Arteris Announces Financial Results for the Second Quarter 2024 and Third Quarter and Full Year 2024 Guidance
Arteris (Nasdaq: AIP) reported strong Q2 2024 financial results, with revenue up 13% sequentially to $14.6 million. The company achieved record Annual Contract Value and Trailing-Twelve-Month Variable Royalties of $60.1 million, a 3% year-over-year increase. Notably, Arteris reported positive free cash flow for the second consecutive quarter.
Key highlights include:
- Remaining performance obligation (RPO) grew 19% year-over-year to $77.5 million
- Non-GAAP operating loss improved to $3.5 million from $4.2 million in the year-ago period
- Added seven new customers across various markets
- Expanded presence in the Automotive sector with two new global OEM customers
For Q3 2024, Arteris projects ACV + TTM royalties of $58.5-$62.5 million and revenue of $14.2-$15.2 million. Full-year 2024 guidance estimates revenue between $56.0-$58.0 million.
Arteris (Nasdaq: AIP) ha riportato forti risultati finanziari per il secondo trimestre del 2024, con un aumento del fatturato del 13% rispetto al trimestre precedente a $14,6 milioni. L'azienda ha raggiunto un valore contrattuale annuale record e diritti variabili degli ultimi dodici mesi di $60,1 milioni, con un incremento del 3% rispetto all'anno precedente. È importante notare che Arteris ha riportato un flusso di cassa libero positivo per il secondo trimestre consecutivo.
I punti salienti includono:
- l'obbligo di prestazione rimanente (RPO) è cresciuto del 19% rispetto all'anno precedente, raggiungendo $77,5 milioni
- la perdita operativa non GAAP è migliorata a $3,5 milioni dai $4,2 milioni dello stesso periodo dell'anno scorso
- aggiunti sette nuovi clienti in vari mercati
- espansione della presenza nel settore automobilistico con due nuovi clienti OEM globali
Per il terzo trimestre del 2024, Arteris prevede royalties ACV + TTM di $58,5-$62,5 milioni e un fatturato di $14,2-$15,2 milioni. Le previsioni per l'intero anno 2024 stimano un fatturato tra $56,0-$58,0 milioni.
Arteris (Nasdaq: AIP) informó resultados financieros sólidos para el segundo trimestre de 2024, con un aumento del 13% en los ingresos secuencialmente, alcanzando $14.6 millones. La empresa logró un valor de contrato anual récord y regalías variables de los últimos doce meses de $60.1 millones, un incremento del 3% en comparación con el año anterior. Notablemente, Arteris reportó un flujo de caja libre positivo por segundo trimestre consecutivo.
Los aspectos más destacados incluyen:
- la obligación de desempeño restante (RPO) creció un 19% interanual hasta $77.5 millones
- la pérdida operativa no GAAP mejoró a $3.5 millones desde $4.2 millones en el mismo período del año pasado
- se añadieron siete nuevos clientes en varios mercados
- ampliación de la presencia en el sector automotriz con dos nuevos clientes OEM globales
Para el tercer trimestre de 2024, Arteris proyecta regalías ACV + TTM de $58.5-$62.5 millones y unos ingresos de $14.2-$15.2 millones. La guía anual para 2024 estima ingresos entre $56.0-$58.0 millones.
Arteris (Nasdaq: AIP)는 2024년 2분기 강력한 재무 결과를 보고했으며, 전 분기 대비 13% 증가한 1,460만 달러의 매출을 기록하였습니다. 이 회사는 전년 대비 3% 증가한 6,010만 달러의 연간 계약 가치 및 지난 12개월간 변동 로열티 기록을 달성했습니다. 특히, Arteris는 두 분기 연속 긍정적인 자유 현금 흐름을 보고했습니다.
