexNoC IP, cache-coherent Ncore NoC IP, and optimized automation for SoC assembly and integration, which collectively enhance the development process and reduce risks [6][7]. Strategic Collaborations - Arteris is collaborating with major players in the silicon value chain, including Arm, Cadence, Renesas, and Synopsys, to enable next-generation AI and automotive platforms [6][7]. - These partnerships aim to accelerate the journey to chiplet-based systems, optimize performance metrics, and ensure seamless interoperability across multi-die designs [7]. Market Relevance - The expanded multi-die solution is crucial for semiconductor firms to compress development cycles, scale modular architectures, and deliver differentiated AI performance, aligning with evolving industry demands [8].

Financial Data and Key Metrics Changes - The company has seen a shift in revenue concentration from China, dropping from 50% in 2019 to around 30% by early 2023, and currently closer to high teens percentage [66][70]. - The average selling prices (ASPs) are expected to reach around $1 million by 2026, driven by increasing design complexity and the adoption of more system IP [79]. Business Line Data and Key Metrics Changes - The FlexNOC product family is transitioning from FlexNOC 4 to FlexNOC 5, with a 30% list price increase for FlexNOC 5 over FlexNOC 4, and another 30% increase for FlexGen, which adds automation features [81][82]. - The company has approximately $90 million in remaining performance obligations, indicating a backlog of revenue to be recognized in the future [83]. Market Data and Key Metrics Changes - The company is experiencing growth in various geographical markets, particularly in the US, Japan, and Korea, which are offsetting declines in China [70][75]. - The automotive sector is highlighted as a significant area of growth, with Chinese EVs performing well in the market [75]. Company Strategy and Development Direction - The company is focusing on the shift from insourcing to outsourcing in the semiconductor design space, with expectations that commercial solutions will grow from 25% to potentially 75% over the next decade [22][24]. - The introduction of FlexGen aims to address industry challenges such as the lack of skilled engineers and high costs associated with chip design [29]. Management's Comments on Operating Environment and Future Outlook - Management acknowledges the ongoing trade tensions between the US and China but notes that there is no direct impact on the company's IP at the moment [62][64]. - The company sees AI and machine learning as integral to future growth, with half of customer design starts now related to these technologies [46]. Other Important Information - The company is exploring the incorporation of AI in system IP design, focusing on analytics and verification processes [48][50]. - Cybersecurity is a significant concern, with the company taking advanced measures to protect sensitive information [60]. Q&A Session Summary Question: How much of your top line is driven from China customers? - The company's revenue from China has decreased from 50% in 2019 to around 30% in early 2023, and is now in the high teens percentage range [66][70]. Question: What is the average deal size and pricing trends? - The average selling prices are expected to grow, with projections of reaching around $1 million by 2026 due to increasing complexity in designs [79].

Arteris shares have lost about 22.8% since the beginning of the year versus the S&P 500's decline of -0.6%. Over the last four quarters, the company has surpassed consensus EPS estimates three times. The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. There are no easy answers to this key question, but one reliable measure that can help investors address this is ...

