Arteris Q2 2025 presentation: Revenue up 13%, stock surges 50% on AI momentum

Introduction & Market Context

Arteris Inc. (NASDAQ:AIP) shares skyrocketed in after-hours trading on August 5, 2025, jumping more than 50% following the release of its second-quarter earnings presentation that showcased continued growth across key metrics. The semiconductor IP provider, which specializes in network-on-chip and interconnect technology, saw its stock close at $9.45 during regular trading hours before surging to $14.20 in the aftermarket session.

The dramatic stock movement came as Arteris reported year-over-year revenue growth of 13% and highlighted strategic customer wins in the artificial intelligence sector, including a significant deal with AMD (NASDAQ:AMD) for chiplet technology powering AI applications.

Quarterly Performance Highlights

Arteris delivered solid financial results for the second quarter of 2025, with revenue reaching $16.5 million, representing a 13% increase compared to the same period last year. This performance hit the high end of the company’s guidance range of $16.1 million to $16.5 million.

Annual Contract Value (ACV) plus Royalties, a key metric for the company’s future revenue potential, grew to $69.1 million, up 15% year-over-year. Meanwhile, Remaining Performance Obligations (RPO) showed even stronger growth, increasing 28% year-over-year to $99.3 million, indicating a robust pipeline of contracted business.

As shown in the following financial results summary:

The company maintained a strong gross profit margin, with non-GAAP gross profit of $15.0 million representing a 91% margin, slightly down from 92% in the same quarter last year.

Detailed Financial Analysis

While Arteris showed top-line growth, the company’s operating expenses also increased, rising 10% year-over-year to $18.6 million on a non-GAAP basis. This resulted in a non-GAAP operating loss of $3.5 million, flat compared to the same period last year, as illustrated in the operating expenses breakdown:

Free cash flow turned negative at -$2.8 million for the quarter, a decline from the positive $0.3 million reported in Q2 2024. This shift was primarily due to a decrease in cash provided by operating activities. Despite this, the company maintained a stable cash position of $53.9 million, unchanged from the year-ago period.

Strategic Initiatives & Customer Wins

Arteris highlighted several strategic achievements during the quarter, including industry recognition in the AI space. The company’s FlexGen product won the "AI Engineering Innovation Award" in the 8th annual AI Breakthrough Awards, underscoring its technological leadership in the sector.

The company also expanded its multi-die solution capabilities, broadening support for UCIe and Arm AMBA protocols, and collaborated with industry leaders Synopsys (NASDAQ:SNPS) and Cadence for chiplet interface technology. Additionally, Arteris launched Magillem Packaging (NYSE:PKG), a new software product designed to automate IP packaging for chiplets and chips.

Notable customer wins during the quarter included AMD, which licensed Arteris FlexGen smart network-on-chip IP for chiplets powering AI applications. Renesas is leveraging Arteris multi-die technology in its R-Car Gen 5 SoC platform for advanced driver-assistance systems, while Whalechip licensed FlexNoC for cloud servers and ADAS applications.

These customer developments align with the company’s previous statements that AI-related deals now comprise over 55% of Arteris’ total business, as mentioned in their Q1 2025 earnings call.

Forward-Looking Statements

Looking ahead, Arteris provided guidance for both the third quarter and full year 2025. For Q3, the company expects:

• ACV plus Royalties of $69.5 million to $72.5 million
• Revenue between $16.8 million and $17.2 million
• Non-GAAP operating income between -$4 million and -$3 million
• Free cash flow between $0.5 million and $3.5 million

For the full fiscal year 2025, Arteris projects:

• ACV plus Royalties of $72 million to $78 million
• Revenue between $66 million and $70 million
• Non-GAAP operating income between -$15.5 million and -$10.5 million
• Free cash flow between $1 million and $7 million

The guidance suggests continued revenue growth and a return to positive free cash flow in the coming quarters, though the company expects to remain in an operating loss position on a non-GAAP basis throughout 2025.

The market’s enthusiastic response to Arteris’ earnings presentation, with the stock surging nearly 88% in combined regular and after-hours trading, indicates investors are focusing on the company’s growing position in AI-related semiconductor IP and its expanding customer base rather than its current profitability metrics. As chiplet technology and multi-die solutions become increasingly important in advanced computing applications, Arteris appears well-positioned to capitalize on these industry trends.

Full presentation:

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