주요 하이라이트는 다음과 같습니다:
- 남은 성과 의무(RPO)가 전년 대비 19% 증가하여 7,750만 달러에 도달
- 비 GAAP 운영 손실이 전년 동기 420만 달러에서 350만 달러로 개선됨
- 여러 시장에서 7명의 신규 고객 추가
- 두 개의 글로벌 OEM 고객과 함께 자동차 부문에서의 존재 확대
2024년 3분기에는 Arteris가 ACV + TTM 로열티를 5,850만 달러에서 6,250만 달러, 매출을 1,420만 달러에서 1,520만 달러로 예상하고 있습니다. 2024년 전체 연도 가이드는 매출이 5,600만 달러에서 5,800만 달러 사이가 될 것으로 추정하고 있습니다.
Arteris (Nasdaq: AIP) a déclaré de solides résultats financiers pour le deuxième trimestre 2024, avec une augmentation de 13 % des revenus par rapport au trimestre précédent, atteignant 14,6 millions de dollars. L'entreprise a atteint un chiffre d'affaires contractuel annuel record et des redevances variables des douze derniers mois de 60,1 millions de dollars, soit une augmentation de 3 % par rapport à l'année précédente. Il est à noter qu'Arteris a enregistré un flux de trésorerie libre positif pour le deuxième trimestre consécutif.
Les points clés incluent :
- l'obligation de performance restante (RPO) a augmenté de 19 % d'une année sur l'autre, atteignant 77,5 millions de dollars
- la perte d'exploitation non-GAAP s'est améliorée à 3,5 millions de dollars, contre 4,2 millions de dollars l'année précédente
- ajout de sept nouveaux clients sur divers marchés
- expansion de la présence dans le secteur automobile avec deux nouveaux clients OEM mondiaux
Pour le troisième trimestre 2024, Arteris prévoit des redevances ACV + TTM entre 58,5 et 62,5 millions de dollars et des revenus entre 14,2 et 15,2 millions de dollars. Les prévisions pour l'année entière 2024 estiment les revenus entre 56,0 et 58,0 millions de dollars.
Arteris (Nasdaq: AIP) meldete starke Finanzzahlen für das zweite Quartal 2024, mit einem Anstieg der Einnahmen um 13 % im Vergleich zum Vorquartal auf 14,6 Millionen US-Dollar. Das Unternehmen erzielte einen Rekordwert für jährliche Vertragswerte und variablen Royalties der letzten zwölf Monate von 60,1 Millionen US-Dollar, was einem Anstieg von 3 % im Jahresvergleich entspricht. Auffallend ist, dass Arteris im zweiten Quartal in Folge einen positiven Cashflow erwirtschaftete.
Schlüsselpunkte sind:
- Die verbleibende Leistungspflicht (RPO) wuchs im Vergleich zum Vorjahr um 19 % auf 77,5 Millionen US-Dollar
- Der non-GAAP Betriebsverlust verbesserte sich von 4,2 Millionen US-Dollar im Vorjahreszeitraum auf 3,5 Millionen US-Dollar
- Sieben neue Kunden in verschiedenen Märkten hinzugefügt
- Präsenz im Automobilsektor mit zwei neuen globalen OEM-Kunden erweitert
Für das dritte Quartal 2024 prognostiziert Arteris ACV + TTM-Royalties von 58,5 bis 62,5 Millionen US-Dollar und Einnahmen von 14,2 bis 15,2 Millionen US-Dollar. Die Prognose für das gesamte Jahr 2024 schätzt die Einnahmen auf zwischen 56,0 und 58,0 Millionen US-Dollar.
- Revenue increased 13% sequentially to $14.6 million
- Record $60.1 million in Annual Contract Value and Trailing-Twelve-Month Variable Royalties, up 3% year-over-year
- Positive free cash flow for the second consecutive quarter at $0.3 million
- Remaining performance obligation (RPO) grew 19% year-over-year to $77.5 million
- Added seven new customers across key markets
- Expanded presence in Automotive sector with two new global OEM customers
- Included in the Russell 2000® Index
- Operating loss of $7.4 million
- Non-GAAP operating loss of $3.5 million
- Net loss of $8.3 million or $0.22 per share
- Non-GAAP net loss of $4.4 million or $0.11 per share
Insights
Arteris' Q2 2024 results showcase a mix of positive trends and ongoing challenges. The company reported revenue of
However, profitability remains a concern. The company reported a Non-GAAP operating loss of
On a positive note, Arteris generated positive free cash flow of
The company's guidance for Q3 and full-year 2024 indicates cautious optimism. The projected ACV + TTM royalties range of
Investors should closely monitor Arteris' progress in expanding its customer base, particularly in high-growth sectors like Automotive and AI, as well as its ability to translate revenue growth into improved bottom-line results.