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $16,500,000, up 28% year over year, exceeding guidance [17] - Annual contract value (ACV) plus royalties reached $66,800,000, a 15% increase year over year, marking a record high [17] - Remaining performance obligations (RPO) were $88,900,000, representing a 19% year over year increase, also a new high for the company [17] - Non-GAAP gross profit was $15,300,000 with a gross margin of 92% [17] - Non-GAAP operating loss was $3,200,000, a 40% improvement compared to the prior year [20] - Free cash flow was positive at $2,700,000 for the quarter, benefiting from early customer payments [21] Business Line Data and Key Metrics Changes - The company achieved several key design wins, including major contracts from top global technology companies and automotive OEMs [8][9] - Adoption of technology in advanced semiconductor companies continues to grow, with significant projects in AI and automotive sectors [9][10] - The FlexGen product, an AI-driven smart NOC IP technology, is being evaluated by over 20 customers, with expectations for revenue generation in the second half of the year [10] Market Data and Key Metrics Changes - The automotive sector remains robust, with ongoing design projects for future vehicles, including electric and autonomous driving technologies [12][13] - The company is seeing increased outsourcing of silicon system IP needs as customers seek efficiency and cost reduction [15][22] - The global economic uncertainty has not led to deal cancellations but may impact royalty revenues due to customer confidence [14][22] Company Strategy and Development Direction - The company is focusing on innovation and expanding ecosystem collaborations, including joining the Intel Foundry Accelerator Program [12] - The strategy includes enhancing customer support and product development through new engineering centers and partnerships [13] - The company aims to remain a neutral player in the system IP market, capitalizing on the trend of outsourcing due to increasing design complexity [42][73] Management's Comments on Operating Environment and Future Outlook - Management acknowledges economic uncertainty but maintains that licensing activity remains robust [30][32] - The company has not adjusted its overall FY 2025 revenue guidance, citing strong customer demand despite potential short-term headwinds [22][26] - There is optimism regarding the deal pipeline and customer interest in outsourcing system IP products [26][73] Other Important Information - The company received multiple awards for innovation, highlighting its technological advancements and market recognition [11] - The opening of a new engineering and customer support center in Krakow, Poland, aims to enhance product development and customer service [13] Q&A Session Summary Question: Changes in customer behavior due to tariffs and trade environment - Management noted some replanning of projects in China but observed an increased willingness to outsource system IP to commercial vendors [29][30] Question: Expectations for FlexGen revenue and traction - Management reported positive feedback from customers evaluating FlexGen, anticipating substantial bookings and revenue in the second half of the year [35][36] Question: Accelerated decision timelines by customers - Management indicated that while design cycles are being accelerated, licensing activity remains steady without significant changes in decision-making timelines [41][42] Question: Interest from joining the Intel Foundry Alliance - Management expects increased business opportunities from joining the alliance, particularly with Intel's commitment to commercial solutions [46] Question: Market size for system IP - Management estimated the system IP market to be between $1 billion and $1.2 billion, with significant growth potential as more companies outsource [59][60] Question: Underlying technological changes prompting outsourcing - Management highlighted the increasing complexity of designs, particularly with AI and chiplets, driving the need for commercial IP solutions [62][63]

Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $16,500,000, representing a 28% year-over-year increase, exceeding guidance [17] - Annual contract value (ACV) plus royalties reached a record high of $66,800,000, up 15% year-over-year [17] - Remaining performance obligations (RPO) at the end of Q1 were $88,900,000, a 19% year-over-year increase [17] - Non-GAAP gross profit was $15,300,000 with a gross margin of 92% [17] - Non-GAAP operating loss for Q1 was $3,200,000, a 40% improvement compared to the prior year [20] - Free cash flow was positive at $2,700,000 for the quarter [21] Business Line Data and Key Metrics Changes - The company achieved several key design wins, including contracts with top global technology companies and automotive OEMs [6][7] - Adoption of technology in automotive, enterprise computing, and communications sectors is increasing, driven by design complexity and AI applications [6][8] - The company is seeing strong momentum in the microcontroller (MCU) system IP market, with initial royalties received from a top five MCU manufacturer [9] Market Data and Key Metrics Changes - The automotive sector remains a significant focus, with 10 automotive OEMs now as direct customers [8] - The company is expanding its presence in the AI market, with over 55% of total business now related to AI projects [72][78] - The semiconductor industry is experiencing a shift towards outsourcing system IP needs due to increasing design complexity and cost pressures [42][46] Company Strategy and Development Direction - The company is focusing on innovation and expanding ecosystem collaborations, including joining the Intel Foundry Accelerator Program [11] - The introduction of FlexGen, an AI-driven smart NOC IP technology, is expected to enhance productivity and performance in semiconductor designs [9] - The company aims to maintain its position as a neutral player in the system IP market while capitalizing on the growing demand for outsourced solutions [74] Management's Comments on Operating Environment and Future Outlook - Management acknowledges global economic uncertainty but reports no deal cancellations or delays in Q1 [13] - The company anticipates potential short-term headwinds in royalties due to customer confidence and tariffs [14] - Despite economic challenges, management remains optimistic about long-term growth and customer interest in outsourcing [15][26] Other Important Information - The company opened a new engineering and customer support center in Krakow, Poland, to enhance product development and customer support [12] - The company received multiple awards for innovation, including recognition for its NOC IP technologies [10] Q&A Session Summary Question: Changes in customer behavior due to tariffs and trade environment - Management noted some replanning of projects in China but observed an increased willingness among larger companies to outsource system IP to commercial vendors [29][30] Question: Expectations for FlexGen's revenue and ACV - Management reported positive feedback from customers evaluating FlexGen, with expectations for substantial bookings and revenue in the second half of the year [36][37] Question: Accelerating decision timelines by customers - Management indicated that while design cycles are being accelerated, licensing activity remains steady without significant changes in decision-making timelines [42] Question: Interest from joining the Intel Foundry Alliance - Management expects that joining the alliance will lead to additional business opportunities over the next twelve months [47] Question: Market size for system IP - Management estimated the system IP market to be between $1 billion and $1.2 billion, with significant growth potential as complexity increases [60] Question: Underlying technological changes prompting outsourcing - Management highlighted the increasing complexity of designs, particularly with the rise of AI and chiplets, as key factors driving the shift towards outsourcing [62][64]

