Q2 2026 Arteris Inc Earnings Call Transcript
Key Points
- Arteris Inc (AIP) achieved record annual contract value plus royalties of $99.5 million, a 44% year-over-year increase, and record revenue, royalties, and RPO backlog.
- The company reported strong customer diversification, with no single customer accounting for more than 10% of revenue in the first half of 2026.
- Arteris Inc (AIP) secured major design wins, including a hyperscale cloud company standardizing on its technology and a top US semiconductor design house for custom AI chips.
- The company's acquisition of cybersecurity firm Sycuity is gaining traction, with an expanded partnership with ARM to use its hardware security assurance technology in CPU designs.
- Arteris Inc (AIP) raised $72 million through its ATM program, strengthening its balance sheet to support investments and potential acquisitions.
- The company raised its full-year 2026 revenue guidance to $95-$98 million, representing a 37% year-over-year increase at the midpoint, and expects to achieve non-GAAP operating profitability as early as Q4 2026.
- Non-GAAP operating loss in Q2 2026 was $4.6 million, impacted by unexpectedly high French employer payroll taxes on RSU vesting totaling $1.7 million.
- The company's gross margin is being negatively affected by the inclusion of subcontractor costs and lower-margin government work from the Sycuity acquisition.
- Royalty revenue growth showed a slight sequential dip due to a customer's supply chain issues, which held back one quarter's worth of shipments.
- Higher sales commissions resulting from strong deal flow increased operating expenses in the quarter.
- The company's long-term royalty growth rate guidance of high 30s to low 40% may be conservative, but management is sticking with it for now, potentially limiting upside expectations.
- GAAP operating loss widened to $13.9 million in Q2 2026, including $2.2 million in acquisition-related expenses.
Good afternoon, everyone, and welcome to the Art Terrace second quarter 2026 earnings call, please note this call is being recorded and simultaneously webcast. Or material contained in the webcast is the sole property and copyright of Arurus with all rights reserved. For opening remarks. For opening remarks and introductions, I would like like to turn the call over to Erica Mannion at Safire Investor Relations, please go ahead.
Thank you and good afternoon. With me today from our terrace are Charlie Janet. Chief Executive Officer, and Nick Hawkins, Chief Financial Officer. Charlie will begin with a brief review of the business results for the second quarter end of June 30, 2026. Nick will review the financial results for the second quarter of 2026, followed by the company's outlook for the third quarter and the full year of 2026. We will then open the call for questions. Before we begin, I'd like to remind you that management will make statements during this call that are forward-looking
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