Arteris 2025 Q2 Earnings Loss Widens Despite Revenue Growth

Arteris reported Q2 2025 earnings on August 6, 2025, with revenue up 13.2% year-over-year, though the company's net loss expanded. CEO K. Charles Janac expressed optimism, citing record Annual Contract Value plus royalties and improved Remaining Performance Obligations. However, the earnings failed to narrow losses, as the company remains in its fifth consecutive year of losses in the quarter.

Revenue
Arteris reported total revenue of $16.50 million for Q2 2025, an increase of 13.2% compared to $14.57 million in Q2 2024. Licensing, support, and maintenance accounted for the majority of the revenue, contributing $15.09 million. Variable royalties and other revenue totaled $1.41 million, with $1.40 million attributed to variable royalties and an additional $12,000 from other revenue sources. This breakdown reflects the company's primary revenue streams and highlights its continued focus on licensing and support services.

Earnings/Net Income
Arteris maintained an EPS of $-0.22 in Q2 2025, unchanged from the prior year. However, the company's net loss worsened to $-9.13 million for the quarter, a 9.4% increase from the $-8.34 million recorded in Q2 2024. This represents the fifth consecutive year of losses during the corresponding fiscal quarter, underscoring ongoing financial challenges. The stable EPS but widened net loss suggests limited progress in improving profitability despite revenue growth.

Price Action
The stock price of Arteris (AIP) experienced mixed performance in the immediate aftermath of the earnings report. It declined by 8.96% during the latest trading day but saw a 22.64% surge over the most recent full trading week and a 40.85% increase month-to-date. This volatility highlights the market's response to the earnings results and broader investor sentiment.

Post-Earnings Price Action Review
Following the earnings report, a strategy of purchasing Arteris shares after a revenue increase quarter-over-quarter and holding for 30 days generated a 30.26% return. However, this underperformed the benchmark, which returned 48.58%, resulting in an excess return of -18.33%. The strategy delivered a compound annual growth rate of 9.55% with a maximum drawdown of 0.00% and a Sharpe ratio of 0.14. While the approach demonstrated low risk and steady growth, its performance relative to the market was moderate.

CEO Commentary
K. Charles Janac, President and CEO of Arteris, emphasized the company’s strong performance in Q2 2025, noting a record $69.1 million in Annual Contract Value plus royalties and a 28% year-over-year increase in Remaining Performance Obligations to $99.3 million. Janac expressed confidence in Arteris' long-term growth, driven by a robust product portfolio, expanding relationships with leading electronics companies, and innovation in key markets such as AI, autonomous driving, and advanced communications. His optimistic tone underscored the company’s strategic positioning and potential for future growth.

Guidance
Arteris provided forward-looking guidance for Q3 and FY 2025, projecting Q3 ACV + royalties of $69.5–$72.5 million and FY 2025 ACV + royalties of $72.0–$78.0 million. Revenue is expected to range between $16.8–$17.2 million for Q3 and $66.0–$70.0 million for the full year. Non-GAAP operating loss is anticipated to be $3.0–$4.0 million in Q3 and $10.5–$15.5 million for the year, with free cash flow estimated at $0.5–$3.5 million in Q3 and $1.0–$7.0 million for FY 2025.

Additional News
Arteris announced several business highlights in Q2 2025, including a key customer win with Whalechip for high-performance AI computing at the data center. Additionally, the company expanded its multi-die solution by broadening support for the Universal Chiplet Interconnect Express (UCIe) and collaborated with Synopsys and Cadence for chiplet interface solutions. Arteris also launched Magillem Packaging, a new software product designed to automate IP packaging. The company was recognized at the 8th annual AI Breakthrough Awards, with FlexGen winning the “AI Engineering Innovation Award.” These developments highlight Arteris’ ongoing innovation and expansion in high-growth markets.