Financial Performance - For the three months ended March 31, 2025, Arteris generated revenue of $16.5 million and reported a net loss of $8.1 million, with a net loss per share of $0.20[80]. - Total revenue for the three months ended March 31, 2025, was $16.532 million, a 28% increase from $12.947 million in the same period of 2024[112]. - Licensing, support, and maintenance revenue increased by $3.596 million, or 31%, to $15.335 million for the three months ended March 31, 2025, compared to $11.739 million in 2024[114]. - Gross profit margin improved to 91% for the three months ended March 31, 2025, compared to 89% in the same period of 2024[113]. - Net loss for the three months ended March 31, 2025, was $8.121 million, a decrease from a net loss of $9.403 million in 2024[112]. - Cost of revenue increased slightly by $58,000, or 4%, to $1.526 million for the three months ended March 31, 2025, compared to $1.468 million in 2024[115]. - Other income (expense), net decreased by $218,000, or 23%, to $718,000 for the three months ended March 31, 2025, from $936,000 in 2024[121]. - Provision for income taxes decreased by $102,000, or 28%, to $268,000 for the three months ended March 31, 2025, compared to $370,000 in 2024[123]. - Loss from equity method investment was $815,000 for the three months ended March 31, 2025, compared to $759,000 in 2024, reflecting a 7% increase[122]. Revenue Sources and Growth - As of March 31, 2025, the Annual Contract Value (ACV) was $62.1 million, an increase from $53.5 million as of March 31, 2024, while total ACV plus royalties reached $66.8 million, up from $58.2 million[92]. - 60.1% of revenue for the three months ended March 31, 2025, was derived from international sales, with 25.1% specifically from customers in China[88]. - The company anticipates continued growth driven by increasing complexity in System-on-Chip (SoC) designs, particularly in markets such as automotive and AI[78]. - The company aims to evaluate growth opportunities through potential acquisitions of other businesses[87]. Expenses and Investments - Research and development (R&D) expenses rose by $1.027 million, or 9%, to $11.862 million for the three months ended March 31, 2025, from $10.835 million in 2024[116]. - Sales and marketing (S&M) expenses increased by $1.073 million, or 20%, to $6.529 million for the three months ended March 31, 2025, compared to $5.456 million in 2024[118]. - Research and development expenses are expected to increase in absolute terms, reflecting ongoing investments in technology and product development[86]. Cash Flow and Liquidity - As of March 31, 2025, the company had $42.3 million in cash and cash equivalents, with $12.8 million in long-term investments[124]. - For the three months ended March 31, 2025, net cash provided by operating activities was $2.9 million, despite a net loss of $8.1 million[128]. - The company experienced a $10.3 million decrease in accounts receivable for the three months ended March 31, 2025[128]. - Net cash used in investing activities for the three months ended March 31, 2025 was $0.1 million, primarily due to purchases of available-for-sale securities[130]. - Net cash provided by financing activities for the three months ended March 31, 2024 was less than $0.1 million, primarily from stock option exercises[133]. - The company believes its current cash and cash equivalents will be sufficient to meet liquidity requirements for at least the next 12 months[125]. Industry Context - The semiconductor industry is characterized by cyclical trends, which can significantly impact revenue and customer demand for Arteris' products[90]. - Arteris' interconnect IP solutions are critical for enabling sophisticated applications across various markets, including automotive and consumer electronics[79]. Other Information - The company had no off-balance sheet financing arrangements during the periods presented[134]. - Non-cash charges for the three months ended March 31, 2025 included stock-based compensation of $4.3 million[128]. - The company is classified as an emerging growth company under the JOBS Act, allowing it to delay the adoption of certain accounting standards[138].

