Arteris Q4 Earnings Call Highlights

Key Points

• Arteris exited Q4 with a record annual contract value plus royalties of $83.6 million (up 28% YoY), backed by broad adoption of its NoC and system IP as customers have shipped more than 4 billion chips and chiplets.
• The Jan. 14 acquisition of Cycuity adds hardware security-assurance tools to Arteris’ portfolio, positioning the company to cross-sell into its base and win new customers amid a surge in reported silicon vulnerabilities.
• Financially, Arteris reported Q4 revenue of $20.1 million (+30% YoY), industry-leading non-GAAP gross margins near 92%, positive free cash flow for the year, and guided 2026 exit ACV to $100–104 million while expecting a potential non-GAAP operating profit as early as Q4 2026.

Arteris NASDAQ: AIP reported fourth-quarter and full-year 2025 results that management said set multiple company records, driven by growth across licensing and royalties and increased adoption of its network-on-chip (NoC) and related system IP in AI-driven semiconductor designs.

Record ACV plus royalties and expanding royalty base

Chief Executive Officer Charlie Janac said the company delivered a record annual contract value (ACV) plus royalties of $83.6 million exiting the fourth quarter, up 28% year over year. Janac attributed the performance to demand across enterprise computing, automotive, and consumer electronics, alongside communications, industrial, and aerospace and defense applications, as AI-driven designs proliferate from the data center to the edge.

Janac also highlighted scale in Arteris’ end-market footprint, saying customers have now shipped more than 4 billion chips and chiplets that incorporate Arteris NoC IP, supporting an expanding royalty stream.

Cycuity acquisition positions Arteris in hardware security assurance

On January 14, Arteris closed its acquisition of Cycuity, which management described as a provider of semiconductor cybersecurity assurance products. Janac said the deal expands Arteris’ portfolio by enabling chip designers to analyze and improve security in IP blocks, chiplets, and SoCs, with tools aimed at detecting risks during the design phase before manufacturing and deployment.

Janac cited NIST data indicating newly reported cybersecurity silicon vulnerabilities have grown by more than 15 times over the last five years, arguing that rising attack volume is increasing demand for hardware security assurance. He said the Cycuity product line can be used by Arteris’ existing customers and also create “new entry points” with other semiconductor and systems companies that are not current customers.

During Q&A, Janac said security is becoming a “major issue” across markets and described the opportunity as both cross-sell into Arteris’ base and broader expansion to “essentially any semiconductor company.” He also noted that certain markets, including automotive and aerospace and “even data center,” are requiring ISO 21434 cybersecurity certification.

Product adoption: FlexGen, Ncore, and broader portfolio wins

Janac said organically developed products saw strong adoption in 2025, highlighting several customer deployments:

• FlexGen, Arteris’ AI-driven smart NoC IP announced a year ago, has now been licensed for over 30 production device deployments across vertical markets. Janac cited customers including AMD (AI chiplet designs), GreenChip (automotive), and NanoXplore (aerospace). He said Arteris expects FlexGen momentum to continue in 2026.
• Ncore cache coherent interconnect IP saw strength in the second half of 2025 across edge and server applications. Janac said Altera selected Ncore and FlexGen in early fourth quarter to support intelligence computing “from cloud to edge.”
• NXP expanded its use of Arteris products to accelerate edge AI efforts, deploying multiple offerings including Ncore, FlexNoC, CodaCache, and Magillem SoC integration software, according to Janac.
• Black Sesame licensed both coherent and non-coherent interconnect IP—Ncore and FlexNoC—for automotive automated driving silicon, Janac said.
• Blaize deployed Arteris system IP for energy-efficient AI silicon in the fourth quarter, with Janac emphasizing power reduction and efficient data movement.

