Arteris (AIP) 28th Annual Needham Growth Conference Virtual summary

Business overview and technology focus

• Specializes in network-on-chip (NoC) IP and software for efficient data movement within and between chips, addressing increasing chip complexity and supporting both Arm and RISC-V architectures.

• Acquired Magillem (2020), Semifore (2022), and Cycuity (2024) to expand capabilities in SoC connectivity, hardware-software integration, and security verification.

• Over 300 employees, 230+ active customers globally, and nearly 4 billion SoCs shipped with their IP.

• Focused on AI, automotive, data center, and chiplet solutions, with about half of design starts now for AI applications.

• Maintains strong customer retention, exemplified by a 12-year relationship with a major automotive customer.

Product innovation and roadmap

• Releases at least two product enhancements and one new product annually; FlexGen, launched in February 2025, automates NoC IP generation, reducing design time and wire length.

• Chiplet solution announced in June 2025, enabling cache-coherent communication across up to four dies, to be delivered by Q1 2026.

• Actively supports industry standards, including joining the Ultra Accelerator Link Consortium and planning UALink protocol support.

• New product development for 2027 already underway, maintaining a robust R&D pipeline.

Financial performance and growth strategy

• Achieved positive free cash flow in 2025, with a strong, debt-free balance sheet and diversified customer base.

• Third quarter saw strong performance, meeting or exceeding guidance, with positive free cash flow despite negative profitability due to deferred revenue recognition.

• Remaining performance obligations (RPO) reached $105 million at Q3, representing 1.5x annual revenue and up 34% year-over-year.

• License revenue targeted to grow in high teens to low 20s percent, with royalties expected to grow at roughly double that rate.

• Royalty streams have diversified significantly since 2020, now with five customers providing six-figure quarterly royalties and a growing pipeline.