Company Overview - Arteris, Inc. is a leading provider of system IP that accelerates system-on-chip (SoC) creation [3] - The company's technology includes network-on-chip (NoC) interconnect IP and SoC integration automation, which enhances product performance while reducing power consumption and time to market [3] Financial Results Announcement - Arteris will release its financial results for the first quarter ended March 31, 2025, after market close on May 13, 2025 [1] - A conference call to discuss these results will be held on the same day at 4:30 PM ET, with dial-in options provided for participants [1] Investor Relations - A live webcast of the conference call will be available on the Investor Relations section of Arteris' website [1] - A replay of the webcast will be accessible approximately two hours after the call and will remain available for about 30 calendar days [2]

Core Insights - Arteris, Inc. has opened a new engineering and customer support hub in Krakow, Poland, aimed at enhancing the development of silicon-proven network-on-chip IP and SoC integration automation software for the semiconductor industry [1][2] Group 1: Company Expansion - The new hub in Poland will expand Arteris' global footprint and create new opportunities for hardware and software engineers in the region [2] - Arteris currently serves over 200 customers worldwide and operates across 11 countries [2] Group 2: Collaboration and Community Engagement - The Krakow hub will collaborate with AGH University of Krakow to foster technological progress and support the development of the next generation of engineers [3] - The establishment of the hub is seen as a testament to the local talent and business opportunities available in Krakow and Poland [4] Group 3: Focus Areas - The primary focus of the Krakow office will be on engineering and innovation, with plans for other functional areas to have an expanded presence in Poland [4] - Arteris' technology aims to enhance product performance while reducing power consumption and time to market, thereby improving SoC economics for its customers [5]

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]

Core Insights - Arteris (NASDAQ: AIP) shares have increased by over 20% since coverage was initiated last October, indicating positive market sentiment and growth potential for the company [1] Company Overview - Arteris specializes in interconnect technology for Network on Chips (NoC), which is crucial for enhancing communication between various components in semiconductor devices [1] Investment Focus - The analysis emphasizes a focus on undercovered companies, particularly in sectors such as technology, software, electronics, and energy transition, suggesting a strategic approach to identifying investment opportunities [1] Analyst Background - The analyst has over 7 years of personal investment experience and a Master's degree in Electrical Engineering, which supports a strong foundation for evaluating technology and engineering companies [1]

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]