Arteris' Q2 2024 results reflect the growing importance of system IP in the rapidly evolving semiconductor landscape. The company's success in adding seven new customers across key markets, including Automotive, Enterprise Computing, Communications and Consumer Electronics, underscores the increasing demand for sophisticated SoC integration solutions.
The addition of two market-leading global automotive OEMs to Arteris' customer base is particularly noteworthy. As vehicles become more technologically advanced, requiring complex SoCs for functions like autonomous driving and infotainment systems, Arteris' expertise in system IP becomes increasingly valuable.
The company's involvement with a major robotaxi company and a market-leading assisted driving technology company further cements its position in the burgeoning autonomous vehicle sector. This aligns well with the industry trend towards more advanced driver assistance systems (ADAS) and fully autonomous vehicles.
Arteris' partnership with Andes Technology, a leading supplier of RISC-V processor IP, is strategically significant. As RISC-V architecture gains traction in the industry due to its open-source nature and flexibility, this collaboration could open up new opportunities for Arteris in the growing RISC-V ecosystem.
The selection of Arteris' SoC integration automation software by Esperanto Technologies, an AI solution provider, highlights the company's relevance in the AI and high-performance computing space. As AI workloads become more complex and demanding, efficient SoC design and integration become crucial, positioning Arteris favorably in this high-growth sector.
These developments suggest that Arteris is well-positioned to capitalize on key technology trends, particularly in automotive, AI and advanced computing. However, the company will need to effectively monetize these opportunities to improve its financial performance in the coming quarters.
CAMPBELL, Calif., Aug. 01, 2024 (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 second quarter ended June 30, 2024 and provided third quarter and full year 2024 guidance.
“We’re excited to report a record
Second Quarter 2024 Financial Highlights:
- Revenue of
$14.6 million , up13% sequentially - Annual Contract Value (ACV) and trailing-twelve-months (TTM) variable royalties of
$60.1 million , up3% year-over-year - Remaining performance obligation (RPO) of
$77.5 million , up19% year-over-year, growing to the highest level we have ever reported - Non-GAAP free cash flow of positive
$0.3 million or1.8% of revenue - Operating loss of
$7.4 million - Non-GAAP operating loss of
$3.5 million , compared to a Non-GAAP operating loss of$4.2 million in the year ago period - Net loss of
$8.3 million or$0.22 per share - Non-GAAP net loss of
$4.4 million or$0.11 per share
Second Quarter 2024 Business Highlights:
- Added seven new customers across key markets, including Automotive, Enterprise Computing, Communications and Consumer Electronics;
- Continued growth momentum in Automotive with the addition of two market-leading global automotive OEMs to our customer base;
- Steady design activity, with design starts in dynamic technology areas, including a major robotaxi company and a market-leading assisted driving technology company;
- Forged an ecosystem partnership with Andes Technology, a founding and premier member of RISC-V and a leading supplier of high-performance, low-power RISC-V processor IP;
- Esperanto Technologies, an AI solution provider for Generative AI and high-performance computing, chose Arteris SoC integration automation software for its automation efficiency, error reduction and streamlined design workflows; and
- AIP included in the Russell 2000® Index.
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.
Third Quarter and Full Year 2024 Guidance:
| Q3 2024 | FY 2024 | |
| (in millions) | ||
| ACV + TTM royalties | ||
| Revenue | ||
| Non-GAAP operating loss | ||
| Free cash flow | ||
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 August 1, 2024 to review its second quarter 2024 financial results and to discuss its financial outlook.
| Time: | 4:30PM ET | |
| United States/Canada Toll Free: | 1-800-717-1738 | |
| International Toll: | 1-646-307-1865 | |
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.
