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Arteris Announces Financial Results for the Fourth Quarter and Full Year 2024 and Estimated First Quarter and Full Year 2025 Guidance

1. Arteris achieved record $65.1M ACV plus royalties in Q4 2024. 2. Revenue increased to $15.5M, up 24% year-over-year, indicating robust demand. 3. Signed 14 new customers, including major automotive OEMs, enhancing market presence. 4. Anticipates revenue of $66M to $70M for the full year 2025. 5. Expecting growth due to AI adoption in semiconductor technologies.

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FAQ

Why Bullish?

Record annual contract value and strong customer growth signal positive momentum, akin to previous growth periods for tech firms post-product innovation launches.

How important is it?

Positive quarterly results and strategic growth initiatives directly validate the company's market position, influencing investor sentiment significantly.

Why Long Term?

Sustained demand implies ongoing revenue growth, similar to patterns observed in established IP companies in the semiconductor field.

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CAMPBELL, Calif., Feb. 18, 2025 (GLOBE NEWSWIRE) -- Arteris, Inc. (Nasdaq: AIP), a leading provider of system IP which accelerates system-on-chip (SoC) creation, today announced financial results for the fourth quarter and year ended December 31, 2024 and provided first quarter and full year 2025 guidance. “In the fourth quarter of 2024, we achieved a record Annual Contract Value plus royalties of $65.1 million, driven by strong demand for our commercial semiconductor System IP products, particularly in AI-driven enterprise computing and automotive SoCs,” said K. Charles Janac, President and CEO of Arteris. “As AI adoption accelerates across data centers, autonomous driving, and edge devices, the growing complexity of both high performance and traditional technologies like MCUs is fueling demand for the efficiency enabled by Arteris’ networks-on-chip IP technology, contributing to new customer wins, and expanded partnerships. With a robust product pipeline and deepening relationships with top-tier technology companies, we believe we are well-positioned to capitalize on exciting high-growth opportunities including Generative AI and Autonomous Driving,” concluded Janac. Fourth Quarter 2024 Financial Highlights: Revenue of $15.5 million, up 24% year-over-yearAnnual Contract Value (ACV) plus royalties of $65.1 million, up 16% year-over-year, growing to the highest level we have ever reportedRemaining performance obligation (RPO) of $88.4 million, up 22% year-over-year, growing to the highest level we have ever reportedOperating loss of $7.1 million, compared to an operating loss of $9.2 million in the fourth quarter of 2023Non-GAAP operating loss of $2.8 million, compared to a Non-GAAP operating loss of $5.5 million in the fourth quarter of 2023Net loss of $8.2 million or $0.20 per shareNon-GAAP net loss of $3.9 million or $0.10 per share Full year 2024 Financial Highlights: Revenue of $57.7 million, up 8% year-over-yearOperating loss of $31.6 million, compared to an operating loss of $35.1 million for the year-ended 2023Non-GAAP operating loss of $14.8 million, compared to a Non-GAAP operating loss of $19.8 million for the year-ended 2023Net loss of $33.6 million or $0.86 per shareNon-GAAP net loss of $16.9 million or $0.43 per share Fourth Quarter 2024 Business Highlights: 2024 was a strong year for Arteris, seeing accelerating demand for commercial system IP. We signed on 14 new customers, including two major automotive OEMs, and increased our footprint in key technology areas, such as chiplets, microcontrollers (MCUs), and AI;Record high $65.1 million in ACV plus royalties, driven by the addition of new customers as well as increased uptake by our current customers;Large, established customers are continuing to broaden their use of the Arteris product portfolio, with a top 5 technology company licensing Magillem and CSRCompiler, and a top 5 automotive semiconductor company licensing several additional SoC designs;Delivered on last quarter’s strategic expansion into the microcontroller space, licensing Arteris interconnect to Infineon, the leading MCU company, serving the world’s top automotive Tier 1 vendors and OEMs;Announced design wins with GigaDevice for automotive microcontrollers, and Menta for edge AI and IoT chiplet designs; andAnnounced the release of FlexGen smart NoC IP, which has the potential to deliver up to 10x engineer productivity and lower power consumption, through the automation of NoC design creation. Non-GAAP gross profit, Non-GAAP gross margin, Non-GAAP operating loss, Non-GAAP operating loss margin, Non-GAAP net loss, Non-GAAP