Arteris Hits $25.8 Million In Revenue As Adjusted Operating Loss Shrinks To $1.2 Million
Royalties grew 71% over the trailing twelve months, while the chip-technology company forecasts $98.5 million to $99.5 million in annual sales.
Arteris, which licenses technology that moves data inside computer chips, posted record third-quarter revenue of $25.8 million, up 48% from a year earlier, in the earnings release accompanying its Thursday SEC filing. Its adjusted operating loss narrowed to $1.2 million from $3.5 million, though the loss under standard accounting widened.
Stock Pay Separates The Loss Measures
Arteris reported an operating loss of $11.3 million, versus $8.7 million a year earlier. The company's adjusted measure excludes stock-based pay, amortization of assets bought in acquisitions and acquisition-related costs; stock-based pay alone accounted for $9.186 million of the quarter's adjustments, compared with $4.956 million a year earlier.
Operating expenses reached $33.639 million, against $24.356 million in the third quarter of 2025. Research and development, sales and marketing, and general administrative costs all increased. Gross margin slipped to 87% from 90%; adjusted gross margin fell to 89% from 91%.
The net loss was $11.2 million, or $0.23 per share, compared with $8.991 million, or $0.21 per share, a year earlier. Excluding the same adjustments, Arteris lost $1.1 million, or $0.02 per share, versus $3.818 million, or $0.09 per share.
Cash also moved in the opposite direction from sales: third-quarter free cash flow—operating cash flow minus spending on property and equipment—was negative $2.126 million, compared with positive $2.471 million a year earlier.
Royalties And Customer Designs Expand
Contracted revenue not yet recognized reached $135.5 million, up 29% year over year. Annual contract value—the annualized fixed fees in customer agreements—plus trailing-twelve-month royalties and other revenue reached $103.8 million, up 39%. Variable royalties over the trailing twelve months totaled $9.4 million, a 71% increase.
K. Charles Janac, Arteris' president and chief executive officer, attributed strong design activity to AI infrastructure, edge computing and physical AI applications. “Notably, one-third of our license wins by dollar value came from top 30 global technology companies,” Janac said.
Arteris earns license, support and maintenance fees as well as royalties. Its technology connects processors, memory and other chip components; it also sells chip-assembly automation software and, through its 2026 purchase of Cycuity, hardware-security verification software.
During the quarter, customers confirmed that cumulative semiconductor design starts using Arteris technology had surpassed 1,000. The company said more customers were ordering multiple products, and it signed major expanded licenses with a top U.S. hyperscaler, two leading semiconductor companies and a leading automotive equipment manufacturer.
Arteris also expanded FlexGen Multi-Die and Ncore Multi-Die, products for designs built from connected chip components. It announced broader third-party chip-security assurance through the Trusted and Assured Microelectronics program, working with BAE Systems and SiFive.
Fourth-Quarter Outlook Straddles Adjusted Profit
Arteris estimates fourth-quarter revenue of $25.7 million to $26.7 million and adjusted operating results ranging from a $0.9 million loss to $1.1 million in income. Its updated full-year revenue forecast is $98.5 million to $99.5 million, with an adjusted operating loss of $7.2 million to $9.2 million.
The company forecasts annual contract value plus royalties of $103 million to $107 million for both the fourth quarter and full year. It expects full-year free cash flow of $5 million to $9 million; for the first nine months, free cash flow was negative $868,000.
Arteris generated $397,000 in operating cash during the first nine months, while sales of shares through its at-the-market offering brought in $72.037 million after commissions and offering costs.
Sources
- 8-K Filing — Arteris, Inc. (AIP) — SEC EDGAR
- Exhibit exhibit991q3fy268-k.htm — Arteris, Inc. 8-K exhibit — SEC EDGAR
- Arteris, Inc. (AIP) Reports Q3 Loss, Tops Revenue Estimates — Yahoo Finance
- Arteris Announces Financial Results for the Third Quarter — globenewswire.com
