Financial Data and Key Metrics Changes - Total revenue for Q1 2025 was $16,500,000, representing a 28% year-over-year increase, exceeding guidance [17] - Annual contract value (ACV) plus royalties reached a record high of $66,800,000, up 15% year-over-year [17] - Remaining performance obligations (RPO) at the end of Q1 were $88,900,000, a 19% year-over-year increase [17] - Non-GAAP gross profit was $15,300,000 with a gross margin of 92% [17] - Non-GAAP operating loss for Q1 was $3,200,000, a 40% improvement compared to the prior year [20] - Free cash flow was positive at $2,700,000 for the quarter [21] Business Line Data and Key Metrics Changes - The company achieved several key design wins, including contracts with top global technology companies and automotive OEMs [6][7] - Adoption of technology in automotive, enterprise computing, and communications sectors is increasing, driven by design complexity and AI applications [6][8] - The company is seeing strong momentum in the microcontroller (MCU) system IP market, with initial royalties received from a top five MCU manufacturer [9] Market Data and Key Metrics Changes - The automotive sector remains a significant focus, with 10 automotive OEMs now as direct customers [8] - The company is expanding its presence in the AI market, with over 55% of total business now related to AI projects [72][78] - The semiconductor industry is experiencing a shift towards outsourcing system IP needs due to increasing design complexity and cost pressures [42][46] Company Strategy and Development Direction - The company is focusing on innovation and expanding ecosystem collaborations, including joining the Intel Foundry Accelerator Program [11] - The introduction of FlexGen, an AI-driven smart NOC IP technology, is expected to enhance productivity and performance in semiconductor designs [9] - The company aims to maintain its position as a neutral player in the system IP market while capitalizing on the growing demand for outsourced solutions [74] Management's Comments on Operating Environment and Future Outlook - Management acknowledges global economic uncertainty but reports no deal cancellations or delays in Q1 [13] - The company anticipates potential short-term headwinds in royalties due to customer confidence and tariffs [14] - Despite economic challenges, management remains optimistic about long-term growth and customer interest in outsourcing [15][26] Other Important Information - The company opened a new engineering and customer support center in Krakow, Poland, to enhance product development and customer support [12] - The company received multiple awards for innovation, including recognition for its NOC IP technologies [10] Q&A Session Summary Question: Changes in customer behavior due to tariffs and trade environment - Management noted some replanning of projects in China but observed an increased willingness among larger companies to outsource system IP to commercial vendors [29][30] Question: Expectations for FlexGen's revenue and ACV - Management reported positive feedback from customers evaluating FlexGen, with expectations for substantial bookings and revenue in the second half of the year [36][37] Question: Accelerating decision timelines by customers - Management indicated that while design cycles are being accelerated, licensing activity remains steady without significant changes in decision-making timelines [42] Question: Interest from joining the Intel Foundry Alliance - Management expects that joining the alliance will lead to additional business opportunities over the next twelve months [47] Question: Market size for system IP - Management estimated the system IP market to be between $1 billion and $1.2 billion, with significant growth potential as complexity increases [60] Question: Underlying technological changes prompting outsourcing - Management highlighted the increasing complexity of designs, particularly with the rise of AI and chiplets, as key factors driving the shift towards outsourcing [62][64]