© 2004-2024 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:
Arteris
Nick Hawkins
Chief Financial Officer
IR@arteris.com
Sapphire Investor Relations, LLC
Erica Mannion and Michael Funari
+1 617 542 6180
IR@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 third quarter and full year 2024; 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 "may," "might," "will," "could," "would," "should," "expect," "plan," "anticipate," "intend," "believe," "expect," "estimate," "seek," "predict," "future," "project," "potential," "continue," "target" 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; and the other factors described under the heading “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2024 to be filed with the Securities and Exchange Commission (SEC) on August 1, 2024. 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 ended June 30, 2024 are not necessarily indicative of our operating results for any future periods.
| Arteris, Inc. Condensed Consolidated Statements of Loss (In thousands, except share and per share data) (Unaudited) | |||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Revenue | |||||||||||||||
| Licensing, support and maintenance | $ | 13,553 | $ | 12,998 | $ | 25,292 | $ | 24,842 | |||||||
| Variable royalties and other | 1,022 | 1,736 | 2,230 | 3,046 | |||||||||||
| Total revenue | 14,575 | 14,734 | 27,522 | 27,888 | |||||||||||
| Cost of revenue | 1,458 | 1,225 | 2,926 | 2,349 | |||||||||||
| Gross profit | 13,117 | 13,509 | 24,596 | 25,539 | |||||||||||
| Operating expenses: | |||||||||||||||
| Research and development | 10,717 | 12,087 | 21,552 | 23,468 | |||||||||||
| Sales and marketing | 5,013 | 5,601 | 10,469 | 10,606 | |||||||||||
| General and administrative | 4,828 | 4,504 | 9,150 | 8,905 | |||||||||||
| Total operating expenses | 20,558 | 22,192 | 41,171 | 42,979 | |||||||||||
| Loss from operations | (7,441 | ) | (8,683 | ) | (16,575 | ) | (17,440 | ) | |||||||
| Interest expense | (68 | ) | (27 | ) | (144 | ) | (59 | ) | |||||||
| Other income (expense), net | 865 | 835 | 1,801 | 1,743 | |||||||||||
| Loss before income taxes and loss from equity method investment | (6,644 | ) | (7,875 | ) | (14,918 | ) | (15,756 | ) | |||||||
| Loss from equity method investment, net of tax | 725 | 734 | 1,484 | 1,568 | |||||||||||
| Provision for income taxes | 975 | 556 | 1,345 | 851 | |||||||||||
| Net loss | $ | (8,344 | ) | $ | (9,165 | ) | $ | (17,747 | ) | $ | (18,175 | ) | |||
| Net loss per share attributable to common stockholders, basic and diluted | $ | (0.22 | ) | $ | (0.26 | ) | $ | (0.47 | ) | $ | (0.52 | ) | |||
| Weighted average shares used in computing per share amounts, basic and diluted | 38,476,934 | 35,250,157 | 38,092,996 | 34,925,800 | |||||||||||
| Arteris, Inc. Condensed Consolidated Balance Sheets (In thousands, except share and per share data) (Unaudited) | |||||||
| As of | |||||||
| June 30, 2024 | December 31, 2023 | ||||||
| ASSETS | |||||||
| Current assets: | |||||||
| Cash and cash equivalents | $ | 22,128 | $ | 13,696 | |||
| Short-term investments | 23,629 | 27,477 | |||||
| Accounts receivable, net of allowance of | 8,947 | 12,003 | |||||
| Prepaid expenses and other current assets | 4,202 | 5,254 | |||||
| Total current assets | 58,906 | 58,430 | |||||
| Property and equipment, net | 4,665 | 5,745 | |||||
| Long-term investments | 8,124 | 11,802 | |||||
| Equity method investment | 7,016 | 8,500 | |||||
| Operating lease right-of-use assets | 3,829 | 4,289 | |||||
| Intangibles, net | 3,466 | 3,858 | |||||
| Goodwill | 4,178 | 4,178 | |||||
| Other assets | 6,187 | 5,999 | |||||
