Arteris, Inc. Earnings Call: Growth Amidst Challenges

Arteris, Inc. ((AIP)) has held its Q2 earnings call. Read on for the main highlights of the call.

Arteris, Inc. recently held its earnings call, revealing a generally positive sentiment with strong revenue growth and strategic customer wins, such as a significant agreement with AMD. However, the company also faced challenges, including increased operating expenses and negative free cash flow, influenced by foreign exchange impacts.

Record-High Annual Contract Value Plus Royalties

Arteris achieved a record annual contract value plus royalties of $69.1 million, marking a 15% increase compared to the previous year. This achievement underscores the company’s ability to secure lucrative contracts and maintain a strong market position.

Strong Remaining Performance Obligations

The company reported $99.3 million in remaining performance obligations at the end of the second quarter, a 28% increase year-over-year. This growth indicates a robust pipeline of future revenue and commitments from customers.

Revenue Growth

Arteris reported a total revenue of $16.5 million for the second quarter, representing a 13% year-over-year increase and reaching the top end of the guidance range. This growth highlights the company’s successful execution of its business strategy.

AI Engineering Innovation Award

Arteris’ FlexGen technology was recognized with the AI Engineering Innovation Award at the 8th Annual AI Breakthrough Awards. This accolade reflects the company’s commitment to innovation and leadership in AI technology.

Strategic Win with AMD

A significant strategic win was achieved with AMD, a leading semiconductor company, signing an agreement to utilize Arteris’ FlexGen technology. This partnership underscores the value and competitiveness of Arteris’ offerings in the semiconductor industry.

Increased Operating Expenses

The company experienced a 10% year-over-year increase in non-GAAP operating expenses, totaling $18.6 million, with total GAAP operating expenses rising by 12%. This increase was attributed to strategic investments and foreign exchange impacts.

Negative Free Cash Flow

Arteris reported a negative free cash flow of $2.8 million for the second quarter. This financial metric highlights the challenges the company faces in managing its cash resources amidst growth and investment activities.

Foreign Exchange Impact on Operating Loss

The weakening U.S. dollar, particularly against the euro, contributed to higher operating expenses and impacted the company’s non-GAAP operating loss guidance. This currency fluctuation poses a challenge to financial performance.

Forward-Looking Guidance

For the third quarter and full year of 2025, Arteris provided optimistic guidance, projecting ACV plus royalties to range from $69.5 million to $72.5 million in Q3 and $72 million to $78 million for the full year. Revenue is expected to reach between $16.8 million and $17.2 million in Q3 and $66 million to $70 million for the year. Despite anticipating a non-GAAP operating loss and free cash flow challenges, the guidance reflects strong deal execution and growing customer interest.

In conclusion, Arteris, Inc.’s earnings call presented a mixed yet promising outlook. While the company celebrated significant revenue growth and strategic partnerships, it also acknowledged challenges such as increased expenses and negative cash flow. The forward-looking guidance suggests continued growth and resilience in the face of currency fluctuations, positioning Arteris for future success.