Financial Performance - For the three months ended March 31, 2025, Arteris generated revenue of $16.5 million and reported a net loss of $8.1 million, with a net loss per share of $0.20[80]. - Total revenue for the three months ended March 31, 2025, was $16.532 million, a 28% increase from $12.947 million in the same period of 2024[112]. - Licensing, support, and maintenance revenue increased by $3.596 million, or 31%, to $15.335 million for the three months ended March 31, 2025, compared to $11.739 million in 2024[114]. - Gross profit margin improved to 91% for the three months ended March 31, 2025, compared to 89% in the same period of 2024[113]. - Net loss for the three months ended March 31, 2025, was $8.121 million, a decrease from a net loss of $9.403 million in 2024[112]. - Cost of revenue increased slightly by $58,000, or 4%, to $1.526 million for the three months ended March 31, 2025, compared to $1.468 million in 2024[115]. - Other income (expense), net decreased by $218,000, or 23%, to $718,000 for the three months ended March 31, 2025, from $936,000 in 2024[121]. - Provision for income taxes decreased by $102,000, or 28%, to $268,000 for the three months ended March 31, 2025, compared to $370,000 in 2024[123]. - Loss from equity method investment was $815,000 for the three months ended March 31, 2025, compared to $759,000 in 2024, reflecting a 7% increase[122]. Revenue Sources and Growth - As of March 31, 2025, the Annual Contract Value (ACV) was $62.1 million, an increase from $53.5 million as of March 31, 2024, while total ACV plus royalties reached $66.8 million, up from $58.2 million[92]. - 60.1% of revenue for the three months ended March 31, 2025, was derived from international sales, with 25.1% specifically from customers in China[88]. - The company anticipates continued growth driven by increasing complexity in System-on-Chip (SoC) designs, particularly in markets such as automotive and AI[78]. - The company aims to evaluate growth opportunities through potential acquisitions of other businesses[87]. Expenses and Investments - Research and development (R&D) expenses rose by $1.027 million, or 9%, to $11.862 million for the three months ended March 31, 2025, from $10.835 million in 2024[116]. - Sales and marketing (S&M) expenses increased by $1.073 million, or 20%, to $6.529 million for the three months ended March 31, 2025, compared to $5.456 million in 2024[118]. - Research and development expenses are expected to increase in absolute terms, reflecting ongoing investments in technology and product development[86]. Cash Flow and Liquidity - As of March 31, 2025, the company had $42.3 million in cash and cash equivalents, with $12.8 million in long-term investments[124]. - For the three months ended March 31, 2025, net cash provided by operating activities was $2.9 million, despite a net loss of $8.1 million[128]. - The company experienced a $10.3 million decrease in accounts receivable for the three months ended March 31, 2025[128]. - Net cash used in investing activities for the three months ended March 31, 2025 was $0.1 million, primarily due to purchases of available-for-sale securities[130]. - Net cash provided by financing activities for the three months ended March 31, 2024 was less than $0.1 million, primarily from stock option exercises[133]. - The company believes its current cash and cash equivalents will be sufficient to meet liquidity requirements for at least the next 12 months[125]. Industry Context - The semiconductor industry is characterized by cyclical trends, which can significantly impact revenue and customer demand for Arteris' products[90]. - Arteris' interconnect IP solutions are critical for enabling sophisticated applications across various markets, including automotive and consumer electronics[79]. Other Information - The company had no off-balance sheet financing arrangements during the periods presented[134]. - Non-cash charges for the three months ended March 31, 2025 included stock-based compensation of $4.3 million[128]. - The company is classified as an emerging growth company under the JOBS Act, allowing it to delay the adoption of certain accounting standards[138].

May 13, 2025 Arteris 1Q 2025 Earnings Presentation Charlie Janac CEO Nick Hawkins CFO 1 © 2025 Arteris, Inc. Disclaimer This presentation and the accompanying oral presentation have been prepared by Arteris, Inc. ("Arteris IP" or "the "Company") for informational purposes only and not for any other purpose. Nothing contained in this presentation is, or should be construed as, a recommendation, promise or representation by the presenter or Arteris IP or any officer, director, employee, agent or advisor of Ar ...

Financial Performance - Revenue for Q1 2025 was $16.5 million, representing a 28% increase year-over-year[5] - Annual Contract Value (ACV) plus royalties reached $66.8 million, up 15% year-over-year, marking the highest level reported[5] - Remaining performance obligation (RPO) was $88.9 million, a 19% increase year-over-year, also the highest level reported[5] - Non-GAAP free cash flow was positive at $2.7 million, equating to 16% of revenue[5] - Non-GAAP gross profit increased to $15,261 million for the three months ended March 31, 2025, compared to $11,718 million in 2024, reflecting a growth of approximately 30.4%[32] - Non-GAAP gross margin improved to 92% for the three months ended March 31, 2025, up from 91% in the same period of 2024[32] - Free cash flow for the three months ended March 31, 2025, was $2,677 million, significantly higher than $281 million in 2024, marking an increase of over 850%[35] - Non-GAAP net loss for the three months ended March 31, 2025, was $3,591 million, compared to $5,554 million in 2024, indicating a decrease of approximately 35.4%[32] - Net loss for the three months ended March 31, 2025, was $8,121 million, an improvement from a net loss of $9,403 million for the same period in 2024, indicating a reduction of about 13.6%[21] Guidance and Projections - Estimated Q2 2025 revenue guidance is between $16.1 million and $16.5 million[7] - Full year 2025 revenue guidance is projected between $65.0 million and $71.0 million[7] - Non-GAAP operating loss for Q2 2025 is estimated to be between $3.0 million and $4.0 million[7] Customer and Partnership Developments - The company added another top global automotive OEM to its customer list, now having direct license agreements with 10 automotive OEMs[5] - Arteris joined the Intel Foundry Accelerator program, enhancing its network of ecosystem partners[5] - The company opened a new engineering and customer support center in Krakow, Poland, to support development efforts[11] Asset and Liability Management - Total assets decreased from $106,135 million as of December 31, 2024, to $98,319 million as of March 31, 2025, representing a decline of approximately 7.5%[19] - Total current liabilities decreased from $59,282 million as of December 31, 2024, to $56,539 million as of March 31, 2025, a reduction of approximately 4.6%[19] - Total liabilities decreased from $107,323 million as of December 31, 2024, to $103,140 million as of March 31, 2025, a decline of about 3.6%[19] Research and Development - Research and development expenses rose to $11,862 million for the three months ended March 31, 2025, compared to $10,835 million in 2024, an increase of about 9.5%[32] Shareholder Information - The number of weighted average shares used in computing per share amounts increased from 37,709,058 in 2024 to 40,853,048 in 2025, reflecting a growth of approximately 8.5%[34]

