Arteris, Inc. (AIP) Q2 2026 Earnings: Revenue $24M (+46.3%)
AIP — Q2 2026 Financial Report Analysis
Q2 · Fiscal year 2026 · Published by Pham Hop
Arteris grew Q2 2026 revenue 46% to $24.1M with royalties up 50% and contracted backlog up 36%, but its net loss widened to $14.1M and it raised revenue guidance while widening its adjusted-loss outlook.
Revenue
$24M
+46.3% YoY
Net income
-$14M
-54.1% YoY
Diluted EPS
$-0.30
-36.4% YoY
Operating margin
-57.6%
This period vs a year ago
Same period last year
This period
Revenue▲+46.3%
≈$16M
$24M
Year-ago figures (≈) are worked out from the growth rate the company reported. Each row has its own scale.
Revenue up 46%, but the loss widened as Arteris paid for growth and a deal
Arteris sells the "wiring plan" inside computer chips: software-configurable designs (called network-on-chip, or NoC, interconnect) that move data between the processors, memory and other blocks on a chip. Chipmakers pay Arteris an upfront licence fee to use the design, and later a royalty on every chip they ship that contains it. In the second quarter of 2026 (ended June 30), revenue rose 46% to $24.1 million, a quarterly record, but the net loss widened to $14.1 million from $9.1 million as headcount, stock-based pay and costs tied to the January acquisition of chip-security firm Cycuity grew faster than sales.
At a glance
$24.1 million revenue, up 46%. Licensing fees did most of the work (+38%), and royalties, the per-chip fees that show customers' chips are actually selling, rose 50% to $2.1 million.
$134.9 million of contracted future revenue (RPO), up 36%. That is about 5.6 times this quarter's revenue already signed, and the company expects $67.5 million of its non-cancelable portion to turn into revenue within 12 months.
$8.6 million of free cash flow in the quarter despite a $14.1 million net loss. Customers pay licence fees upfront and a large chunk of costs is paid in stock rather than cash, so cash is running well ahead of reported profit.
The numbers
Metric
Q2 2026
Q2 2025
YoY Change
Total revenue
$24.1M
$16.5M
+46.3%
Licensing, support and maintenance
$20.8M
$15.1M
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+38.0%
Variable royalties
$2.1M
$1.4M
+50.0%
Professional services and other
$1.2M
$0.01M
n/m (from Cycuity)
Gross margin
85.1%
89.4%
-4.3 pts
Operating margin (GAAP)
-57.6%
-50.0%
-7.6 pts
Non-GAAP operating loss
-$4.6M
-$3.5M
wider by $1.0M
Net loss
-$14.1M
-$9.1M
loss 54.1% wider
Diluted EPS
-$0.30
-$0.22
36.4% worse
Annual Contract Value (ACV) + royalties
$99.5M
$69.1M
+44.0%
Remaining performance obligations (RPO)
$134.9M
$99.3M
+35.8%
Confirmed design starts (quarter)
26
25
+1
Operating margin is the share of revenue left after running the business (before interest and tax); here it is negative because operating costs exceed revenue. Figures from the Q2 2026 Form 10-Q; non-GAAP operating loss from the company's August 6 earnings release.
Takeaway: Signed business is growing at least as fast as the cost base: ACV plus royalties rose 44% and RPO 36%, against a 37% rise in non-GAAP operating expenses. But about $1.2 million of revenue and most of the gross-margin slip come from Cycuity's government services work, and the headline net loss widened. The path to profit runs through royalties and licence renewals compounding on a cost base management now says will lose $7–10 million on an adjusted basis this year, more than it said in May.
Where the growth came from
Licences. Licensing, support and maintenance revenue rose $5.7 million to $20.8 million. The 10-Q attributes this to "the addition of new customers, new license arrangements with existing customers, and revenue for hardware security verification products that were introduced as part of the Cycuity acquisition." The filing does not say how much of that came from Cycuity, so the organic growth rate can't be isolated precisely.
Royalties. Variable royalties, paid when a customer's chip containing Arteris technology actually ships, rose 50% to $2.1 million, and over the trailing twelve months reached $8.6 million (+65%). The company credits "an increase in product sales by certain existing customers, and the addition of new customers." Royalties are still only 8.7% of revenue, but they matter disproportionately: they arrive years after a licence is signed (Arteris says customers start shipping one to five years after finishing a design, and royalties then run for up to seven years), so today's royalty growth reflects licences sold years ago, and today's design starts set up royalties years from now.
Services (new). Professional services and other revenue jumped from $12,000 to $1.2 million, which the filing says is "primarily due to revenue generated from hardware security verification services performed under contract with the U.S. government, a significant portion of which was delivered by third-party subcontractors," all inherited with Cycuity.
