• Arteris Announces Financial Results for the First Quarter 2023 and Estimated Second Quarter and Full Year 2023 Guidance

    Источник: Nasdaq GlobeNewswire / 04 май 2023 16:05:36   America/New_York

    CAMPBELL, Calif., May 04, 2023 (GLOBE NEWSWIRE) -- Arteris, Inc. (Arteris or Arteris IP), a leading provider of network-on-chip (NoC) interconnect and other intellectual property (IP) technology that manages the on-chip communications in system-on-chip (SoC) semiconductor devices, today announced financial results for the first quarter ended March 31, 2023 as well as estimated second quarter and full year 2023 guidance.

    “We’re excited to report a solid start to the year, with Annual Contract Value plus Trailing-Twelve-Month Royalties of $54.8 million, up 20% year-over-year when adjusted to exclude HiSilicon and DJI and up 5% sequentially,” said K. Charles Janac, President and CEO of Arteris. “With the added focus on the broader automotive supply chain, including OEMs, and following last year’s Arm automotive partnership, we are pleased to report that in the year to date, Arteris secured four new OEM design wins, including three new car companies across the US, Europe and APAC. In addition to automotive, we continue to see strong demand from AI and Machine Learning applications which increasingly require network-on-chip IP and benefit from SoC integration automation. We believe Arteris is well positioned to continue to gain market share as the growing complexity of automotive, consumer electronics, and AI/ML applications, creates a need for third party commercial System IP,” concluded K. Charles Janac.

    First Quarter 2023 Financial Highlights:

    • Annual Contract Value (ACV) and Trailing-twelve-month (TTM) royalties of $54.8 million, up 4% year-over-year
    • Revenue of $13.2 million, up 12% year-over-year
    • Remaining performance obligation (RPO) of $57.3 million
    • Operating loss of $8.8 million or 67% of revenue
    • Non-GAAP operating loss of $5.6 million or 42.4% of revenue, compared to a loss of $4.2 million in the year-ago period
    • Net loss of $9.0 million or $0.26 per share
    • Non-GAAP net loss of $5.8 million or $0.17 per share
    • Non-GAAP free cash flow of $(8.5) million or (65)% of revenue

    First Quarter 2023 Business Highlights:

    • 22 confirmed designs starts in the first quarter, highlighting sustained customer usage of Arteris technology;
    • Added six Active Customers in the first quarter across key verticals, including in Enterprise & Computing, Consumer, and Automotive;
    • Tenstorrent licensed Arteris IP for AI high-performance computing and datacenter RISC-V chiplets; and
    • ASICLAND selected Arteris FlexNoC for automotive, AI enterprise and AI edge SoCs to facilitate faster time to market and reduce design time for ASICLAND’s customers across various industries.

    Estimated Second Quarter and Full Year 2023 Guidance:

     Q2 2023FY 2023
     (in millions, except %)
    ACV + TTM royalties$53.5 - $57.5$60.4 - $65.4
    Revenue$13.0 - $14.0$56.0 - $60.0
    Non-GAAP operating loss (%)37.0% - 57.0%28.5% - 43.5%
    Free cash flow (%)(51.8)% - (26.8)%(19.7)% - (9.7)%


    The guidance provided above are forward-looking statements and reflect our 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.

    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. 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 May 4, 2023 to review its first quarter 2023 financial results and to discuss its financial outlook.

     Time:4:30PM ET 
     United States/Canada Toll Free:877-407-9208 
     International Toll:1-201-493-6784 
     Conference ID:13737399 

    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 the company’s web site approximately two hours after the conclusion of the call and remain available for approximately 30 calendar days.

    About Arteris

    Arteris IP (Nasdaq: AIP) provides system-on-chip (SoC) system IP consisting of network-on-chip (NoC) interconnect IP and IP deployment technology to accelerate system-on-chip (SoC) semiconductor development and integration for a wide range of applications from AI to automobiles, mobile phones, IoT, cameras, SSD controllers, and servers for customers such as Bosch, Mobileye, Samsung, Toshiba and NXP. Arteris IP products include the Ncore® cache coherent and FlexNoC® non-coherent interconnect IP, the CodaCache® standalone last level cache, and optional Resilience Package (ISO 26262 functional safety), FlexNoC AI Package, and PIANO® automated timing closure capabilities. Our IP deployment products provide intelligent automation that accelerates the development and increases the quality of SoC hardware designs and their associated software and firmware, verification and simulation platforms, and specifications and customer documentation. Customer results obtained by using Arteris IP products include lower power, higher performance, more efficient design reuse and faster SoC development, leading to lower development and production costs.

