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Introduction & Market Context
Arteris Inc. (NASDAQ:AIP), a provider of system-on-chip (SoC) interconnect intellectual property, presented its first quarter 2025 earnings results on May 13, showcasing strong financial performance and strategic customer wins. The company, which specializes in network-on-chip (NoC) interconnect IP, continues to build momentum in the automotive and artificial intelligence sectors, following the positive trends seen in previous quarters.
Led by CEO Charlie Janac and CFO Nick Hawkins (NASDAQ:HWKN), the presentation revealed significant year-over-year growth across key metrics, with particular strength in the automotive segment where the company secured multiple new design wins with major OEMs.
Quarterly Performance Highlights
Arteris reported impressive financial results for Q1 2025, achieving a record high of $66.8 million in Annual Contract Value (ACV) plus Royalties, representing a 15% increase year-over-year. Revenue reached $16.5 million, up 28% compared to the same period last year and exceeding the company’s guidance range of $15.7-$16.1 million.
As shown in the following comprehensive financial overview:
The company’s Remaining Performance Obligation (RPO) grew to $88.9 million, a 19% increase from Q1 2024, indicating a strong pipeline of future revenue. Non-GAAP gross profit reached $15.3 million with an impressive 92% margin, slightly higher than the 91% reported in both Q1 and Q4 2024.
Arteris highlighted several business achievements during the quarter, including continued success with top global technology companies, with four of the top 30 expanding their Arteris product deployments. The company also joined the Intel (NASDAQ:INTC) Foundry Accelerator program and IMEC-sponsored efforts around the Automotive Chiplet ecosystem scaling, positioning Arteris at the forefront of emerging semiconductor technologies.
Detailed Financial Analysis
Operating expenses and operating income showed improvement on a non-GAAP basis. While non-GAAP operating expenses increased by 8% year-over-year to $18.4 million, the company’s non-GAAP operating loss improved by 40% to $3.2 million compared to Q1 2024.
The detailed breakdown of operating metrics demonstrates this progress:
Particularly noteworthy was Arteris’ free cash flow generation of $2.7 million, a significant improvement from $0.3 million in Q1 2024 and a strong recovery from the negative $2.7 million reported in Q4 2024. This positive cash flow contributed to strengthening the company’s financial position, with cash, cash equivalents, and investments increasing to $55.1 million from $52.3 million in the previous quarter.
The following chart illustrates the company’s improving cash position:
Strategic Initiatives
Arteris made significant inroads in the automotive sector during Q1 2025, securing several strategic customer wins. A major Japanese automotive OEM licensed Arteris interconnect technology for in-house development of a new autonomous driving SoC, while an existing electric vehicle OEM customer expanded its use of Arteris products for another in-house developed SoC for its next generation of software-defined EVs.
Additionally, Nextchip licensed FlexNoC IP with AI and functional safety support for use in its next-generation vision-based Advanced Driver Assistance Systems (ADAS) technology, further cementing Arteris’ position in the automotive semiconductor market.
The company also expanded its global footprint by announcing a new engineering and customer support center in Krakow, Poland, enhancing its ability to serve European customers. On the product front, Arteris released the latest generation of its Magillem register management automation software, continuing its innovation in SoC design tools.
Forward-Looking Statements
Looking ahead, Arteris provided guidance for both Q2 and the full year 2025, projecting continued growth across key metrics. For Q2 2025, the company expects:
For Q2 2025, Arteris forecasts ACV plus Royalties of $66-$70 million (13% year-over-year growth at the midpoint) and revenue of $16.1-$16.5 million (12% year-over-year growth at the midpoint). The non-GAAP operating loss is expected to be between $4 million and $3 million, while free cash flow is projected between negative $5 million and $0.
For the full year 2025, Arteris anticipates ACV plus Royalties of $71-$79 million (15% year-over-year growth at the midpoint) and revenue of $65-$71 million (18% year-over-year growth at the midpoint). The company expects a non-GAAP operating loss between $14 million and $7 million for the year, with free cash flow projected between $0 and $8 million.
These projections suggest Arteris is on a path toward improved financial performance, with particular emphasis on revenue growth and cash flow generation, while continuing to invest in product development and market expansion.
In after-hours trading following the presentation, Arteris stock (NASDAQ:AIP) was down 5.75% to $7.87, despite the positive quarterly results and outlook, suggesting investors may have had higher expectations or were focusing on the continued operating losses despite their improvement.
Full presentation:
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