| TOTAL ASSETS | $ | 96,371 | $ | 102,801 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 340 | $ | 183 | |||
| Accrued expenses and other current liabilities | 11,713 | 11,831 | |||||
| Operating lease liabilities, current | 830 | 781 | |||||
| Deferred revenue, current | 36,939 | 31,537 | |||||
| Vendor financing arrangements, current | 1,905 | 2,070 | |||||
| Total current liabilities | 51,727 | 46,402 | |||||
| Deferred revenue, noncurrent | 24,503 | 25,172 | |||||
| Operating lease liabilities, noncurrent | 3,123 | 3,610 | |||||
| Vendor financing arrangements, noncurrent | 889 | 1,292 | |||||
| Deferred income, noncurrent | 8,226 | 8,810 | |||||
| Other liabilities | 2,628 | 2,412 | |||||
| Total liabilities | 91,096 | 87,698 | |||||
| Stockholders' equity: | |||||||
| Preferred stock, par value of | — | — | |||||
| Common stock, par value of | 39 | 37 | |||||
| Additional paid-in capital | 126,192 | 118,193 | |||||
| Accumulated other comprehensive income | 38 | 120 | |||||
| Accumulated deficit | (120,994 | ) | (103,247 | ) | |||
| Total stockholders' equity | 5,275 | 15,103 | |||||
| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ | 96,371 | $ | 102,801 | |||
| Arteris, Inc. Condensed Consolidated Statements of Cash Flows (In thousands) (Unaudited) | |||||||
| Six Months Ended June 30, | |||||||
| 2024 | 2023 | ||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | |||||||
| Net loss | $ | (17,747 | ) | $ | (18,175 | ) | |
| Adjustments to reconcile net loss to net cash used in operating activities: | |||||||
| Depreciation and amortization | 1,630 | 1,275 | |||||
| Stock-based compensation | 7,417 | 7,267 | |||||
| Amortization of deferred income | (588 | ) | (585 | ) | |||
| Loss from equity method investment | 1,484 | 1,568 | |||||
| Net accretion of discounts on available-for-sale securities | (344 | ) | (497 | ) | |||
| Other, net | 24 | 10 | |||||
| Changes in operating assets and liabilities: | |||||||
| Accounts receivable, net | 3,055 | (2,438 | ) | ||||
| Prepaid expenses and other assets | 865 | (710 | ) | ||||
| Accounts payable | 156 | (371 | ) | ||||
| Accrued expenses and other liabilities | 103 | 16 | |||||
| Deferred revenue | 4,733 | 2,696 | |||||
| Net cash provided by (used in) operating activities | 788 | (9,944 | ) | ||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | |||||||
| Purchases of property and equipment | (243 | ) | (735 | ) | |||
| Purchases of available-for-sale securities | (12,981 | ) | (19,544 | ) | |||
| Proceeds from maturities of available-for-sale securities and other | 20,769 | 20,650 | |||||
| Net cash provided by investing activities | 7,545 | 371 | |||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | |||||||
| Payments of contingent consideration for business combination | — | (1,000 | ) | ||||
| Principal payments under vendor financing arrangements | (485 | ) | (488 | ) | |||
| Proceeds from exercise of stock options | 584 | 417 | |||||
| Payments to tax authorities for shares withheld from employees | — | (57 | ) | ||||
| Net cash provided by (used in) financing activities | 99 | (1,128 | ) | ||||
| NET INCREASE (DECREASE) IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH | 8,432 | (10,701 | ) | ||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period | 14,084 | 37,423 | |||||
| CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period | $ | 22,516 | $ | 26,722 | |||
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 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, acquisition costs 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) provided by 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.