net loss per share, free cash flow and free cash flow margin are Non-GAAP financial measures. Additional information on Arteris’ historic reported results, including a reconciliation of these Non-GAAP financial measures to their most comparable GAAP measures, is included in the financial tables below. First Quarter and Full Year 2025 Guidance:  Q1 2025FY 2025 (in millions)ACV + royalties$65.5 - $67.5$73.0 - $77.0Revenue$15.7 - $16.1$66.0 - $70.0Non-GAAP operating loss$3.0 - $4.0$8.5 - $12.5Free cash flow$(2.0) - $2.0$1.0 - $7.0    The guidance provided above are forward-looking statements and reflects Arteris' expectations as of today's date. Actual results may differ materially. Refer to the section titled "Forward-Looking Statements" below for information on the factors, among others, that could cause our actual results to differ materially from these forward-looking statements. A reconciliation of Non-GAAP guidance measures reported above to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty of expenses that may be incurred in the future, although it is important to note that these factors could be material to Arteris' results computed in accordance with GAAP. Definitions of the other business metrics used in this press release including ACV, active customers, confirmed design starts and RPO are included below under the heading “Other Business Metrics.” Conference Call Arteris will host a conference call today on February 18, 2025 to review its fourth quarter and full year 2024 financial results and to discuss its financial outlook. Time:4:30PM ETUnited States/Canada Toll Free:1-646-307-1865International Toll:1-800-717-1738   A live webcast will also be available in the Investor Relations section of Arteris’ website at: https://ir.arteris.com/events-and-presentations A replay of the webcast will be available in the Investor Relations section of Arteris' website approximately two hours after the conclusion of the call and remain available for approximately 30 calendar days. About Arteris Arteris is a leading provider of system IP for the acceleration of system-on-chip (SoC) development across today’s electronic systems. Arteris network-on-chip (NoC) interconnect IP and SoC integration automation technology enable higher product performance with lower power consumption and faster time to market, delivering better SoC economics so its customers can focus on dreaming up what comes next. Learn more at arteris.com. © 2004-2025 Arteris, Inc. All rights reserved worldwide. Arteris, Arteris IP, the Arteris IP logo, and the other Arteris marks found at https://www.arteris.com/trademarks are trademarks or registered trademarks of Arteris, Inc. or its subsidiaries. All other trademarks are the property of their respective owners. Investor Contacts:ArterisNick HawkinsChief Financial OfficerIR@arteris.com Sapphire Investor Relations, LLCErica Mannion and Michael Funari+1 617 542 6180IR@arteris.com Forward-Looking Statements This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, including but not limited to, statements regarding our future financial and operating performance, including our GAAP and Non-GAAP guidance for the fourth quarter and full year 2024 and first quarter and full year 2025; our market opportunity and its potential growth; our ability to execute on existing customer contracts and drive increased customer adoption of our system IP; and our position within the market and our ability to drive customer value. The words such as "may," "will," "could," "expect," "approximately," "believe," "estimate," "future," "potential," "guidance," "outlook," and similar words or expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Any forward-looking statements contained herein are based on our historical performance and our current plans, estimates and expectations and are not a representation that such plans, estimates, or expectations will be achieved. These forward-looking statements represent our expectations as of the date of this press release. Subsequent events may cause these expectations to change, and we disclaim any obligation to update the forward-looking statements in the future, except as required by law. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from our current expectations. Important factors that could cause actual results to differ materially from those anticipated in our forward-looking statements include, but are not limited to, the significant competition we face from larger companies and third-party providers; our history of net losses; whether semiconductor companies in the automotive market, enterprise computing market, communications market, consumer electronics market, and industrial markets incorporate our solutions into their end products and the growth and economic stability of these end markets; our ability to attract new customers and the extent to which our customers renew their subscriptions for our solutions; the ability of our customers’ end products achieving market acceptance or growth; our ability to sustain or grow our licensing revenue; our ability, and the cost, to successfully execute on research and development efforts; the occurrence of product errors or defects in our solutions; if we fail to offer high-quality support; the occurrence of macro-economic conditions that adversely impact us, our customers and their end product markets; the effects of geopolitical conflicts, such as the military conflict between Russia and Ukraine; the range of regulatory, operational, financial and political risks we are exposed to as a result of our dependence on international customers and operations; our ability to protect our proprietary technology and inventions through patents and other IP rights; whether we are subject to any liabilities or fines as a result of government regulation, including import, export and economic sanctions laws and regulations; the occurrence of a disruption in our networks or a security breach; risks associated with doing business in China, including as a result of changes to trade relations between the U.S. and China; and the other factors described under the heading “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2024 to be filed with the Securities and Exchange Commission (SEC) on or about February 18, 2025. All forward-looking statements reflect our beliefs and assumptions only as of the date of this press release. We undertake no obligation to update forward-looking statements to reflect future events or circumstances. Our results for the quarter and year ended December 31, 2024 are not necessarily indicative of our operating results for any future periods. Arteris, Inc.Condensed Consolidated Statements of Operations(In thousands, except share and per share data)(Unaudited)  Three Months Ended December 31, Twelve Months Ended December 31, 2024 2023 2024 2023Revenue       Licensing, support and maintenance$14,016  $11,347  $52,815  $48,273 Variable royalties and other 1,473   1,157   4,909   5,393 Total revenue 15,489   12,504   57,724   53,666 Cost of revenue 1,575   1,448   5,962   5,077 Gross profit 13,914   11,056   51,762   48,589 Operating expenses:       Research and development 11,532   10,663   45,007   45,128 Sales and marketing 5,365   5,029   20,796   20,659 General and administrative 4,119   4,613   17,555   17,944 Total operating expenses 21,016   20,305   83,358   83,731 Loss from operations (7,102)  (9,249)  (31,596)  (35,142)Interest expense (45)  (75)  (244)  (211)Other income (expense), net 824   917   3,400   3,558 Loss before income taxes and loss from equity method investment (6,323)  (8,407)  (28,440)  (31,795)Loss from equity method investment, net of tax 634   910   2,698   3,397 Provision for income taxes 1,247   1,224   2,500   1,677 Net loss$(8,204) $(10,541) $(33,638) $(36,869)        Net loss per share attributable to common stockholders, basic and diluted$(0.20) $(0.29) $(0.86) $(1.03)Weighted average shares used in computing per share amounts, basic and diluted 40,157,199   36,816,597   38,914,197   35,675,689                  Arteris, Inc.Condensed Consolidated Balance Sheets(In thousands, except share and per share data)  As of December 31, 2024 2023ASSETS   Current assets:   Cash and cash equivalents$13,684  $13,696 Short-term investments 30,157   27,477 Accounts receivable, net of allowance of $131 and $93 as of December 31, 2024, and 2023, respectively 20,608   12,003 Prepaid expenses and other current assets 4,634   5,254 Total current assets 69,083   58,430 Property and equipment, net 4,019   5,745 Long-term investments 8,504   11,802 Equity method investment 5,802   8,500 Operating lease right-of-use assets 3,838   4,289 Intangibles, net 3,024   3,858 Goodwill 4,178   4,178 Other assets 7,687   5,999 TOTAL ASSETS$106,135  $102,801 LIABILITIES AND STOCKHOLDERS’ EQUITY   Current liabilities:   Accounts payable$539  $183 Accrued expenses and other current liabilities 15,899   11,831 Operating lease liabilities, current 917   781 Deferred revenue, current 40,445   31,537 Vendor financing arrangements, current 1,482   2,070 Total current liabilities 59,282   46,402 Deferred revenue, noncurrent 35,177   25,172 Operating lease liabilities, noncurrent 2,998   3,610 Vendor financing arrangements, noncurrent 594   1,292 Deferred income, noncurrent 7,631   8,810 Other liabilities 1,641   2,412 Total liabilities 107,323   87,698 Stockholders’ (deficit) equity:   Preferred stock, par value of $0.001—10,000,000 shares authorized and no shares issued and outstanding as of both December 