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Arteris (AIP)
NASDAQ:AIP
US Market

Arteris (AIP) AI Stock Analysis

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Arteris

(NASDAQ:AIP)

Rating:58Neutral
Price Target:
$7.50
▲( 5.63% Upside)
Arteris's overall stock score is primarily influenced by strong revenue growth and positive earnings call highlights. However, profitability challenges, financial leverage risks, and valuation concerns weigh down the score. Positive technical indicators provide some support, but significant economic and operational risks remain.
Positive Factors
Financial Performance
The company reported record annual contract value (ACV) plus royalties, record RPO, and strong FCF generation, an indicator of the strong underlying demand for its network-on-chip IP solutions.
Licensing and Partnerships
Securing a licensing win with a leading Japanese automotive OEM for a new autonomous driving SoC was another highlight, bringing the company's total direct Auto OEM engagements to 10.
Negative Factors
Economic Environment
The uncertain economic environment is impacting demand for Arteris' customers' products, particularly in Automotive and Consumer.

Arteris (AIP) vs. SPDR S&P 500 ETF (SPY)

Arteris Business Overview & Revenue Model

Company DescriptionArteris, Inc. provides semiconductor interconnect intellectual property (IP) and IP deployment solutions in the Americas, the Asia Pacific, Europe, and the Middle East. The company develops, licenses, and supports the on-chip interconnect fabric technology used in System-on-Chip (Soc) designs and Network-on-Chip (NoC) interconnect IP. Its products include FlexNoC, a silicon-proven interconnect IP product; FlexNoC Resilience Package, which provides on-chip data protection; Ncore, a silicon-proven and cache coherent interconnect IP product that provides scalable, configurable, and area efficient characteristics; CodaCache, a last-level cache semiconductor IP product; and Physical interconnect aware NoC optimizer, a software tool that estimates physical layout effects during the architecture and logic development stages of an SoC interconnect design; The company also offers FlexWay for IP subsystem interconnect; FlexPSI for All-digital inter chip link; and FlexNoC Physical for linking physical placement and routing tools. In addition, it provides IP deployment software solutions, including specification, design, documentation, artificial intelligence (AI) package, design data intelligence, and harmony trace. The company serves customers in the automotive, AI/machine learning, 5G and wireless communications, data centers, consumer electronics, and other markets. Arteris, Inc. was founded in 2003 and is headquartered in Campbell, California.
How the Company Makes MoneyArteris makes money primarily by licensing its intellectual property (IP) solutions to semiconductor and electronic device manufacturers who integrate these solutions into their SoC designs. The company charges upfront licensing fees as well as royalties based on the production volume of chips that incorporate its IP. Additionally, Arteris offers maintenance and support services, which provide recurring revenue streams. Strategic partnerships with major semiconductor companies and technology firms also contribute to Arteris' revenue by expanding its market reach and fostering innovation in its product offerings.

Arteris Financial Statement Overview

Summary
Arteris exhibits significant financial challenges, particularly in profitability and cash flow generation. Despite some revenue growth, negative equity and consistent net losses signal financial instability.
Income Statement
40
Negative
Arteris's financial performance shows a slight improvement in revenue growth, with a 7.57% increase from 2023 to 2024. However, the company struggles with profitability, as indicated by a negative net profit margin and a consistent EBIT loss over recent years. The gross profit margin is strong at 89.68%, but this is overshadowed by the significant net losses, which indicate operational challenges in converting revenue to profit.
Balance Sheet
35
Negative
The balance sheet reveals a negative equity position, with liabilities exceeding assets, which poses a risk to financial stability. The debt-to-equity ratio is not calculable due to negative equity, and this instability is further reflected in the declining stockholders' equity over the years. Despite these concerns, the company maintains a relatively low level of debt.
Cash Flow
30
Negative
Arteris shows negative operating and free cash flows, indicating challenges in cash generation from operations. The operating cash flow to net income ratio is slightly better in 2024 than in 2023, but still negative, suggesting inefficiencies in converting revenue into cash. Free cash flow growth is also negative, highlighting ongoing liquidity issues.
Breakdown
Dec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
57.72M53.67M50.38M37.86M31.81M
Gross Profit
51.76M48.59M46.10M34.13M30.32M
EBIT
-31.60M-35.14M-28.86M-21.77M-3.78M
EBITDA
-24.83M-28.52M-25.35M-20.27M-1.25M
Net Income Common Stockholders
-33.64M-36.87M-27.10M-23.38M-3.26M
Balance SheetCash, Cash Equivalents and Short-Term Investments
43.84M41.17M68.15M85.83M11.74M
Total Assets
106.14M102.80M115.52M120.44M42.74M
Total Debt
5.99M7.75M3.62M3.91M4.77M
Net Debt
-7.69M-5.94M-33.80M-81.91M-6.97M
Total Liabilities
107.32M87.70M77.98M67.54M54.74M
Stockholders Equity
-1.19M15.10M37.53M52.90M-12.01M
Cash FlowFree Cash Flow
-1.04M-17.23M-7.82M-1.62M1.51M
Operating Cash Flow
-720.00K-15.73M-6.77M-814.00K2.16M
Investing Cash Flow
970.00K-4.69M-37.48M-1.36M-5.15M
Financing Cash Flow
-262.00K-2.92M-4.15M76.25M790.00K

Arteris Technical Analysis

Technical Analysis Sentiment
Negative
Last Price7.10
Price Trends
50DMA
6.97
Positive
100DMA
8.53
Negative
200DMA
8.22
Negative
Market Momentum
MACD
0.15
Positive
RSI
50.73
Neutral
STOCH
14.12
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AIP, the sentiment is Negative. The current price of 7.1 is below the 20-day moving average (MA) of 7.19, above the 50-day MA of 6.97, and below the 200-day MA of 8.22, indicating a neutral trend. The MACD of 0.15 indicates Positive momentum. The RSI at 50.73 is Neutral, neither overbought nor oversold. The STOCH value of 14.12 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AIP.