May 13, 2025 Arteris 1Q 2025 Earnings Presentation Charlie Janac CEO Nick Hawkins CFO 1 © 2025 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, employee, agent or advisor of Ar ...

Financial Performance - Revenue for Q1 2025 was $16.5 million, representing a 28% increase year-over-year[5] - Annual Contract Value (ACV) plus royalties reached $66.8 million, up 15% year-over-year, marking the highest level reported[5] - Remaining performance obligation (RPO) was $88.9 million, a 19% increase year-over-year, also the highest level reported[5] - Non-GAAP free cash flow was positive at $2.7 million, equating to 16% of revenue[5] - Non-GAAP gross profit increased to $15,261 million for the three months ended March 31, 2025, compared to $11,718 million in 2024, reflecting a growth of approximately 30.4%[32] - Non-GAAP gross margin improved to 92% for the three months ended March 31, 2025, up from 91% in the same period of 2024[32] - Free cash flow for the three months ended March 31, 2025, was $2,677 million, significantly higher than $281 million in 2024, marking an increase of over 850%[35] - Non-GAAP net loss for the three months ended March 31, 2025, was $3,591 million, compared to $5,554 million in 2024, indicating a decrease of approximately 35.4%[32] - Net loss for the three months ended March 31, 2025, was $8,121 million, an improvement from a net loss of $9,403 million for the same period in 2024, indicating a reduction of about 13.6%[21] Guidance and Projections - Estimated Q2 2025 revenue guidance is between $16.1 million and $16.5 million[7] - Full year 2025 revenue guidance is projected between $65.0 million and $71.0 million[7] - Non-GAAP operating loss for Q2 2025 is estimated to be between $3.0 million and $4.0 million[7] Customer and Partnership Developments - The company added another top global automotive OEM to its customer list, now having direct license agreements with 10 automotive OEMs[5] - Arteris joined the Intel Foundry Accelerator program, enhancing its network of ecosystem partners[5] - The company opened a new engineering and customer support center in Krakow, Poland, to support development efforts[11] Asset and Liability Management - Total assets decreased from $106,135 million as of December 31, 2024, to $98,319 million as of March 31, 2025, representing a decline of approximately 7.5%[19] - Total current liabilities decreased from $59,282 million as of December 31, 2024, to $56,539 million as of March 31, 2025, a reduction of approximately 4.6%[19] - Total liabilities decreased from $107,323 million as of December 31, 2024, to $103,140 million as of March 31, 2025, a decline of about 3.6%[19] Research and Development - Research and development expenses rose to $11,862 million for the three months ended March 31, 2025, compared to $10,835 million in 2024, an increase of about 9.5%[32] Shareholder Information - The number of weighted average shares used in computing per share amounts increased from 37,709,058 in 2024 to 40,853,048 in 2025, reflecting a growth of approximately 8.5%[34]