Arteris 2025 Q1 Earnings Net Loss Narrows by 13.6%

Arteris (AIP) reported its fiscal 2025 Q1 earnings on May 13th, 2025. Arteris announced a 27.7% year-over-year increase in revenue, reaching $16.53 million, surpassing expectations. The company also provided guidance for the second quarter, anticipating revenue between $16.1 million and $16.5 million, which aligns with market expectations. The full-year guidance indicates anticipated revenue in the range of $65 million to $71 million, suggesting positive growth momentum. Despite narrowing its net loss, Arteris continues to face financial challenges, although improvements in operational efficiency are evident.

Revenue

Arteris achieved a total revenue of $16.53 million in Q1 2025, marking a 27.7% increase from the previous year's $12.95 million. This growth was driven by $15.34 million from licensing, support, and maintenance. The segment of variable royalties and other contributed $1.20 million, with variable royalties alone accounting for $1.17 million. Additionally, other revenue streams added $30,000, reflecting a comprehensive growth in all business segments.

Earnings/Net Income

Arteris reported a loss of $0.20 per share in Q1 2025, a notable improvement from the $0.25 loss per share in Q1 2024, reflecting a 20% enhancement. The net loss was reduced to $8.12 million, a 13.6% decrease from the $9.40 million net loss in the prior year. Despite the ongoing losses, the reduction indicates a positive trend toward better financial health.

Price Action

Post Earnings Price Action Review

The strategy of purchasing AIP shares when revenues fall short of expectations and holding for 30 days proved ineffective. Over this period, the stock price decreased from the initial purchase price of $12.27 to a selling price of $11.88, resulting in a loss of $0.39, equivalent to a 3.18% decline. This suggests that the anticipated price recovery did not occur, highlighting the need for investors to consider additional market factors and conditions when making investment decisions. The strategy's lack of success underscores the importance of a broader analysis beyond earnings performance when evaluating stock positions.

CEO Commentary

Charlie Janac, CEO, reported that Arteris achieved a record annual contract value plus royalties of $66.8 million, driven by increasing demand for semiconductor system IP products across various sectors, including enterprise computing and automotive. He noted that the complexity of chip designs and the rise of AI applications are key growth drivers. However, he acknowledged potential short-term headwinds due to global economic uncertainty that could affect royalty revenues. Janac expressed optimism regarding strong customer momentum and ongoing innovation, highlighting the company's commitment to technology advancements and collaborations that enhance their competitive position in the market.

Guidance

Arteris expects second-quarter ACV plus royalties to range from $66 million to $70 million and revenue between $16.1 million and $16.5 million. For the full year 2025, the guidance includes an ACV plus royalties exit range of $71 million to $79 million and revenue between $65 million and $71 million. Non-GAAP operating losses are anticipated between $14 million to $7 million, with non-GAAP free cash flow projected to be between $0 million to positive $8 million. Despite economic challenges, the company remains optimistic about a strong deal pipeline.

Additional News

Recently, Arteris has been active in expanding its strategic partnerships and global presence. The company announced its participation in the Intel Foundry Accelerator Ecosystem Alliance Program to support advanced semiconductor designs, a move that underscores its commitment to staying at the forefront of technological innovation. Additionally, Arteris was recognized with two Gold and one Silver Stevie® Awards in the 2025 American Business Awards®, highlighting its achievements with products like Ncore NoC IP. Furthermore, Arteris expanded its global footprint with a new engineering center in Poland, indicating confidence in future growth and the strategic importance of enhancing its international capabilities.