    Investor Contacts:
    Arteris
    Nick Hawkins
    Chief Financial Officer
    IR@arteris.com

    Sapphire Investor Relations
    Erica Mannion and Michael Funari
    +1 617 542 6180
    IR@arteris.com

    Forward-Looking Statements

    This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended, including but not limited to, statements regarding our future financial and operating performance, including our GAAP and Non-GAAP guidance for the first quarter and full year 2023; our market opportunity and its potential growth; our position within the market and our ability to drive customer value; and our ability to make progress even in a challenging economic environment. The words "may," "might," "will," "could," "would," "should," "expect," "plan," "anticipate," "intend," "believe," "expect," "estimate," "seek," "predict," "future," "project," "potential," "continue," "target" and similar words or expressions are intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Any forward-looking statements contained herein are based on our historical performance and our current plans, estimates and expectations and are not a representation that such plans, estimates, or expectations will be achieved. These forward-looking statements represent our expectations as of the date of this press release. Subsequent events may cause these expectations to change, and we disclaim any obligation to update the forward-looking statements in the future, except as required by law. These forward-looking statements are subject to known and unknown risks and uncertainties that may cause actual results to differ materially from our current expectations. Important factors that could cause actual results to differ materially from those anticipated in our forward-looking statements include, but are not limited to, the significant competition we face from larger companies and third-party providers; our history of net losses; whether semiconductor companies in the automotive market, enterprise computing market, communications market, consumer electronics market, and industrial markets incorporate our solutions into their end products and the growth and economic stability of these end markets; our ability to attract new customers and the extent to which our customers renew their subscriptions for our solutions; the ability of our customers’ end products achieving market acceptance or growth; our ability to sustain or grow our licensing revenue; our ability, and the cost, to successfully execute on research and development efforts; the occurrence of product errors or defects in our solutions; if we fail to offer high-quality support; the occurrence of macro-economic conditions that adversely impact us, our customers and their end product markets; the effects of geopolitical conflicts, such as the military conflict between Russia and Ukraine; the range of regulatory, operational, financial and political risks we are exposed to as a result of our dependence on international customers and operations; our ability to protect our proprietary technology and inventions through patents and other IP rights; whether we are subject to any liabilities or fines as a result of government regulation, including import, export and economic sanctions laws and regulations; the occurrence of a disruption in our networks or a security breach; risks associated with doing business in China; and the other factors described under the heading “Risk Factors” in our Quarterly Report on Form 10-Q for the quarter ended March 31, 2023 to be filed with the Securities and Exchange Commission (SEC) on May 4, 2023. All forward-looking statements reflect our beliefs and assumptions only as of the date of this press release. We undertake no obligation to update forward-looking statements to reflect future events or circumstances. Our results for the quarter ended March 31, 2023 are not necessarily indicative of our operating results for any future periods.


    Arteris, Inc

    Condensed Consolidated Statements of Loss
    (in thousands, except share and per share data)
    (Unaudited)

     Three Months Ended
    March 31,
      2023   2022 
    Revenue   
    Licensing, support and maintenance$11,844  $10,575 
    Variable royalties and other 1,310   1,180 
    Total revenue 13,154   11,755 
    Cost of revenue 1,124   979 
    Gross profit 12,030   10,776 
    Operating expense:   
    Research and development 11,381   9,456 
    Sales and marketing 5,005   3,921 
    General and administrative 4,401   4,015 
    Total operating expenses 20,787   17,392 
    Loss from operations (8,757)  (6,616)
    Interest expense (32)  (20)
    Interest and other income (expense), net 908   (61)
    Loss before provision for income taxes and loss from equity method investment (7,881)  (6,697)
    Loss from equity method investment, net of tax (834)   
    Provision for income taxes 295   123 
    Net loss$(9,010) $(6,820)
        
    Net loss per share attributable to common stockholders, basic and diluted$(0.26) $(0.22)
    Weighted average shares used on computing per share amounts, basic and diluted 34,597,839   31,619,706 
            

    Arteris, Inc
    Condensed Consolidated Balance Sheets
    (In thousands, except share and per share data)
    (unaudited)

