Arteris (AIP) Q1 2026 earnings summary

Executive summary

• Achieved record annual contract value plus royalties of $92.8 million, up 39% year-over-year, with record revenue, royalties, and backlog driven by strong customer engagement and new wins across enterprise computing, automotive, consumer electronics, aerospace/defense, and space sectors.

• AI integration is fueling demand, with over two-thirds of customer engagements now in AI chips; enterprise computing led licensing activity, including a major hyperscaler expanding use of technology.

• Completed the acquisition of Cycuity, a chip cybersecurity company, broadening the system IP portfolio and strengthening offerings in security for advanced chip designs.

• Recognized for innovation by Fast Company and Stevie Awards for technology innovation and cybersecurity products.

• CFO Nick Hawkins announced retirement effective August 31, 2026, after leading the company through significant growth and acquisitions; transition plan in place.

Financial highlights

• Q1 2026 revenue was $22.9 million, up 39% year-over-year, exceeding guidance, with ACV plus royalties at $92.8 million.

• Trailing 12-month royalties reached $7.9 million, up 67% year-over-year, with three customers now reporting over $250,000 in quarterly royalties.

• Remaining performance obligations totaled $118 million, up 33% year-over-year, a new record.

• Non-GAAP gross profit was $20.1 million (87% margin); GAAP gross profit was $19.7 million (86% margin).

• Non-GAAP operating loss was $2.5 million; GAAP operating loss was $9.3 million; net loss was $8 million ($0.17 per share); non-GAAP net loss was $1.2 million ($0.03 per share).

• Free cash flow was negative $7.4 million, including $3 million in Cycuity acquisition costs.

• Ended Q1 with $41.9 million in cash equivalents and no debt.

Outlook and guidance

• Q2 2026 guidance: ACV plus royalties of $95M–$99M, revenue of $23M–$24M, non-GAAP operating loss of $3M–$2M, free cash flow of $2M–$8M.

• Full year 2026 guidance raised: ACV plus royalties to exit at $102M–$106M, revenue of $91M–$95M, non-GAAP operating loss of $8.5M–$4.5M, free cash flow of $5M–$9M.

• Expecting non-GAAP operating profit as early as Q4 2026.

• Management expects continued investment in R&D and sales to drive long-term growth, with R&D expenses anticipated to increase as a percentage of revenue in the near term.