Core Insights - Arteris has licensed its FlexNoC 5 interconnect IP with Functional Safety to Nextchip for their EFREET1 project, aimed at advancing automotive vision technology [1][2] - Nextchip specializes in semiconductor designs for Advanced Driver Assistance Systems (ADAS) and Image Signal Processors (ISP), recognized for high signal image processing performance [2][5] - The collaboration enhances Nextchip's design cycle efficiency through Arteris' low power, high performance, and area-efficient solutions [3] Company Overview - Arteris is a leading provider of system IP that accelerates system-on-chip (SoC) development, focusing on higher product performance and lower power consumption [4] - Nextchip is a prominent provider of automotive semiconductor and vision technologies, specializing in ADAS and ISP, with advanced AI-driven technologies for safer driving solutions [5][6] Technology and Innovation - FlexNoC 5 offers physical awareness and Functional Safety features, allowing engineering teams to optimize design processes and reduce time to market [3] - Nextchip is expanding its technology applications beyond camera sensors into emerging sensor markets, including robotics and smart cities [6]

Core Viewpoint - Arteris, Inc. has launched the latest generation of Magillem Registers technology, which automates the hardware/software integration process for system-on-chip (SoC) development, significantly reducing development time and addressing design complexity challenges [2][4][8] Group 1: Product Features and Benefits - Magillem Registers automates the hardware/software interface (HSI) for developing chips and chiplets, enhancing communication among cross-functional teams and ensuring up-to-date standards [3][4] - The product offers a 35% reduction in development time compared to in-house solutions, allowing design teams to focus on innovation [2][4] - It provides an integrated infrastructure for specifying, documenting, implementing, and verifying SoC address maps, promoting efficient IP reuse and consistency across design teams [4][6] Group 2: Performance and Scalability - The latest release delivers up to 3x faster performance compared to previous versions, enabling the compilation of millions of registers within minutes [6][7] - It supports a 5x increase in design size, accommodating both small IoT devices and large multi-die systems with millions of control registers [6][7] - The product enhances usability with features that streamline input, document navigation, and customizable workflows, significantly improving team productivity [7] Group 3: Industry Standards and Integration - Magillem Registers supports multiple industry standards, including IEEE 1685-2022 (IP-XACT) and SystemRDL 2.0, improving compatibility with third-party IP vendors [5][7] - The integration of acquired technologies into a single software product enhances register management and HSI automation, addressing the complexities of modern SoC designs [5][8] Group 4: Market Context and Challenges - With over 70% of chips requiring respins, effective hardware/software integration is critical for SoC teams, especially with the increasing complexity driven by AI logic [8] - The automation efficiencies provided by Magillem Registers are essential for controlling costs and maximizing engineering productivity in the development of AI SoCs and FPGAs [8]

Shares of Arteris (NASDAQ: AIP ) are up more than 20% since I initiated coverage on the stock last October. I had previously walked through its interconnect technology for Network on Chips ("NoC") and growth outlook for the business, concluding by assigningAn individual investor primarily focused on undercovered companies, with more than 50 companies on my watchlist. My areas include technology, software, electronics and the energy transition. I have been investing my personal capital for over 7 years in a ...

Arteris, Inc. (NASDAQ:AIP) Q4 2024 Earnings Conference Call February 18, 2025 4:30 PM ET Company Participants Erica Mannion – Sapphire Investor Relations Charlie Janac – Chief Executive Officer Nick Hawkins – Chief Financial Officer Conference Call Participants Gus Richard – Northland Kevin Garrigan – Rosenblatt Securities Ethan Potasnick – TD Cowen Operator Good afternoon, everyone, and welcome to the Arteris Fourth Quarter and Full Year 2024 Earnings Call. Please note, this call is being recorded and simu ...