     As of
     March 31,
    2023
     December 31,
    2022
    ASSETS   
    Current assets:   
    Cash and cash equivalents$28,505  $37,423 
    Short-term investments 32,426   30,728 
    Accounts receivable, net of allowance of $310 and $250 9,750   7,143 
    Prepaid expenses and other current assets 5,096   5,818 
    Total current assets 75,777   81,112 
    Property and equipment, net 3,313   3,617 
    Long-term investments 2,458   4,427 
    Equity method investment 11,063   11,897 
    Operating lease right-of-use assets 1,932   1,883 
    Intangibles, net 4,383   4,575 
    Goodwill 4,218   4,218 
    Other assets 4,149   3,787 
    TOTAL ASSETS$107,293  $115,516 
    LIABILITIES AND STOCKHOLDERS’ EQUITY   
    Current liabilities:   
    Accounts payable$1,215  $572 
    Accrued expenses and other current liabilities 9,992   12,095 
    Operating lease liabilities, current 780   899 
    Deferred revenue, current 27,794   28,839 
    Vendor financing arrangements, current 1,161   1,264 
    Total current liabilities 40,942   43,669 
    Deferred revenue, noncurrent 22,270   21,840 
    Operating lease liabilities, noncurrent 1,205   1,009 
    Vendor financing arrangements, noncurrent 256   448 
    Deferred income, noncurrent 9,699   9,993 
    Other liabilities 1,153   1,022 
    Total liabilities 75,525   77,981 
    Stockholders' equity:   
    Preferred stock, par value of $0.001 - 10,000,000 shares authorized and no shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively     
    Common stock, par value of $0.001 - 300,000,000 shares authorized as of March 31, 2023 and December 31, 2022; 35,298,223 and 34,625,875 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively 35   34 
    Additional paid-in capital 107,009   103,778 
    Accumulated other comprehensive income 112   101 
    Accumulated deficit (75,388)  (66,378)
    Total stockholders' equity 31,768   37,535 
    TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY$107,293  $115,516 


    Arteris, Inc.

    Condensed Consolidated Statements of Cash Flows
    (In thousands)
    (unaudited)

     Three Months Ended
    March 31,
      2023   2022 
    CASH FLOWS FROM OPERATING ACTIVITIES:   
    Net loss$(9,010) $(6,820)
    Adjustments to reconcile net loss to net cash used in operating activities:   
    Depreciation and amortization 601   401 
    Stock-based compensation 2,985   2,309 
    Operating non-cash lease expense 27   25 
    Amortization of deferred income (291)   
    Loss from equity method investment 834    
    Net accretion of discounts on available-for-sale securities (259)   
    Changes in operating assets and liabilities:   
    Accounts receivable, net (2,607)  5,674 
    Prepaid expenses and other assets 364   (1,447)
    Accounts payable 555   (434)
    Accrued expenses and other liabilities (974)  (1,370)
    Deferred revenue (614)  301 
    Net cash used in operating activities (8,389)  (1,361)
    CASH FLOWS FROM INVESTING ACTIVITIES:   
    Purchases of property and equipment (120)  (92)
    Purchases of available-for-sale securities (4,909)   
    Proceeds from maturities of available-for-sale securities 5,450    
    Payments of deferred transaction costs relating to investment in Transchip    (191)
    Net cash provided by (used in) investing activities 421   (283)
    CASH FLOWS FROM FINANCING ACTIVITIES:   
    Payments of contingent consideration for business combination (1,000)  (1,573)
    Principal payments under vendor financing arrangements (192)  (205)
    Proceeds from exercise of stock options 256   90 
    Payments to tax authorities for shares withheld from employees (14)   
    Payments of deferred offering costs    (257)
    Net cash used in financing activities (950)  (1,945)
    NET DECREASE IN CASH AND CASH EQUIVALENTS (8,918)  (3,589)
    CASH AND CASH EQUIVALENTS, beginning of period 37,423   85,825 
    CASH AND CASH EQUIVALENTS, end of period$28,505  $82,236 


    Non-GAAP Financial Measures

    To supplement our financial results, which are prepared and presented in accordance with GAAP, we use certain non-GAAP financial measures, as described below, to understand and evaluate our core performance. These non-GAAP measures, which may be different than similarly-titled measures used by other companies, are presented to enhance investors’ overall understanding of our financial performance and should not be considered a substitute for, or superior to, the financial information prepared and presented in accordance with GAAP.

    We define "Non-GAAP gross profit and Non-GAAP gross margin" as GAAP gross profit and GAAP gross margin, adjusted for stock-based compensation expense included in cost of revenue. We define “Non-GAAP Loss from Operations” as our income (loss) from operations adjusted to exclude stock-based compensation, acquisition costs and amortization of acquired intangible assets. We define “Non-GAAP Net Loss” as our net income (loss) adjusted to exclude stock-based compensation, acquisition costs, amortization of acquired intangible assets and gain on extinguishment of debt.

    We define “Non-GAAP EPS”, as our Non-GAAP Net Income (Loss) divided by our GAAP weighted-average number of shares outstanding for the period on a diluted basis. Management uses Non-GAAP EPS to evaluate the performance of our business on a comparable basis from period to period.

    The above items are excluded from our Non-GAAP Gross Profit, Non-GAAP Income (Loss) from Operations and Non-GAAP Net Income (Loss) because these items are non-cash in nature, or are not indicative of our core operating performance, and render comparisons with prior periods and competitors less meaningful. We believe Non-GAAP Gross Profit, Non-GAAP Income (Loss) from Operations and Non-GAAP Net Income (Loss) provide useful supplemental information to investors and others in understanding and evaluating our results of operations, as well as provide a useful measure for period-to-period comparisons of our business performance.

