Arteris Announces Financial Results for the Fourth Quarter and Full Year 2023 and Estimated First Quarter and Full Year 2024 Guidance

CAMPBELL, Calif., Feb. 20, 2024 -- Arteris, Inc. (Nasdaq: AIP), a leading provider of system IP which accelerates system-on-chip (SoC) creation, today announced financial results for the fourth quarter and year ended December 31, 2023 and provided first quarter and full year 2024 guidance.

"We're excited to report a strong finish to 2023, with Annual Contract Value and Trailing-Twelve-Month Variable Royalties of $56.1 million, above the high end of our guidance range," said K. Charles Janac, President and CEO of Arteris. "We believe that the accelerating adoption of commercial System IP solutions across the industry’s most complex applications including Generative AI and advanced mobility is becoming clear. With 23 net new Active Customers in 2023, including several of the world’s largest electronics companies, as well as a record number of license deals and customer chip designs, the scale and scope of our long-term opportunity remains robust," concluded Janac.

Fourth Quarter 2023 Financial Highlights:

• Revenue of $12.5 million, up 12% year-over-year
• Annual Contract Value (ACV) and trailing twelve months (TTM) variable royalties of $56.1 million, up 7% year-over-year
• Remaining performance obligation (RPO) of $72.7 million, up 26% year-over-year
• Operating loss of $9.2 million
• Non-GAAP operating loss of $5.5 million, compared to a Non-GAAP operating loss of $5.8 million in the year-ago period
• Net loss of $10.5 million or $0.29 per share
• Non-GAAP net loss of $6.8 million or $0.18 per share
• Non-GAAP free cash flow of $(3.4) million or (27)% of revenue

Full year 2023 Financial Highlights:

• Revenue of $53.7 million, up 7% year-over-year
• Operating loss of $35.1 million
• Non-GAAP operating loss of $19.8 million, compared to a Non-GAAP operating loss of $16.2 million for the year-ended 2022
• Net loss of $36.9 million or $1.03 per share
• Non-GAAP net loss of $21.6 million or $0.60 per share
• Non-GAAP free cash flow of $(17.2) million or (32)% of revenue

Fourth Quarter 2023 Business Highlights:

• Highest level of quarterly design activity for the company, with 29 confirmed design starts across all our verticals. This includes another nine artificial intelligence/machine learning (AI/ML) designs for the quarter and 37 for 2023;
• Added four Active Customers in the quarter, for a total of 23 net new Active Customers in 2023;
• 65% year-over-year increase in trailing-twelve-months variable royalties and other revenue;
• Rain AI selected FlexNoC 5 interconnect for its family of AI accelerator products, optimized for high-performance, low-power Generative AI and Edge AI computing;
• Scalinx licensed Ncore and FlexNoC interconnect IP for its next-generation Modem SoC dedicated to wireless communication infrastructure, delivering ultra-high capacity, multi-gigabit links over long distances;
• Partnered with Semidynamics, a provider of fully customizable high-performance RISC-V processor IP, enabling an acceleration of product innovation for AI/ML and high-performance computing applications;
• Ncore cache coherent interconnect IP achieved ISO 26262 up to ASIL D, the most stringent level of functional safety for automotive technology;
• Awarded ISO 9001:2015 certification for Quality Management Systems, validating Arteris’ capabilities to consistently design, develop, and deploy high-quality products and services; and
• FlexNoC 5 continues its momentum with 12 additional customers having licensed and/or upgraded in the quarter.

Non-GAAP gross profit, Non-GAAP gross margin, Non-GAAP operating loss, Non-GAAP operating loss margin, Non-GAAP net loss, Non-GAAP net loss per share, free cash flow and free cash flow margin are Non-GAAP financial measures. Additional information on Arteris’ historic reported results, including a reconciliation of these Non-GAAP financial measures to their most comparable GAAP measures, is included in the financial tables below.

First Quarter and Full Year 2024 Guidance:

The guidance provided above are forward-looking statements and reflects Arteris' expectations as of today's date. Actual results may differ materially. Refer to the section titled "Forward-Looking Statements" below for information on the factors, among others, that could cause our actual results to differ materially from these forward-looking statements.

A reconciliation of Non-GAAP guidance measures reported above to corresponding GAAP measures is not available on a forward-looking basis without unreasonable effort due to the uncertainty of expenses that may be incurred in the future, although it is important to note that these factors could be material to Arteris' results computed in accordance with GAAP.

Definitions of the other business metrics used in this press release including ACV, active customers, confirmed design starts and RPO are included below under the heading “Other Business Metrics.”

Conference Call

Arteris will host a conference call today on February 20, 2024 to review its fourth quarter and full year 2023 financial results and to discuss its financial outlook.

A live webcast will also be available in the Investor Relations section of Arteris’ website at: https://ir.arteris.com/events-and-presentations

A replay of the webcast will be available in the Investor Relations section of Arteris' website approximately two hours after the conclusion of the call and remain available for approximately 30 calendar days.

About Arteris

Arteris is a leading provider of system IP for the acceleration of system-on-chip (SoC) development across today’s electronic systems. Arteris network-on-chip (NoC) interconnect IP and SoC integration automation technology enable higher product performance with lower power consumption and faster time to market, delivering better SoC economics so its customers can focus on dreaming up what comes next. Learn more at arteris.com.