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 June 30, | Six Months Ended June 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Gross profit | $ | 13,117 | $ | 13,509 | $ | 24,596 | $ | 25,539 | |||||||
| Add: | |||||||||||||||
| Stock-based compensation expense included in cost of revenue | 186 | 122 | 375 | 205 | |||||||||||
| Amortization of acquired intangible assets (1) | 50 | 49 | 100 | 49 | |||||||||||
| Non-GAAP gross profit | $ | 13,353 | $ | 13,680 | $ | 25,071 | $ | 25,793 | |||||||
| Gross margin | 90 | % | 92 | % | 89 | % | 92 | % | |||||||
| Non-GAAP gross margin | 92 | % | 93 | % | 91 | % | 92 | % | |||||||
| Research and development | $ | 10,717 | $ | 12,087 | $ | 21,552 | $ | 23,468 | |||||||
| Stock-based compensation expense | (1,788 | ) | (2,485 | ) | (3,396 | ) | (3,914 | ) | |||||||
| Amortization of acquired intangible assets (1) | (85 | ) | (85 | ) | (170 | ) | (220 | ) | |||||||
| Non-GAAP research and development | $ | 8,844 | $ | 9,517 | $ | 17,986 | $ | 19,334 | |||||||
| Sales and marketing | $ | 5,013 | $ | 5,601 | $ | 10,469 | $ | 10,606 | |||||||
| Stock-based compensation expense | (657 | ) | (737 | ) | (1,380 | ) | (1,422 | ) | |||||||
| Amortization of acquired intangible assets (1) | (57 | ) | (57 | ) | (114 | ) | (114 | ) | |||||||
| Non-GAAP sales and marketing | $ | 4,299 | $ | 4,807 | $ | 8,975 | $ | 9,070 | |||||||
| General and administrative | $ | 4,828 | $ | 4,504 | $ | 9,150 | $ | 8,905 | |||||||
| Stock-based compensation expense | (1,129 | ) | (938 | ) | (2,266 | ) | (1,726 | ) | |||||||
| Non-GAAP general and administrative | $ | 3,699 | $ | 3,566 | $ | 6,884 | $ | 7,179 | |||||||
| Loss from operations | $ | (7,441 | ) | $ | (8,683 | ) | $ | (16,575 | ) | $ | (17,440 | ) | |||
| Stock-based compensation expense | 3,760 | 4,282 | 7,417 | 7,267 | |||||||||||
| Amortization of acquired intangible assets (1) | 192 | 191 | 384 | 383 | |||||||||||
| Non-GAAP loss from operations | $ | (3,489 | ) | $ | (4,210 | ) | $ | (8,774 | ) | $ | (9,790 | ) | |||
| Net loss | $ | (8,344 | ) | $ | (9,165 | ) | $ | (17,747 | ) | $ | (18,175 | ) | |||
| Stock-based compensation expense | 3,760 | 4,282 | 7,417 | 7,267 | |||||||||||
| Amortization of acquired intangible assets (1) | 192 | 191 | 384 | 383 | |||||||||||
| Non-GAAP net loss (2) | $ | (4,392 | ) | $ | (4,692 | ) | $ | (9,946 | ) | $ | (10,525 | ) | |||
| Net loss per share attributable to common stockholders, basic and diluted | $ | (0.22 | ) | $ | (0.26 | ) | $ | (0.47 | ) | $ | (0.52 | ) | |||
| Per share impacts of adjustments to net loss (3) | $ | 0.11 | $ | 0.13 | $ | 0.21 | $ | 0.22 | |||||||
| Non-GAAP net loss per share attributable to common stockholders, basic and diluted | $ | (0.11 | ) | $ | (0.13 | ) | $ | (0.26 | ) | $ | (0.30 | ) | |||
| Weighted average shares used in computing per share amounts, basic and diluted | 38,476,934 | 35,250,157 | 38,092,996 | 34,925,800 | |||||||||||
| (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
| Six Months Ended June 30, | |||||||
| 2024 | 2023 | ||||||
| Net cash provided by (used in) operating activities | $ | 788 | $ | (9,944 | ) | ||
| Less: | |||||||
| Purchase of property and equipment | (243 | ) | (735 | ) | |||
| Free cash flow | $ | 545 | $ | (10,679 | ) | ||
| Net cash provided by investing activities | $ | 7,545 | $ | 371 | |||
| Net cash provided by (used in) financing activities | $ | 99 | $ | (1,128 | ) | ||
FAQ
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