Core Insights - Arteris, Inc. reported strong financial results for Q1 2025, achieving record annual contract value plus royalties of $66.8 million, a 15% increase year-over-year, and positive free cash flow of $2.7 million [2][6]. Financial Highlights - Revenue for Q1 2025 was $16.5 million, representing a 28% increase year-over-year [6]. - Non-GAAP operating loss decreased to $3.2 million from $5.3 million in Q1 2024 [6]. - Net loss for the quarter was $8.1 million, or $0.20 per share, compared to a net loss of $9.4 million, or $0.25 per share, in Q1 2024 [6][16]. - Remaining performance obligations (RPO) reached $88.9 million, up 19% year-over-year [6]. Business Highlights - The company experienced strong demand across key verticals: enterprise computing, communications, and automotive semiconductors, driven by the adoption of chiplets and AI compute [2][6]. - Arteris expanded its customer base, adding another top global automotive OEM, bringing the total to 10 automotive OEMs [6]. - The company joined the Intel Foundry Accelerator program, enhancing its network of ecosystem partners [6]. - Arteris received three awards at the annual American Business Awards, including gold for Most Innovative Tech Company of the Year [6]. Guidance - For Q2 2025, Arteris expects annual contract value plus royalties to be between $66.0 million and $70.0 million, with revenue projected between $16.1 million and $16.5 million [7]. - Full-year 2025 guidance for annual contract value plus royalties is set at $71.0 million to $79.0 million, with revenue expected between $65.0 million and $71.0 million [7].

Group 1: Arteris, Inc. (AIP) - Arteris, Inc. shares increased by 8.6% to close at $7.24, with trading volume significantly higher than usual, reflecting a 19.3% gain over the past four weeks [1] - The company is experiencing increased demand for commercial semiconductor system IP products, driven by the adoption of AI-driven enterprise computing, automotive SoCs, and microcontrollers [1] - The consensus EPS estimate for the upcoming quarter is a loss of $0.11 per share, representing a year-over-year change of +26.7%, with expected revenues of $15.9 million, up 22.8% from the previous year [2] Group 2: Earnings and Stock Performance - The consensus EPS estimate for Arteris has remained unchanged over the last 30 days, indicating that stock price movements may not sustain without trends in earnings estimate revisions [3] - The stock currently holds a Zacks Rank of 3 (Hold), suggesting a neutral outlook [3] - In comparison, Getty Images Holdings, Inc. (GETY), another company in the same industry, has a consensus EPS estimate of $0.03, reflecting a year-over-year change of +200%, but carries a Zacks Rank of 5 (Strong Sell) [4]

Core Insights - Arteris, Inc. has joined the Intel Foundry Accelerator Ecosystem Alliance Program, enhancing its collaboration with Intel Foundry to support the design of electronics using advanced semiconductor process technologies [1][2][3] - The partnership aims to optimize performance, power, and area (PPA) for complex system-on-chip (SoC) and chiplet designs, leveraging Arteris' network-on-chip (NoC) IP and SoC integration automation technologies [2][3] - This collaboration is expected to drive advancements in interoperability and the chiplet ecosystem, facilitating better integration and performance for mutual customers [1][3] Company Overview - Arteris is recognized as a leading provider of system IP that accelerates SoC development, focusing on enhancing product performance while reducing power consumption and time to market [4] - The company's NoC interconnect IP and automation technologies are designed to deliver improved SoC economics, allowing customers to innovate and develop new products [4]

Core Insights - Arteris, Inc. has been awarded three prestigious Stevie Awards at the 23rd Annual American Business Awards, including two Gold Stevie Awards for Most Innovative Tech Company of the Year and Technical Innovation of the Year, and a Silver Stevie Award for Achievement in Product Innovation [1][3][4] Company Achievements - The Gold Stevie Award for Most Innovative Tech Company of the Year recognizes Arteris' overall contributions to pioneering change in the tech industry [3] - The second Gold Stevie Award was awarded for Arteris' Ncore cache coherent network-on-chip IP, highlighting its technical innovation [3] - The Silver Stevie Award was given for Arteris' NoC Tiling capabilities, showcasing the company's commitment to product innovation [3] Industry Context - The American Business Awards is a leading business awards program in the U.S., with over 3,600 nominations and participation from more than 250 professionals in the judging process [2] - The awards celebrate organizations across the U.S. that demonstrate resilience and innovation, reflecting the competitive landscape of the tech industry [4] Company Overview - Arteris is recognized as a leading provider of system IP that accelerates system-on-chip (SoC) development, focusing on enhancing product performance while reducing power consumption and time to market [5] - The company's network-on-chip (NoC) interconnect IP and SoC integration automation technology are key components in delivering better SoC economics for its customers [5]

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]