31, 2024, and 2023 —   — Common stock, par value of $0.001—300,000,000 shares authorized at December 31, 2024, and 2023; 40,724,936 and 37,518,583 shares issued and outstanding at December 31, 2024, and 2023, respectively 40   37 Additional paid-in capital 135,522   118,193 Accumulated other comprehensive income 135   120 Accumulated deficit (136,885)  (103,247)Total stockholders’ (deficit) equity (1,188)  15,103 TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$106,135  $102,801          Arteris, Inc.Condensed Consolidated Statements of Cash Flows(In thousands)  Twelve Months EndedDecember 31, 2024 2023CASH FLOWS FROM OPERATING ACTIVITIES:   Net loss$(33,638) $(36,869)Adjustments to reconcile net loss to net cash used in operating activities:   Depreciation and amortization 3,362   3,069 Stock-based compensation 15,938   14,535 Pension plan expenses 163   134 Amortization of deferred income (1,182)  (1,179)Loss from equity method investment 2,698   3,397 Net accretion of discounts on available-for-sale securities (695)  (893)Other, net (9)  128 Changes in operating assets and liabilities:   Accounts receivable, net (8,605)  (4,858)Prepaid expenses and other assets (1,068)  (1,301)Accounts payable 324   (389)Accrued expenses and other liabilities 3,079   2,467 Deferred revenue 18,913   6,030 Net cash used in operating activities (720)  (15,729)CASH FLOWS FROM INVESTING ACTIVITIES:   Purchases of property and equipment (324)  (1,503)Purchases of available-for-sale securities and other (37,175)  (47,788)Proceeds from maturities of available-for-sale securities and other 38,469   44,650 Other investing activities —   (50)Net cash provided by (used in) investing activities 970   (4,691)CASH FLOWS FROM FINANCING ACTIVITIES:   Payments of contingent consideration for business combination —   (1,592)Principal payments under vendor financing arrangements (1,749)  (1,289)Payments to tax authorities for shares withheld from employees —   (607)Proceeds from exercise of stock options 890   490 Proceeds from employee stock purchase plan 538   — Other financing activities 59   79 Net cash used in financing activities (262)  (2,919)NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH (12)  (23,339)CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period 14,084   37,423 CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period$14,072  $14,084          Non-GAAP Financial Measures To supplement our financial results, which are prepared and presented in accordance with GAAP, we use certain non-GAAP financial measures, as described below, to understand and evaluate our core performance. These non-GAAP measures, which may be different than similarly-titled measures used by other companies, are presented to enhance investors’ overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP. We define "Non-GAAP gross profit and Non-GAAP gross margin" as GAAP gross profit and GAAP gross margin, adjusted for stock-based compensation expense and amortization of intangible assets included in cost of revenue. We define “Non-GAAP Loss from Operations” as our income (loss) from operations adjusted to exclude stock-based compensation, acquisition costs and amortization of acquired intangible assets. We define “Non-GAAP Net Loss” as our net income (loss) adjusted to exclude stock-based compensation and amortization of acquired intangible assets. We define “Non-GAAP EPS”, as our Non-GAAP Net Income (Loss) divided by our GAAP weighted-average number of shares outstanding for the period on a diluted basis. Management uses Non-GAAP EPS to evaluate the performance of our business on a comparable basis from period to period. The above items are excluded from our Non-GAAP Gross Profit, Non-GAAP Income (Loss) from Operations and Non-GAAP Net Income (Loss) because these items are non-cash in nature, or are not indicative of our core operating performance, and render comparisons with prior periods and competitors less meaningful. We believe Non-GAAP Gross Profit, Non-GAAP Income (Loss) from Operations and Non-GAAP Net Income (Loss) provide useful supplemental information to investors and others in understanding and evaluating our results of operations, as well as provide a useful measure for period-to-period comparisons of our business performance. We define free cash flow as net cash used in operating activities less cash used for purchases of property and equipment. We believe that free cash flow is a useful indicator of liquidity that provides information to management and investors, even if negative, about the amount of cash used in our operations other than that used for investments in property and equipment. Other Business Metrics Active Customers – we define Active Customers as customers who have entered into a license