Financial Performance - The company incurred net losses of $33.6 million and $36.9 million for the years ended December 31, 2024, and 2023, respectively, with an accumulated deficit of $136.9 million as of December 31, 2024[94]. - Total revenue for the year ended December 31, 2024, was $57,724,000, representing an increase of 7.6% from $53,666,000 in 2023[386]. - Gross profit for 2024 was $51,762,000, compared to $48,589,000 in 2023, indicating a growth of 6.5%[386]. - The net loss for 2024 was $33,638,000, a decrease from the net loss of $36,869,000 in 2023, reflecting an improvement of 6.3%[386]. - Cash and cash equivalents as of December 31, 2024, were $13,684,000, slightly down from $13,696,000 in 2023[384]. - Total current assets increased to $69,083,000 in 2024 from $58,430,000 in 2023, marking a growth of 18.2%[384]. - Total liabilities rose to $107,323,000 in 2024, up from $87,698,000 in 2023, representing a significant increase of 22.3%[384]. - Research and development expenses for 2024 were $45,007,000, nearly unchanged from $45,128,000 in 2023[386]. - The total stockholders' equity deficit as of December 31, 2024, was $(1,188,000), a decline from a positive equity of $15,103,000 in 2023[384]. - Net cash used in operating activities decreased significantly to $720 in 2024 from $15,729 in 2023, indicating improved operational efficiency[394]. - Cash paid for taxes increased to $1,552 in 2024 from $1,294 in 2023, reflecting higher taxable income or changes in tax obligations[394]. Market and Competitive Landscape - The company faces significant competition from larger companies and third-party providers, which may impact its ability to compete effectively in the semiconductor industry[88]. - The company relies on its customers to incorporate its technology into their end products, and any failure in customer adoption could adversely affect its revenue generation[97]. - The customer acquisition cycle for new licenses typically ranges from two to nine months, which can lead to unpredictable revenue streams[108]. - The company’s growth strategy is dependent on the increasing adoption of vehicles with sophisticated automated driving, which requires more complex SoCs[103]. - The semiconductor IP industry is emerging, and the company’s future growth will depend on market acceptance of its third-party licensable IP model[105]. - Revenue concentration is a risk, with a limited number of customers accounting for a substantial portion of total revenue, which could lead to significant declines if key customers are lost[137][138]. Regulatory and Compliance Risks - Political and regulatory changes in the U.S. could materially impact the company’s business operations and financial results[104]. - The company faces significant risks due to U.S. government trade restrictions, which are expected to decrease revenue from China[124]. - The company is exposed to various regulatory, operational, financial, and political risks due to its international operations[124]. - The company must comply with U.S. export controls, which may limit the export of products and require government authorizations, impacting sales opportunities[201]. - Recent modifications to export regulations affecting semiconductor products, particularly to China, necessitate ongoing compliance efforts[203]. - The company is subject to evolving data privacy laws in China, which may lead to unpredictable compliance costs and operational impacts[193]. Intellectual Property and Legal Risks - The company may face challenges in integrating personnel and operations from acquisitions, which could adversely affect financial results[157]. - The company may experience increased expenses due to the operational and control requirements of growth, which could harm profitability if revenue does not increase proportionately[159]. - The company faces risks related to the volatility of its stock price, which may affect its ability to attract and retain key personnel[163]. - The semiconductor industry faces significant risks from patent infringement claims, which could lead to substantial liabilities and disrupt business operations[172]. - Legal disputes may force the company to redesign products or seek costly licenses, impacting financial results and market competitiveness[173]. - The ability to obtain third-party software licenses on reasonable terms is critical; failure to do so could disrupt product development and harm financial results[175]. Operational Challenges - The company incurs substantial expenses in the design win process without guaranteed revenue, which may adversely affect financial results[109]. - A significant portion of revenue may depend on a single product design win with a large customer, and losing such a win could harm the business[110]. - The company anticipates that average selling prices (ASPs) of its products may decline over time, making design wins critical for future success[109]. - The automotive market's downturn could delay the adoption of autonomous driving technologies, affecting demand for the company's products[142][144]. - Global supply chain issues, exacerbated by geopolitical tensions and trade disputes, may prolong challenges in the semiconductor industry[136]. Future Outlook and Strategy - The company is expanding into adjacent markets through acquisitions, such as Magillem and Semifore, to enhance its IP interconnect solutions[116]. - The company plans to expand its global sales and marketing capabilities, requiring significant financial investment to increase customer base and market acceptance[139]. - The company believes its existing cash and cash equivalents will satisfy anticipated cash requirements for at least the next 12 months, but may require additional capital for growth opportunities[158]. - The company continues to focus on developing and licensing on-chip interconnect fabric technology for System-on-Chip designs, indicating ongoing commitment to innovation in the semiconductor industry[396]. Stock and Corporate Governance - K. Charles Janac, the President and CEO, holds approximately 25.0% of the outstanding voting stock, allowing significant influence over corporate matters[244]. - The company has 300,000,000 shares of common stock authorized and can issue up to 10,000,000 shares of preferred stock, which may dilute existing stockholders' ownership[245]. - The company does not expect to declare or pay any dividends on common stock for the foreseeable future, relying on share price appreciation for investor returns[246]. - Management has broad discretion in using net proceeds from the initial public offering, which may not necessarily enhance operating results or market value[247]. - The company is subject to Section 203 of the DGCL, which restricts business combinations with interested stockholders for three years unless approved[249].

