Arteris — Third Quarter 2026 Earnings Summary

Financial Performance:

• Revenue reached $25.8 million, a 48% increase year-over-year compared to $17.4 million in Q3 2025.
• Trailing-twelve-months variable royalties were $9.4 million, up 71% year-over-year.
• Annual Contract Value (ACV) plus royalties totaled $103.8 million, representing a 39% year-over-year increase.
• Remaining Performance Obligations (RPO) stood at $135.5 million, up 29% year-over-year.
• GAAP operating loss was $11.3 million, compared to an operating loss of $8.7 million in Q3 2025.
• Non-GAAP operating loss narrowed to $1.2 million, compared to a Non-GAAP operating loss of $3.5 million in Q3 2025.
• Net loss was $11.2 million ($0.23 per share), compared to a net loss of $9.0 million ($0.21 per share) in Q3 2025.
• Non-GAAP net loss was $1.1 million ($0.02 per share), compared to a Non-GAAP net loss of $3.8 million ($0.09 per share) in Q3 2025.
• Cash and cash equivalents increased to $71.0 million as of September 30, 2026, from $33.9 million as of December 31, 2025.
• Deferred revenue totaled $112.1 million ($63.5 million current, $48.5 million noncurrent) as of September 30, 2026, compared to $95.3 million as of December 31, 2025.
• Free cash flow for the nine months ended September 30, 2026, was negative $868 thousand, compared to positive $2.3 million in the prior year period.

Guidance and Future Outlook:

• Estimated Q4 2026 revenue guidance is $25.7 million to $26.7 million.
• Estimated Full Year 2026 revenue guidance is $98.5 million to $99.5 million.
• Estimated Q4 2026 ACV plus royalties guidance is $103.0 million to $107.0 million.
• Estimated Full Year 2026 ACV plus royalties guidance is $103.0 million to $107.0 million.
• Estimated Q4 2026 Non-GAAP operating income guidance is a loss of $0.9 million to income of $1.1 million.
• Estimated Full Year 2026 Non-GAAP operating loss guidance is $9.2 million to $7.2 million.
• Estimated Full Year 2026 free cash flow guidance is $5.0 million to $9.0 million.
• Management does not provide quarterly free cash flow guidance.
• Management expects demand for sophisticated, high-performance, power-efficient, safe, and secure silicon to continue growing.

Business Segments and Product Lines:

• License activity remained strong, driven by integration of data center, edge, and physical AI computing across all market verticals.
• Customers are increasingly shifting to multi-product orders, reflecting growing complexity in semiconductor innovation.
• Arteris surpassed 1,000 confirmed design starts since inception.
• Expanded chiplet and multi-die solutions, specifically FlexGen Multi-Die and Ncore Multi-Die products, support architectures for agentic AI workflows, HPC, data center, cloud infrastructure, and physical AI.
• Major license deals were secured with a top US hyperscaler and two market-leading semiconductor companies to accelerate chip and chiplet development.
• A major license deal was announced with a leading automotive OEM for successive generations of in-house advanced chip designs.
• Expanded semiconductor cybersecurity third-party IP security assurance through the Trusted and Assured Microelectronics program in collaboration with BAE Systems and SiFive.

Market and Competitive Landscape:

• One-third of license wins by dollar value in Q3 2026 came from the top 30 global technology companies.
• Customer design activity is driven by continued innovation in AI infrastructure, edge computing, and physical AI applications.
• The company operates in markets including aerospace and defense, automotive, communications, consumer electronics, enterprise computing, and industrial sectors.
• Management notes significant competition from larger companies and third-party providers.

Risks and Challenges:

• Risks include the amount of future revenue recognition related to RPO, the pace of adoption of AI computing and chiplet architectures, and customer renewal rates.
• Potential impacts from macroeconomic conditions, geopolitical conflicts (including Russia-Ukraine and Middle East conflicts), and trade relations with China.
• Risks associated with product errors, security breaches, and the ability to protect proprietary technology through patents.
• The company has a history of net losses and faces risks related to the growth and economic stability of end markets.
• Future results may differ materially from forward-looking statements due to various known and unknown risks.

Management Commentary and Tone:

• CEO K. Charles Janac described the quarter as delivering "another set of record results."
• Management expressed confidence that Arteris is well-positioned to help customers accelerate innovation and bring next-generation products to market.
• The tone highlighted strong customer confidence, evidenced by the 1,000 confirmed design starts milestone and increased adoption of multiple products.
• Management noted that increasing adoption of multiple products reflects the growing complexity of semiconductor designs and the expanding value of Arteris solutions.

Other Key Points:

• The company completed a business combination (acquisition of Cycuity) during the nine months ended September 30, 2026, incurring $2.9 million in acquisition-related costs.
• Proceeds from the issuance of common stock under the at-the-market offering totaled $72.0 million for the nine months ended September 30, 2026.
• Goodwill increased to $35.2 million as of September 30, 2026, from $4.2 million as of December 31, 2025, largely due to the acquisition.
• Intangible assets increased to $18.0 million as of September 30, 2026, from $2.2 million as of December 31, 2025.
• A conference call to review results and discuss outlook was held on November 5, 2026.