Arteris(US:AIP)2022-05-09 16:00Part I. Financial Information Presents the unaudited condensed consolidated financial statements and management's discussion for the three months ended March 31, 2022 Item 1. Financial Statements (unaudited) Provides the unaudited condensed consolidated financial statements, detailing the company's financial position, operational results, and cash flows for Q1 2022 Condensed Consolidated Balance Sheets Details the company's financial position as of March 31, 2022, showing a decrease in total assets and stockholders' equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2022 | December 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash | $82,236 | $85,825 | | Accounts receivable, net | $8,199 | $13,873 | | Total current assets | $98,891 | $106,647 | | Total Assets | $112,372 | $120,443 | | Liabilities & Equity | | | | Deferred revenue, current | $28,115 | $28,403 | | Total current liabilities | $40,412 | $42,492 | | Total Liabilities | $64,713 | $67,539 | | Accumulated deficit | ($45,811) | ($38,991) | | Total Stockholders' Equity | $47,659 | $52,904 | Condensed Consolidated Statements of Loss and Comprehensive Loss Presents the company's operational results for Q1 2022, highlighting revenue growth despite a net loss Statement of Loss Highlights (in thousands, except per share data) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Total revenue | $11,755 | $6,658 | | Gross profit | $10,776 | $5,790 | | Total operating expenses | $17,392 | $12,237 | | Loss from operations | ($6,616) | ($6,447) | | Net loss | ($6,820) | ($6,717) | | Net loss per share | ($0.22) | ($0.36) | Condensed Consolidated Statements of Cash Flows Summarizes the company's cash inflows and outflows for Q1 2022, indicating a net decrease in cash Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($1,361) | $516 | | Net cash used in investing activities | ($283) | ($39) | | Net cash used in financing activities | ($1,945) | ($200) | | Net (decrease) increase in cash | ($3,589) | $277 | | Cash, beginning of period | $85,825 | $11,744 | | Cash, end of period | $82,236 | $12,021 | Notes to Condensed Consolidated Financial Statements Provides detailed disclosures on the company's business, accounting policies, revenue breakdown, customer concentration, and a subsequent joint venture - The company develops and licenses on-chip interconnect fabric technology (NoC IP) for System-on-Chip (SoC) designs, completing its IPO in October 2021 and raising $71.1 million in net proceeds2021 - Revenue is concentrated, with Customer C accounting for 20% and Customer E for 17% of total revenue for the three months ended March 31, 202234 Disaggregated Revenue (in thousands) | Revenue Source | Q1 2022 | Q1 2021 | | :--- | :--- | :--- | | Licensing, support and maintenance | $10,575 | $6,161 | | Variable royalties | $984 | $490 | | Other | $196 | $7 | | Total | $11,755 | $6,658 | - Subsequent to the quarter end, the company entered into an agreement to form a joint venture, TransChip Technology (Nanjing) Co., Ltd., holding a 40.321% equity interest and contributing approximately $12.5 million primarily through a technology license9495 Management's Discussion and Analysis of Financial Condition and Results of Operations Discusses the company's financial performance, key operational drivers, and liquidity position for the first quarter of 2022 Overview Introduces Arteris's core business, market focus, and key financial and operational metrics for Q1 2022 - Arteris is a leading provider of interconnect IP technology for complex SoCs used in applications such as automated driving, AI/ML, 5G, data centers, and consumer electronics99100 Q1 2022 Key Metrics | Metric | Value (as of or for the three months ended March 31, 2022) | | :--- | :--- | | Revenue | $11.8 million | | Net Loss | $6.8 million | | Annual Contract Value (ACV) | $49.6 million | | New Active Customers | 7 | | Design Starts | 19 | Key Performance Indicators Presents the company's key operational metrics, including Annual Contract Value, Remaining Performance Obligations, new customers, and design starts Key Performance Indicators Comparison | Metric | As of March 31, 2022 | As of March 31, 2021 | | :--- | :--- | :--- | | Annual Contract Value (ACV) | $49.6 million | $38.1 million | | Remaining Performance Obligations (RPO) | $60.5 million | $47.4 million | | New Active Customers (Q1) | 7 | 7 | | Design Starts (Q1) | 19 | 20 | Results of Operations Analyzes the drivers behind revenue growth and the increase in operating expenses for the first quarter of 2022 Revenue Comparison (in thousands) | Revenue Category | Q1 2022 | Q1 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Licensing, support and maintenance | $10,575 | $6,161 | $4,414 | 72% | | Variable royalties | $984 | $490 | $494 | 101% | | Total revenue | $11,755 | $6,658 | $5,097 | 77% | Operating Expenses Comparison (in thousands) | Expense Category | Q1 2022 | Q1 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Research and development | $9,456 | $6,538 | $2,918 | 45% | | Sales and marketing | $3,921 | $2,448 | $1,473 | 60% | | General and administrative | $4,015 | $3,251 | $764 | 24% | | Total operating expenses | $17,392 | $12,237 | $5,155 | 42% | - The increase in operating expenses was primarily driven by higher employee-related costs from increased headcount and a significant rise in stock-based compensation expense related to RSUs granted prior to the IPO141143144 Liquidity and Capital Resources Assesses the company's cash position and its ability to meet short-term and long-term financial obligations - The company's cash balance was $82.2 million as of March 31, 2022, with operations financed primarily by customer payments and IPO proceeds148 Cash Flow Summary (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :--- | :--- | :--- | | Net cash (used in) provided by operating activities | ($1,361) | $516 | | Net cash used in investing activities | ($283) | ($39) | | Net cash used in financing activities | ($1,945) | ($200) | Quantitative and Qualitative Disclosures About Market Risk The company is not required to provide quantitative and qualitative disclosures about market risk as it qualifies as a smaller reporting company - The company is not required to provide quantitative and qualitative disclosures about market risk as it qualifies as a smaller reporting company162 Controls and Procedures Management, including the CEO and CFO, evaluated the company's disclosure controls and procedures and concluded they were effective at a reasonable assurance level as of March 31, 2022 - Based on an evaluation as of the end of the period, the CEO and CFO concluded that the company's disclosure controls and procedures were effective at the reasonable assurance level164 - No changes occurred during the quarter that have materially affected, or are reasonably likely to materially affect, the company's internal control over financial reporting165 Part II. Other Information Contains additional disclosures including legal proceedings, risk factors, and information on equity securities and IPO proceeds Legal Proceedings Confirms the absence of material legal proceedings that would adversely affect the company's business or financial condition - Arteris is not presently a party to any legal proceedings that would individually or in aggregate have a material adverse effect on its business or financial condition168 Risk Factors Outlines various risks, including competition, historical losses, customer concentration, international operations, and intellectual property protection - The company faces significant competition from larger companies with greater resources and from other third-party IP providers170171 - The company has a history of net losses, with an accumulated deficit of $45.8 million as of March 31, 2022, and may not achieve or maintain profitability175 - A significant portion of revenue is concentrated among a small number of customers, with Samsung and Intel accounting for 20% and 17% of revenue respectively in Q1 2022211 - Operations in China present significant risks, with 23.6% of revenue derived from customers in China as of March 31, 2022204294 Unregistered Sales of Equity Securities and Use of Proceeds Reports no unregistered equity sales and details the use of proceeds from the company's October 2021 Initial Public Offering - The company completed its IPO on October 29, 2021, issuing 5,750,000 shares at $14.00 per share and receiving net proceeds of approximately $71.1 million349 - There has been no material change in the planned use of IPO proceeds, which are intended for general corporate purposes350