Core Insights - Arteris has introduced FlexGen, a smart network-on-chip (NoC) interconnect IP that significantly accelerates chip development and optimizes performance efficiency, addressing the demand for faster and more sustainable innovation across various sectors [3][4]. Product Features - FlexGen offers up to a 10x productivity boost, reducing design iterations from weeks to days, which enhances efficiency in chip development [3][6]. - The technology achieves up to a 30% reduction in wire length, leading to lower power consumption, and a 10% reduction in latency, improving performance in system-on-chip (SoC) and chiplet designs [3][6]. - FlexGen automates the creation of high-performance NoC designs, reducing manual adjustments by over 90%, allowing optimized NoC topologies to be generated in hours instead of days [4][6]. Industry Impact - The advancements provided by FlexGen are crucial for meeting the demands of advanced technologies such as artificial intelligence, autonomous driving, and cloud computing [4][7]. - Companies like Dream Chip Technologies have reported transformative results using FlexGen, significantly speeding up their design processes and enabling rapid experimentation [5][7]. - The technology supports the growing complexity of semiconductor design, allowing companies to innovate in areas like AI, 5G, and industrial IoT with fewer resources [7][8]. Company Positioning - Arteris positions itself as a leader in system IP for SoC development, focusing on enhancing productivity and quality of results to address the challenges faced by semiconductor companies [9]. - The company emphasizes the need for smart NoC IP that reduces design time while delivering superior quality, enabling faster innovation cycles for next-generation products [8].

Financial Performance - Revenue for Q4 2024 was $15.5 million, representing a 24% year-over-year increase[6] - Annual Contract Value (ACV) plus royalties reached a record $65.1 million, up 16% year-over-year[6] - Remaining performance obligation (RPO) was $88.4 million, an increase of 22% year-over-year[6] - Full year 2024 revenue totaled $57.7 million, an 8% increase compared to 2023[6] - The net loss for Q4 2024 was $8.2 million, or $0.20 per share, compared to a net loss of $10.5 million in Q4 2023[6][18] - For FY 2024, the net loss was $33.6 million, or $0.86 per share, an improvement from a net loss of $36.9 million in FY 2023[6][18] - Non-GAAP operating loss for FY 2024 was $14.8 million, an improvement from $19.8 million in FY 2023[6] - Net loss for the twelve months ended December 31, 2024, was $33,638 million, a slight improvement from a net loss of $36,869 million in 2023[22] - Non-GAAP gross profit for the twelve months ended December 31, 2024, was $52,744 million, compared to $49,294 million in 2023, reflecting a year-over-year increase of 5.0%[33] - Non-GAAP net loss per share attributable to common stockholders for 2024 was $0.43, compared to $0.60 in 2023, indicating a reduction in loss per share[33] Customer Acquisition and Guidance - The company signed 14 new customers in 2024, including two major automotive OEMs[6] - Guidance for Q1 2025 projects ACV plus royalties between $65.5 million and $67.5 million[8] Assets and Liabilities - Total assets increased to $106,135 million in 2024 from $102,801 million in 2023, representing a growth of 3.3%[20] - Total current assets rose to $69,083 million in 2024, up from $58,430 million in 2023, marking an increase of 18.0%[20] - Total liabilities increased to $107,323 million in 2024 from $87,698 million in 2023, an increase of 22.3%[20] Cash Flow and Expenses - Cash and cash equivalents at the end of the period were $14,072 million, slightly down from $14,084 million in 2023[22] - Research and development expenses for the twelve months ended December 31, 2024, were $45,007 million, consistent with $45,128 million in 2023[33] - Free cash flow for the twelve months ended December 31, 2024, was $(1,044) million, a significant improvement from $(17,232) million in 2023[35] - Net cash used in operating activities decreased to $(720) million in 2024 from $(15,729) million in 2023[35] - Net cash provided by investing activities was $970 million in 2024, compared to $(4,691) million in 2023[35] - Net cash used in financing activities was $(262) million in 2024, down from $(2,919) million in 2023[35] Future Revenue Potential - Active customers, defined as those with ongoing license agreements, are a key metric for revenue potential, although specific numbers were not disclosed[28] - Remaining performance obligations (RPO) represent contracted future revenue not yet recognized, indicating strong future revenue potential[31] Tax Impact - The company maintains a full valuation allowance against deferred tax assets in the US, resulting in no significant tax impact from Non-GAAP adjustments[34] Product Development - The company announced the release of FlexGen smart NoC IP, which could enhance engineer productivity by up to 10x[12]