    We define free cash flow as net cash (used in) provided by operating activities less cash used for purchases of property and equipment. We believe that free cash flow is a useful indicator of liquidity that provides information to management and investors, even if negative, about the amount of cash used in our operations other than that used for investments in property and equipment.

    Other Business Metrics

    Annual Contract Value (ACV) – we define Annual Contract Value for an individual customer agreement as the total fixed fees under the agreement divided by the number of years in the agreement term. Our total ACV is the aggregate ACVs for all our customers as measured at a given point in time. Total fixed fees includes licensing, support and maintenance and other fixed fees under IP licensing or software licensing agreements but excludes variable revenue derived from licensing agreements with customers, particularly royalties. We monitor ACV to measure our success and believe the increase in the number shows our progress in expanding our customers’ adoption of our solutions. ACV fluctuates due to a number of factors, including the timing, duration and dollar amount of customer contracts.

    Active Customers – we define Active Customers as customers who have entered into a license agreement with us that remains in effect. The retention and expansion of our relationships with existing customers are key indicators of our revenue potential.

    Confirmed Design Starts – we define Confirmed Design Starts as when customers confirm their commencement of new semiconductor designs using our interconnect IP and notify us. Confirmed Design Starts is a metric management uses to assess the activity level of our customers in terms of the number of new semiconductor designs that are started using our interconnect IP in a given period. We believe that the number of Confirmed Design Starts is an important indicator of the growth of our business and future royalty revenue trends.

    Remaining Performance Obligations (RPO) – we define Remaining Performance Obligations as the amount of contracted future revenue that has not yet been recognized, including both deferred revenue and unbilled cancelable and non-cancelable contracted amounts that will be invoiced and recognized as revenue in future periods.

    Arteris, Inc.
    Reconciliation of GAAP Measures to Non-GAAP Measures
    (In thousands, except share and per share data)
    (unaudited)

     Three Months Ended
    March 31,
      2023   2022 
    Gross profit$12,030  $10,776 
    Stock-based compensation expense included in cost of revenue 83   96 
    Non-GAAP gross profit$12,113  $10,872 
    Gross margin 91%  92%
    Non-GAAP gross margin 92%  92%
        
    Research and development$11,381  $9,456 
    Stock-based compensation expense (1,429)  (1,144)
    Amortization of acquired intangible assets (1) (135)  (85)
    Non-GAAP research and development$9,817  $8,227 
        
    Sales and marketing$5,005  $3,921 
    Stock-based compensation expense (685)  (271)
    Amortization of acquired intangible assets (1) (57)  (34)
    Non-GAAP sales and marketing$4,263  $3,616 
        
    General and administrative$4,401  $4,015 
    Stock-based compensation expense (788)  (798)
    Non-GAAP general and administrative$3,613  $3,217 
        
    Loss from operations$(8,757) $(6,616)
    Stock-based compensation expense 2,985   2,309 
    Amortization of acquired intangible assets (1) 192   119 
    Non-GAAP loss from operations$(5,580) $(4,188)
        
    Net loss$(9,010) $(6,820)
    Stock-based compensation expense 2,985   2,309 
    Amortization of acquired intangible assets (1) 192   119 
    Non-GAAP net loss (2)$(5,833) $(4,392)
        
    Net loss per share attributable to common stockholders, basic and diluted$(0.26) $(0.22)
    Per share impacts of adjustments to net loss (3)$0.09  $0.08 
    Non-GAAP EPS, basic and diluted$(0.17) $(0.14)
        
    Weighted average shares used in computing per share amounts, basic and diluted 34,597,839   31,619,706 

    (1) Represents the amortization expenses of our intangible assets attributable to our acquisitions.
    (2) Our GAAP tax provision is primarily related to foreign withholding taxes and income tax in profitable foreign jurisdictions. We maintain a full valuation allowance against our deferred tax assets in the US. Accordingly, there is no significant tax impact associated with these Non-GAAP adjustments.
    (3) Reflects the aggregate adjustments made to reconcile Non-GAAP Net Loss to our net loss as noted in the above table, divided by the GAAP diluted weighted average number of shares of the relevant period.

    Free Cash Flow

     Three Months Ended
    March 31,
      2023   2022 
     (in thousands)
    Net cash used in operating activities$(8,389) $(1,361)
    Less:   
    Purchase of property and equipment (120)  (92)
    Free cash flow$(8,509) $(1,453)
    Net cash provided by (used in) investing activities$421  $(283)
    Net cash used in financing activities$(950) $(1,945)

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