Janac also said the number of chiplet projects incorporating Arteris technology has more than tripled over the past two years. He pointed to Arteris’ participation as a founding member of the TRISTAN Project, an open automotive chiplet platform initiative led by Bosch and involving automotive OEMs including BMW, Renault, and Stellantis. He also referenced Arteris’ involvement in a Cadence strategic collaboration with Arm, Samsung Foundry, and other IP partners to deliver pre-validated chiplet solutions.

In response to an analyst question, Janac said customers are increasingly interested in deploying a broader “suite” of solutions. He added that using the full Arteris stack “prior to the Cycuity acquisition” would put licensing values “well north of $1 million,” and that security and chiplet-based licensing dynamics could further lift average project size.

Financial results: revenue growth, high margins, and positive free cash flow

Chief Financial Officer Nick Hawkins said Arteris beat its guidance on all financial measures in the fourth quarter. Total revenue was $20.1 million, up 16% sequentially and 30% year over year. Full-year 2025 revenue was $70.6 million, up 22% year over year.

Hawkins said variable royalties rose 50% year over year, with the fourth quarter setting a new record. He attributed royalties to a “balanced mix” of customers and noted that the number of large royalty reporters has tripled over the last two years. In Q&A, Hawkins said the count of six-figure-plus quarterly royalty reporters increased to nine, spread across segments, with automotive remaining the largest single vertical while consumer, enterprise, and aerospace are emerging.

Gross margins remained high. Non-GAAP gross profit was $18.5 million in the quarter for a 92% margin, while GAAP gross profit was $18.3 million for a 91% margin. For the year, non-GAAP gross margin was 92% and GAAP gross margin was 90%.

On profitability, Hawkins reported a fourth-quarter non-GAAP operating loss of $2.2 million and a full-year non-GAAP operating loss of $12.5 million, a $2.4 million improvement year over year. Fourth-quarter non-GAAP net loss was $2.3 million, or $0.05 per diluted share, while GAAP net loss was $8.5 million, or $0.19 per diluted share. Full-year non-GAAP net loss was $14.1 million, or $0.33 per diluted share, versus a GAAP net loss of $34.7 million, or $0.82 per diluted share.

Arteris ended 2025 with $59.5 million in cash, cash equivalents, and investments and no financial debt. Free cash flow was positive $3.0 million in the fourth quarter and positive $5.3 million for the full year.

Hawkins also reported remaining performance obligations (RPO) of $117 million, up 32% year over year, and said the company expects approximately half of RPO to be recognized as revenue in 2026 (excluding cancelable and non-cancelable FSA).

2026 guidance and path toward profitability

For the first quarter of 2026, Hawkins guided to ACV plus royalties of $85 million to $89 million and revenue of $20.5 million to $21.5 million. The company expects a non-GAAP operating loss of $3.5 million to $2.5 million and non-GAAP free cash flow ranging from negative $1.5 million to positive $1.5 million.

For full-year 2026, Arteris guided to exiting the year with ACV plus royalties of $100 million to $104 million and revenue of $89 million to $93 million, including approximately $7 million from the Cycuity security business. Hawkins said most of the Cycuity-derived revenue is expected to be ratable. Non-GAAP operating loss is projected at $9 million to $5 million, including about $1 million related to the acquisition, with non-GAAP free cash flow of $5 million to $9 million.

In Q&A, Hawkins added that Cycuity is expected to be a “slight contributor to the loss” for 2026 (about $1 million), with the security business anticipated to reach roughly breakeven by the fourth quarter. He also said Cycuity could weigh on free cash flow by about $1 million for the year and about $1.5 million in the first quarter. Hawkins noted a potential 1–2 percentage point impact to gross margin presentation due to the accounting treatment of subcontractors on some government work.

Hawkins said the company believes it is on a path to profitability and expects it could report a non-GAAP operating profit for a period as early as the fourth quarter of 2026.

Separately, Hawkins addressed an at-the-market (ATM) equity program discussed around the acquisition, saying the company is in the activation process and may see “some small amounts” in the first quarter depending on market conditions. He added Arteris does not currently intend to utilize “anything close to the full amount” available.

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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