Core Insights - Arteris, Inc. reported a record Annual Contract Value (ACV) plus royalties of $65.1 million in Q4 2024, reflecting a 16% year-over-year increase, driven by strong demand in AI-driven enterprise computing and automotive SoCs [2][6] - The company is well-positioned to capitalize on high-growth opportunities in Generative AI and Autonomous Driving, supported by a robust product pipeline and new customer acquisitions [2][5] Financial Highlights - Q4 2024 revenue reached $57.7 million, an 8% increase year-over-year [6] - Non-GAAP gross profit for Q4 2024 was $14.15 million, with a gross margin of 91% [35] - The operating loss for Q4 2024 was $7.1 million, an improvement from a loss of $9.2 million in Q4 2023 [6][35] - Full year 2024 net loss was $33.6 million, or $0.86 per share, compared to a net loss of $36.9 million in 2023 [6][35] Business Highlights - In 2024, Arteris signed 14 new customers, including two major automotive OEMs, and expanded its presence in key technology areas such as chiplets and microcontrollers [6][5] - The company announced design wins with GigaDevice and Menta for automotive microcontrollers and edge AI chiplet designs, respectively [6][5] - Arteris released FlexGen smart NoC IP, which can potentially enhance engineering productivity by up to 10 times while reducing power consumption [6][5] Guidance for 2025 - For Q1 2025, Arteris expects ACV plus royalties to be between $65.5 million and $67.5 million, and revenue to be between $15.7 million and $16.1 million [8] - Full year 2025 guidance includes expected revenue of $66.0 million to $70.0 million and a non-GAAP operating loss of $8.5 million to $12.5 million [8]

Core Viewpoint - Arteris Inc. will announce its financial results for Q4 and the full year of 2024 on February 18, 2025, after market close, followed by a conference call to discuss these results [1]. Company Overview - Arteris is a leading provider of system IP that accelerates 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 contribute to better SoC economics, allowing customers to innovate further [3]. Conference Call Details - The conference call will take place on February 18, 2025, at 4:30 PM ET, with live access available via a toll-free number for the U.S./Canada and an international toll number [1]. - A live webcast of the call will be accessible in the Investor Relations section of Arteris' website [1]. - A replay of the webcast will be available approximately two hours after the call and will remain accessible for about 30 days [2].

Core Viewpoint - Arteris, Inc. (AIP) has experienced a significant stock price increase, attributed to strong trading volume and positive market sentiment, with a notable 16.6% gain over the past four weeks [1] Financial Performance - The company is projected to report a quarterly loss of $0.10 per share, reflecting a year-over-year improvement of 44.4%. Expected revenues are $15.25 million, which indicates a 22% increase compared to the same quarter last year [2] - The consensus EPS estimate for Arteris has remained stable over the last 30 days, suggesting that stock price movements may not continue without changes in earnings estimate revisions [3] Industry Context - Arteris operates within the Zacks Internet - Software industry, alongside Calix (CALX), which saw a 1% increase in its stock price, with a 9.8% return over the past month [4][7] - The company is benefiting from strong demand in AI-driven enterprise computing and automotive SoC solutions, along with increasing adoption of its technology by leading global customers [5] Market Trends - Research indicates a strong correlation between earnings estimate revisions and near-term stock price movements, highlighting the importance of monitoring these trends for potential investment opportunities [6]