Arteris(AIP) - 2025 Q2 - Quarterly Results

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] 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] 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) 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 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 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 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 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 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 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 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] - 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] - 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]