Arteris(AIP) - 2024 Q2 - Quarterly Report

Financial Performance - For the three months ended June 30, 2024, Arteris generated revenue of $14.6 million, with a net loss of $8.3 million and a net loss per share of $0.22[88]. - Total revenue for Q2 2024 was $14.575 million, a decrease of 1% compared to $14.734 million in Q2 2023[121]. - Total revenue for the six months ended June 30, 2024, was $27.5 million, a decrease of $366 thousand, or 1%, compared to $27.9 million for the same period in 2023[135]. - Net loss for Q2 2024 was $8.344 million, compared to a net loss of $9.165 million in Q2 2023[121]. Revenue Sources - 64.7% of revenue for the six months ended June 30, 2024, was derived from international sales, with 30.1% from customers in China[96]. - Licensing, support, and maintenance revenue increased by $0.555 million, or 4%, to $13.553 million in Q2 2024 compared to Q2 2023[125]. - Variable royalties decreased by $0.729 million, or 43%, to $0.971 million in Q2 2024 compared to Q2 2023[125]. Customer Metrics - The company reported 21 Confirmed Design Starts for the three months ended June 30, 2024, compared to 22 in the same period of 2023[102]. - The company added six net new Active Customers during the three months ended June 30, 2024, compared to 12 in the same period of 2023[101]. Performance Obligations - Remaining Performance Obligations (RPO) amounted to $77.5 million as of June 30, 2024, up from $65.1 million in 2023[104]. - As of June 30, 2024, the Annual Contract Value (ACV) was $56.1 million, an increase from $53.6 million as of June 30, 2023[100]. Expenses - Cost of revenue increased by $0.233 million, or 19%, to $1.458 million in Q2 2024 from $1.225 million in Q2 2023, primarily due to higher FAE employee-related expenses[126]. - Research and development (R&D) expenses decreased by $1.370 million, or 11%, to $10.717 million in Q2 2024 from $12.087 million in Q2 2023[128]. - Sales and marketing (S&M) expenses decreased by $0.588 million, or 10%, to $5.013 million in Q2 2024 from $5.601 million in Q2 2023[129]. - General and administrative (G&A) expenses increased by $0.324 million, or 7%, to $4.828 million in Q2 2024 from $4.504 million in Q2 2023[127]. - Total operating expenses decreased by $1.634 million, or 7%, to $20.558 million in Q2 2024 from $22.192 million in Q2 2023[127]. Cash Flow - Net cash provided by operating activities was $788 thousand for the six months ended June 30, 2024, compared to net cash used of $(9.9) million for the same period in 2023[147]. - Net cash provided by investing activities was $7.5 million for the six months ended June 30, 2024, compared to $0.4 million for the same period in 2023[151]. - As of June 30, 2024, the company had $45.8 million in cash and cash equivalents and short-term investments[145]. Strategic Outlook - Arteris' technology is driving growth due to increasing complexity in System-on-Chip (SoC) designs, particularly in automotive and AI markets[86]. - The company is exploring growth opportunities through potential acquisitions to enhance its market position[95]. - Research and development expenses are expected to continue increasing in absolute terms, reflecting ongoing investments in technology and product design[94]. - The company expects R&D expenses to increase in absolute terms in the short to medium term but decrease as a percentage of revenue as new products are launched[113]. Industry Context - The semiconductor industry is characterized by cyclical trends, impacting customer demand and revenue predictability[97]. Accounting and Controls - The company has no off-balance sheet financing arrangements or relationships with unconsolidated entities[154]. - There have been no material changes to critical accounting estimates compared to the previous year[156]. - The company is utilizing the extended transition period under the JOBS Act for adopting certain accounting standards[158]. - Management evaluated the effectiveness of disclosure controls and procedures, concluding they were effective at a reasonable assurance level[161]. - No changes in internal control over financial reporting were identified that materially affected the company's reporting[162]. - Management believes that the control systems provide reasonable assurance but cannot guarantee absolute detection of all errors or fraud[163].