Arteris NASDAQ: AIP reported record second-quarter results for 2026, with revenue, annual contract value plus royalties, royalty revenue and remaining performance obligations all reaching new highs. Management said demand was supported by large license agreements across enterprise computing, automotive, aerospace and defense, communications, consumer electronics and industrial markets.
Revenue for the quarter ended June 30 rose 46% year over year to $24.1 million, exceeding the high end of the company’s guidance. Annual contract value, or ACV, plus royalties reached $99.5 million at quarter-end, up 44% from a year earlier. Remaining performance obligations, representing contracted future revenue, rose to $135 million, with Arteris expecting just over half of that balance to be recognized during the 12 months beginning July 1.
Chief Executive Officer Charlie Janac said the company’s customers reported a 21% year-over-year increase in design starts over the trailing 12 months ended June 30. The majority of customer design starts in the second quarter supported artificial intelligence or high-performance computing use cases, he said.
AI Infrastructure and Automotive Demand
Janac said data-center chip and chiplet development remained a key revenue driver, with enterprise computing accounting for an average of 29% of ACV plus royalties over the past four quarters. He said AI infrastructure represented some of the company’s largest deals in the second quarter.
Among those wins, Arteris said one of the world’s largest hyperscale cloud companies selected its infrastructure silicon system intellectual property for next-generation data centers. The company also cited a large win with a U.S. semiconductor design house that is developing custom ASICs for hyperscalers. That customer is using Arteris’ FlexGen smart network-on-chip, or NoC, IP for data movement in chiplets and multi-die chips supporting high-end AI computing.
During the question-and-answer session, Janac said the U.S. semiconductor design house was an existing but previously smaller customer. He said hyperscalers use a mix of commercial chips, internally developed accelerators and chips developed by outside design partners.
Automotive and other physical AI applications also contributed to demand, according to management. Arteris said Li Auto has deployed internally designed autonomous-driving chips in its newest SUV model, with multiple Arteris-designed chips used in each vehicle. Janac said the chips provide about 2,560 trillion operations per second for autonomous driving and other advanced driving tasks.
Chief Financial Officer Nick Hawkins said Li Auto had begun making royalty payments. He said automotive royalty streams generally ramp over their first three years before plateauing for an extended period, though he added that the eventual scale of the Li Auto opportunity remains uncertain.
Security Business Expands Following Cycuity Acquisition
Arteris also highlighted progress in semiconductor cybersecurity assurance following its acquisition of Cycuity earlier in 2026. The company announced an expanded partnership with Arm, whose engineering teams are using Cycuity technology during the design of selected CPUs and intend to broaden use across additional next-generation processors.
Janac characterized the Arm relationship as a “greenfield opportunity,” saying there are relatively few commercial solutions serving the same hardware-security-assurance function. He said Cycuity currently operates under a non-royalty-bearing, software electronic design automation model, although Arteris sees potential future opportunities to combine cybersecurity weakness identification with technologies that could address those weaknesses.
Management said security had a solid second quarter, including government-related work. Hawkins noted that government contracts carry lower gross margins than Arteris’ traditional business and commercial Cycuity operations.
Arteris also announced a collaboration with IC-Link by imec, under which its technology will be used in efforts to accelerate development of high-performance computing chiplets and ASICs. Janac said FlexGen customer adoption continued to expand, with multiple seven-figure FlexGen agreements closed with major semiconductor customers during the first half of 2026.
Profitability, Cash Flow and Capital Raise
On a non-GAAP basis, Arteris reported gross profit of $21 million and a gross margin of 87%. GAAP gross profit was $20.5 million, or an 85% margin. Non-GAAP operating loss was $4.6 million, while GAAP operating loss was $13.9 million.
Non-GAAP net loss was $4.7 million, or $0.10 per diluted share. GAAP net loss totaled $14.1 million, or $0.30 per diluted share.
Hawkins said non-GAAP operating income was affected by $1.7 million in unexpectedly high French employer payroll taxes associated with employee restricted stock unit vesting. The expense reflected a higher Arteris share price during the June quarter. Higher sales and field-engineering commissions tied to strong deal flow also increased expenses.
The company generated $8.6 million in free cash flow during the quarter, bringing trailing-12-month free cash flow to positive $6.8 million. Arteris ended the quarter with $123 million in cash equivalents and investments and no financial debt.
Arteris completed its at-the-market equity program during the quarter, raising approximately $72 million in net proceeds at an average price above $35 per share. Janac said the proceeds will support investments in system IP products, global customer support and potential tuck-in acquisitions.
Outlook Raised for 2026 Revenue
For the third quarter, Arteris forecast ACV plus royalties of $99 million to $103 million, revenue of $24 million to $25 million, and a non-GAAP operating loss of $3 million to $1 million.
The company raised its full-year revenue outlook to $95 million to $98 million, an increase of $3.5 million from its previous forecast. At the midpoint, the revised revenue range would represent 37% year-over-year growth. Arteris maintained its expectation for year-end ACV plus royalties of $102 million to $106 million and non-GAAP free cash flow of positive $5 million to positive $9 million.
Management forecast a full-year non-GAAP operating loss of $10 million to $7 million and said it expects to report non-GAAP operating profit for a period as early as the fourth quarter of 2026.
Hawkins, who is retiring, said Saurabh Sinha will become Arteris’ CFO on Sept. 8. Sinha previously served at Aeva Technologies, where Arteris said he helped manage financial operations, capital allocation and investor relations.
About Arteris (NASDAQ:AIP)
Arteris, Inc is a fabless semiconductor intellectual property (IP) company specializing in on-chip interconnect solutions and system IP for advanced integrated circuits. The company's core products include its FlexNoC network-on-chip (NoC) fabrics, Ncore cache coherent interconnect IP, and CodaCache memory subsystem IP. These technologies enable semiconductor and systems companies to design scalable, energy-efficient chips for applications ranging from automotive and artificial intelligence (AI) to 5G communications and high-performance computing.
Founded in 2003 and headquartered in Santa Clara, California, Arteris serves a global customer base across North America, Europe, and Asia.
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