Arteris Risk Analysis

Arteris disclosed 63 risk factors in its most recent earnings report. Arteris reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 1 New Risks
1.
Political and regulatory conditions that contribute to uncertainty and market volatility including legislative, regulatory, trade and policy changes associated with the new U.S. presidential administration could materially and adversely impact our business operations and financial results. Q4, 2024

Arteris Peers Comparison

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
71
Outperform
$266.16M10.9121.69%-14.48%46.79%
70
Outperform
$339.71M22.5623.57%5.70%-13.18%-12.06%
61
Neutral
$11.41B10.19-7.05%2.95%7.46%-10.52%
AIAIP
58
Neutral
$309.38M-1369.57%14.68%20.20%
57
Neutral
$353.62M-4.71%-4.77%84.82%
50
Neutral
$535.53M-32.43%-7.09%-53.23%
41
Neutral
$249.13M-375.37%-1005.33%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
AIP
Arteris
7.20
-0.49
-6.37%
AEHR
Aehr Test Systems
8.83
-2.59
-22.68%
NVEC
NVE
73.16
0.44
0.61%
INDI
indie Semiconductor
2.42
-3.78
-60.97%
BZAI
Blaize Holdings
2.45
-8.67
-77.97%
XPER
Xperi Inc
7.74
-1.53
-16.50%

Arteris Earnings Call Summary

Earnings Call Date:May 13, 2025
(Q1-2025)
|
% Change Since: -14.97%|
Next Earnings Date:Jul 31, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong financial performance, strategic wins, and innovation recognition, indicating positive momentum. However, concerns about economic uncertainties, tariffs, and currency impacts were noted. Overall, the positive aspects and growth prospects slightly outweigh the challenges.
Q1-2025 Updates
Positive Updates
Record Annual Contract Value and Positive Free Cash Flow
Arteris achieved a record annual contract value plus royalties of $66.8 million and generated $2.7 million in non-GAAP positive free cash flow driven by demand for semiconductor system IP products.
Significant Design Wins and New Customers
Arteris secured several key design wins, including four from top 30 global technology companies and expanded orders from a top five technology company. They also added three new customers, including a Japanese automotive OEM.
Recognition for Innovation
Arteris received awards in three categories at the 23rd Annual American Business Awards, including Gold Awards for Most Innovative Tech Company and Technical Innovation of the Year.
Strong Financial Performance
The company reported a total revenue of $16.5 million, up 28% year-over-year, and a non-GAAP gross margin of 92%.
Growing Pipeline and Product Success
Arteris has over 20 customer SoC projects evaluating FlexGen, expected to generate revenue and ACV in the second half of the year.
Negative Updates
Economic and Tariff Concerns
Arteris expressed concerns over global economic uncertainty, potential short-term headwinds to royalties, and potential impacts from trade challenges and tariffs, especially in automotive and consumer markets.
Currency Exchange Impact
The weakening of the U.S. dollar against major currencies could increase Arteris's expenses by approximately $1 million annually.
Operating Losses Despite Revenue Growth
Despite revenue growth, Arteris reported a non-GAAP operating loss of $3.2 million and a GAAP operating loss of $7.7 million for the first quarter.
Company Guidance
During the first quarter of 2025, Arteris reported a record annual contract value (ACV) plus royalties of $66.8 million, marking a 15% year-over-year increase, which was above the midpoint of their guidance range. The company achieved a total revenue of $16.5 million, representing a 28% year-over-year growth, and exceeded the top end of their guidance range. Non-GAAP gross profit was $15.3 million, with a gross margin of 92%, while GAAP gross profit was $15.0 million, with a gross margin of 91%. Arteris also generated $2.7 million in non-GAAP positive free cash flow. The company's remaining performance obligations (RPO) were reported at $88.9 million, a 19% increase from the previous year. Despite economic uncertainties, Arteris maintained their full year 2025 guidance for ACV plus royalties to exit the year between $71 million and $79 million, with revenue projected between $65 million and $71 million. They anticipate a non-GAAP operating loss ranging from $14 million to $7 million and non-GAAP free cash flow between 0 to positive $8 million for the full year.

Arteris Corporate Events

Executive/Board Changes
Arteris Board Member Isabelle Geday Resigns
Neutral
Mar 28, 2025

On March 25, 2025, Isabelle F. Geday announced her resignation from the board of directors of Arteris, Inc., effective March 27, 2025, citing personal reasons unrelated to any disagreements with the company’s operations or policies. In response to her unexpected departure and in appreciation of her service since 2020, the board approved the accelerated vesting of her 19,287 restricted stock units, which were initially set to vest in June 2025 or at the company’s 2025 annual meeting.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.