Arteris(US:AIP)2025-08-05 21:00Part I. Financial Information Financial Statements The unaudited statements show Q2 2025 revenue of $16.5 million, a net loss of $9.1 million, and a stockholders' deficit of $7.5 million Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Total Current Assets | $61,543 | $69,083 | | Total Assets | $106,880 | $106,135 | | Total Current Liabilities | $62,559 | $59,282 | | Total Liabilities | $114,409 | $107,323 | | Total Stockholders' Deficit | $(7,529) | $(1,188) | Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | Six Months 2025 | Six Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Total Revenue | $16,502 | $14,575 | $33,034 | $27,522 | | Gross Profit | $14,760 | $13,117 | $29,766 | $24,596 | | Loss from Operations | $(8,248) | $(7,441) | $(15,956) | $(16,575) | | Net Loss | $(9,130) | $(8,344) | $(17,251) | $(17,747) | | Net Loss Per Share | $(0.22) | $(0.22) | $(0.42) | $(0.47) | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :--- | :--- | :--- | | 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, cash equivalents and restricted cash | $2,415 | $8,432 | Management's Discussion and Analysis of Financial Condition and Results of Operations Management analyzes revenue growth from new licenses, key performance indicators, and a 13% YoY revenue increase alongside rising operating expenses Overview - Arteris is a leading provider of System-on-Chip (SoC) System IP, with growth driven by increasing SoC complexity, chiplet disaggregation, and AI/ML applications89 - The company's SoC Integration Automation software complements its interconnect IP by automating the integration and assembly of IP blocks into an SoC90 Key Performance Indicators Key Performance Indicators Comparison | Metric | As of June 30, 2025 | As of June 30, 2024 | | :--- | :--- | :--- | | Annual Contract Value (ACV) | $63.9 million | $56.1 million | | ACV plus royalties (TTM) | $69.1 million | $60.1 million | | Remaining Performance Obligations (RPO) | $99.3 million | $77.5 million | - Confirmed Design Starts, a metric for customer activity, totaled 25 in Q2 2025, compared to 21 in Q2 2024, indicating growth in new semiconductor designs104 Results of Operations Revenue Breakdown - Q2 Comparison (in thousands) | Revenue Source | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Licensing, support and maintenance | $15,088 | $13,553 | $1,535 | 11% | | Variable royalties | $1,402 | $971 | $431 | 44% | | Total Revenue | $16,502 | $14,575 | $1,927 | 13% | Revenue Breakdown - Six Months Comparison (in thousands) | Revenue Source | H1 2025 | H1 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Licensing, support and maintenance | $30,423 | $25,292 | $5,131 | 20% | | Variable royalties | $2,569 | $1,789 | $780 | 44% | | Total Revenue | $33,034 | $27,522 | $5,512 | 20% | - Operating expenses for Q2 2025 increased by 12% YoY to $23.0 million, primarily due to higher employee-related costs from increased headcount in R&D (up $1.5 million) and S&M (up $1.3 million)129130131 Liquidity and Capital Resources - As of June 30, 2025, the company had $38.0 million in cash, cash equivalents, and short-term investments, which management believes is sufficient for at least the next 12 months150151 Cash Flow Summary - Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | 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 cash from operating activities decreased to $0.4 million in H1 2025 from $0.8 million in H1 2024, driven by a net loss of $17.3 million offset by non-cash charges and changes in operating assets154155 Quantitative and Qualitative Disclosures About Market Risk The company is exempt from providing market risk disclosures as a smaller reporting company - The company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk165 Controls and Procedures Management concluded disclosure controls were effective as of June 30, 2025, with no material changes to internal controls during the quarter - Based on an evaluation as of the end of the reporting period, the CEO and CFO concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level166 - No changes in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls167 Part II. Other Information Legal Proceedings A patent infringement complaint was dismissed without prejudice, though the court retains jurisdiction for discovery purposes - Regarding the complaint from Network System Technologies, LLC (NST), the court dismissed all claims against the company without prejudice on September 4, 2024, retaining jurisdiction solely for enforcing discovery63170 Risk Factors Key risks include intense competition, a history of net losses, semiconductor industry cyclicality, and geopolitical tensions affecting key markets - Business & Competition: The company faces significant competition from larger companies (e.g., Arm, Cadence) and customers' internal development, and is exposed to the cyclical semiconductor industry173175221 - Financial Performance: The company has a history of net losses, with an accumulated deficit of $154.1 million as of June 30, 2025, and may not achieve or maintain future profitability179 - Geopolitical & Regulatory: A significant portion of revenue (25.0% for H1 2025) comes from China, creating exposure to risks from U.S. export controls and trade tensions210294298 - Intellectual Property & Cybersecurity: The business depends on protecting its proprietary technology and faces risks of infringement claims and potential cybersecurity attacks256260268 Unregistered Sales of Equity Securities and Use of Proceeds The company reports no unregistered equity sales and no material change in the planned use of its IPO proceeds - The company completed its IPO on October 29, 2021, receiving net proceeds of approximately $71.1 million, with no material change in the planned use of these funds346348 Other Information Several company insiders adopted or modified Rule 10b5-1 trading plans during the quarter - In June 2025, several insiders established or modified Rule 10b5-1 trading plans, including the General Counsel, CFO, and a Director, for the potential sale of company shares351352353354