agreement with us that remains in effect. The retention and expansion of our relationships with existing customers are key indicators of our revenue potential. Annual Contract Value (ACV) – we define Annual Contract Value for an individual customer agreement as the total fixed fees under the agreement divided by the number of years in the agreement term. Our total ACV is the aggregate ACVs for all our customers as measured at a given point in time. Total fixed fees includes licensing, support and maintenance and other fixed fees under IP licensing or software licensing agreements but excludes variable revenue derived from licensing agreements with customers, particularly royalties. We define ACV plus royalties as ACV plus the trailing-twelve-months variable royalties and other revenue. Confirmed Design Starts – we define Confirmed Design Starts as when customers confirm their commencement of new semiconductor designs using our interconnect IP and notify us. Confirmed Design Starts is a metric management uses to assess the activity level of our customers in terms of the number of new semiconductor designs that are started using our interconnect IP in a given period. We believe that the number of Confirmed Design Starts is an important indicator of the growth of our business and future royalty revenue trends. Remaining Performance Obligations (RPO) – we define Remaining Performance Obligations as the amount of contracted future revenue that has not yet been recognized, including deferred revenue, billed and unbilled cancelable and non-cancelable contracted amounts. Arteris, Inc.Reconciliation of GAAP Measures to Non-GAAP Measures(In thousands, except share and per share data)(Unaudited)  Three Months Ended December 31, Twelve Months Ended December 31, 2024 2023 2024 2023Gross profit$13,914  $11,056  $51,762  $48,589 Add:       Stock-based compensation expense included in cost of revenue 187   170   783   556 Amortization of acquired intangible assets (1) 49   50   199   149 Non-GAAP gross profit$14,150  $11,276  $52,744  $49,294 Gross margin 90%  88%  90%  91%Non-GAAP gross margin 91%  90%  91%  92%        Research and development$11,532  $10,663  $45,007  $45,128 Stock-based compensation expense (1,959)  (1,668)  (7,509)  (7,324)Amortization of acquired intangible assets (1) (109)  (85)  (389)  (390)Non-GAAP research and development$9,464  $8,910  $37,109  $37,414         Sales and marketing$5,365  $5,029  $20,796  $20,659 Stock-based compensation expense (849)  (624)  (3,079)  (2,712)Amortization of acquired intangible assets (1) (58)  (57)  (229)  (228)Non-GAAP sales and marketing$4,458  $4,348  $17,488  $17,719         General and administrative$4,119  $4,613  $17,555  $17,944 Stock-based compensation expense (1,136)  (1,092)  (4,567)  (3,943)Non-GAAP general and administrative$2,983  $3,521  $12,988  $14,001         Loss from operations$(7,102) $(9,249) $(31,596) $(35,142)Stock-based compensation expense 4,131   3,554   15,938   14,535 Amortization of acquired intangible assets (1) 216   192   817   767 Non-GAAP loss from operations$(2,755) $(5,503) $(14,841) $(19,840)        Net loss$(8,204) $(10,541) $(33,638) $(36,869)Stock-based compensation expense 4,131   3,554   15,938   14,535 Amortization of acquired intangible assets (1) 216   192   817   767 Non-GAAP net loss(2)$(3,857) $(6,795) $(16,883) $(21,567)        Net loss per share attributable to common stockholders, basic and diluted$(0.20) $(0.29) $(0.86) $(1.03)Per share impacts of adjustments to net loss (3)$0.10  $0.11  $0.43  $0.43 Non-GAAP net loss per share attributable to common stockholders, basic and diluted$(0.10) $(0.18) $(0.43) $(0.60)        Weighted average shares used in computing per share amounts, basic and diluted 40,157,199   36,816,597   38,914,197   35,675,689  (1) Represents the amortization expenses of our intangible assets attributable to our acquisitions.(2) Our GAAP tax provision is primarily related to foreign withholding taxes and income tax in profitable foreign jurisdictions. We maintain a full valuation allowance against our deferred tax assets in the US. Accordingly, there is no significant tax impact associated with these Non-GAAP adjustments.(3) Reflects the aggregate adjustments made to reconcile Non-GAAP net loss to our net loss as noted in the above table, divided by the GAAP diluted weighted average number of shares of the relevant period.  Free Cash Flow  Twelve Months EndedDecember 31, 2024 2023Net cash used in operating activities$(720) $(15,729)Less:   Purchase of property and equipment (324)  (1,503)Free cash flow$(1,044) $(17,232)Net cash provided by (used in) investing activities$970  $(4,691)Net cash used in financing activities$(262) $(2,919)

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