Arteris (NASDAQ:AIP) released first-quarter financial results and hosted an earnings call on Tuesday. Read the complete transcript below.
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Summary
Arteris reported record annual contract value plus royalties of $92.8 million, a 39% year-on-year increase, and achieved record revenue and royalty streams.
The company highlighted strong customer engagement across sectors including enterprise computing, automotive, and aerospace, with significant wins in AI and high-bandwidth memory technologies.
Arteris acquired Sycuity, a chip cybersecurity company, to broaden its system IP portfolio and enhance security offerings, already seeing strong interest from customers.
Financially, the company reported a total revenue of $22.9 million for Q1 2026, a 39% year-over-year increase, with a non-GAAP operating loss at the top end of guidance.
Future guidance has been raised, expecting revenue of $91 million to $95 million for the full year 2026, and the company is on track to achieve non-GAAP profitability by the end of the year.
The company announced that CFO Nick Hawkins will retire effective August 31, 2026, leaving the company in a strong financial position with no debt and positive free cash flow.
Full Transcript
OPERATOR
Good afternoon everyone and welcome to the Artery’s first quarter 2026 earnings call. Please note that this call is being recorded and simultaneously webcast. All material contained in the webcast is the sole property and copyright of Arteris with all rights reserved. For opening remarks and introductions. I will now turn the call over to Erica Mannion at Sapphire Investor Relations. Please go ahead.
Erica Mannion (Investor Relations)
Thank you and good afternoon. With me today from Arteris are Charlie Janek, Chief Executive Officer and Nick Hawkins, Chief Financial Officer. Charlie will begin with a brief review of the business results for the first quarter ended March 31, 2026. Nick will review the financial results for the first quarter of 2026, followed by the company’s outlook for the second quarter and the full year of 2026. We will then open the call for questions. Before we begin, I’d like to remind you that management will make statements during this call that are forward looking statements within the meaning of federal securities laws. These statements are based on management’s current expectations and assumptions and involve material risks and uncertainties that could cause actual results and events to materially differ from those anticipated and you should not place undue reliance on forward looking statements. Additional information regarding these risks, uncertainties and factors that could cause results to differ appear in the press release Arteris issued today and in the documents and reports filed by Arteris from time to time with the securities and Exchange Commission. Please note, during this call we will cite certain non GAAP measures, including among others, non GAAP Net loss, non GAAP Net loss per Share and free cash flow, which are not measures prepared in accordance with US gaap. The non GAAP measures are presented as we believe that they provide investors with a means of evaluating and understanding how the company’s management evaluates the company’s operating performance. These non GAAP measures should not be considered in isolation from, as substitutes for or superior to financial measures prepared in accordance with US gaap. A reconciliation of these non GAAP measures to the nearest GAAP measure can be found in the press release for the quarter ended March 31, 2026. In addition, for a definition of certain of the key performance indicators used in this presentation, such as annual contract value and remaining performance obligations, please see the press release for the quarter ended March 31, 2026. These key performance indicators are presented for supplemental informational purposes only, should not be considered a substitute for financial information presented in accordance with gaap, and may differ from similarly titled metrics or measures used by other companies, securities analysts or investors. Listeners who do not have a copy of the press release for the quarter ended March 31, 2026 may obtain a copy by visiting the Investor Relations section of the company’s website. In addition, management will be referring to the first quarter 2026 earnings presentation, which can be found in the Investor Relations section of the company’s website under Events and Presentations tab. Now I will turn the call over to Charlie.
Charlie Janek (Chief Executive Officer)
Thank you Erica, and thanks to everyone for joining us on our call today. The first quarter of 2026 was a robust quarter for Arteris as we reached another record annual contract value plus royalties of 92.8 million, representing a 39% year on year increase. We also achieved record revenue, record royalties and record revenue backlog. Customer engagement in the quarter included both existing customer renewals as well as adding new logos. We won license deals in enterprise computing, automotive communications, consumer electronics and aerospace and defense sectors. AI integration into all types of electronics from data centers to edge devices and physical AI systems is increasing the demand for advanced connectivity and security products and now 2/3 of our customer engagements are into AI chips. New chips and chiplets continue to get more complex and perform more advanced computing. Efficient, safe and secure data movement within those devices is essential, which is driving the growing adoption of our TERIS products and solutions. Every semiconductor must move data to be a chip or chiplet. Rapidly advancing data movement powered by chips is evident in recent earnings releases by semiconductor companies. Many of these companies are also Arteris customers and have both beaten their first quarter revenue projections and raised guidance for the year. This performance has clearly flowed through into our royalty stream which has increased 67% year over year. Enterprise computing which includes data centers, High Performance Computing or hpc, including High Bandwidth Memory or HBM and other AI infrastructure companies was again the biggest contributor to our licensing activity in the quarter. This includes a leading global hyperscaler which expanded its use of our TERIS network on chip technology for its next generation of data center chips. Advanced AI data centers are experiencing strong demands for HBM and I’m pleased to say that another leading global memory supplier is now utilizing Arteris system IP to accelerate their memory chip development. Automotive also continues to be a strong sector for us where our technology is helping to meet the needs of physical AI systems. An example was an important first quarter deal announcement with Renesas that increased their licenses and deployed our system IP with their most advanced R-Car Gen 5 SoC series tailored for advanced driver assistance and automated driving systems. This latest SOC delivers AI performance of up to 400 trillion operations per second or tops with multi die chiplet extensions to boost AI performance using our TERIS network on Chip technology for Silicon Data Movement Communication with efficient, safe and secure data movement is also playing an increasingly important role in in transmitting data, particularly between data centers and edge and endpoint devices. In the first quarter, one of the leading European 5G and 6G communications equipment players further expanded their use of Arteris technology to accelerate the integration of advanced telecommunications chips. Satellites extend communications into aerospace and defense where the pace of innovation and development of advanced, resilient, safe and secure semiconductors is growing rapidly. In the first quarter, a leading US Space infrastructure company expanded its use of arterys for the development of next generation space applications beyond Earth’s orbit. It was a pleasure to see the success of the Artemis 2 mission where AMD chips with built in AArteris technology were used to support critical sensor fusion, data routing and image processing for the Orion spacecraft. This is yet another example of Arteris use in data intensive space exploration. We continue to see adoption of our FlexGen Smart NOC IP at major accounts and startups. We are also working with early adopters on …
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