Revenue mix this quarter: licensing 86%, royalties 9%, services 5%.
Design wins. Customers confirmed 26 new chip designs using Arteris interconnect in the quarter versus 25 a year earlier, essentially flat; the earnings release says trailing-twelve-month design starts were up 21%. Management also says enterprise computing (data centre and AI chips) has averaged 29% of ACV plus royalties over the past four quarters. ACV (annual contract value — total fixed licence fees divided by the years in each contract) reached $90.9 million, up from $63.9 million.
What the headline numbers hide
Gross margin fell because of the acquired services business. Cost of revenue more than doubled (+107%) to $3.6 million, which the 10-Q puts down "primarily" to "third-party subcontractors fulfilling our U.S. government contracts." Subcontracted services earn far thinner margins than software licences, so gross margin slipped from 89.4% to 85.1%. Expect this to persist while the government contracts run.
The GAAP-to-adjusted gap is large and mostly stock pay. The $9.3 million difference between the GAAP operating loss ($13.9 million) and non-GAAP operating loss ($4.6 million) is stock-based compensation ($6.3 million, about 26% of revenue), amortization of acquired intangibles ($0.8 million) and acquisition-related costs ($2.2 million). Of that last item, $2.1 million is an increase in the estimated value of the Cycuity earn-out (up to $12.0 million is payable if bookings targets are met through December 31, 2026) — a non-cash charge, but one that signals the acquired business is tracking toward its targets and may cost more cash in early 2027.
Cash is much better than profit, for a reason. Year-to-date operating cash flow was +$2.1 million against a $22.0 million net loss. The gap is $11.9 million of stock pay (a real cost to shareholders through dilution, not cash), a $10.1 million rise in deferred revenue (customers paying before Arteris books the revenue) and a $5.4 million fall in receivables. Q2 alone produced $9.2 million of operating cash, but H1 free cash flow was only $1.3 million, so a lot of the quarter's cash is billing timing.
Receivables shrank while sales grew — a good sign, with one caveat. Accounts receivable fell to $15.2 million from $19.2 million at year-end. However, one customer accounts for 36% of that balance. No single customer was 10% or more of revenue this year.
The year-to-date loss is flattered by a one-off tax gain, then hit by a one-off write-down. The H1 tax line was a $3.0 million benefit (versus a $1.1 million expense a year ago), mainly from releasing part of a valuation allowance tied to Cycuity's intangible assets. That was partly offset by a $3.0 million Q1 loss on the Transchip equity investment, which is now carried at zero, so there will be no more of those losses.
Shareholders were diluted ~11% since December. Arteris sold 2.1 million new shares in an "at-the-market" offering (shares sold gradually into the market) for $75.0 million gross at an average $35.53, exhausting the programme, and issued 1.1 million shares for Cycuity. Shares outstanding rose from 44.3 million to 49.1 million. Per-share losses therefore rose less than the dollar loss (EPS -36% vs net loss -54%). The raise lifted cash and short-term investments to $122.1 million and turned a $14.6 million shareholders' deficit at year-end into $67.7 million of equity.
China exposure. 23.2% of H1 revenue came from customers in China, where U.S. export rules already restrict sales to some AI and supercomputer chip designers.
Guidance: more revenue, more spending
Management raised full-year 2026 revenue guidance to $95–98 million (from $91–95 million in May) but widened the expected full-year non-GAAP operating loss to $7–10 million (from $4.5–8.5 million). ACV-plus-royalties (FY $102–106 million) and free-cash-flow ($5–9 million) guidance were unchanged. For Q3 it guides revenue of $24–25 million and a non-GAAP operating loss of $1–3 million.
Against its own May targets, Q2 came in at the top of the revenue range ($24.1 million vs $23–24 million) and above the ACV-plus-royalties range ($99.5 million vs $95–99 million), but the non-GAAP operating loss ($4.6 million) was worse than the $2–3 million guided.
There is also a management change: CFO Nick Hawkins is retiring, and Saurabh Sinha (previously CFO of Aeva Technologies) took over on September 8, 2026.
Our read
The revenue line is doing what a licensing business should: ACV plus royalties is rising faster than adjusted costs (+44% vs +37%) and RPO roughly in line (+36%), and royalties — the high-margin, compounding part of the model — grew 50%. The weaker parts are that the Cycuity deal adds lower-margin services revenue and earn-out costs, Q2 missed its own loss target, and the full-year adjusted-loss guide got worse even as revenue was raised, meaning the extra revenue is being reinvested rather than dropping to profit. With $122 million in cash and positive free cash flow guided for the year, funding isn't the near-term question; the question is whether operating expenses (non-GAAP +37% this quarter) slow enough for the implied Q3 improvement (a $1–3 million adjusted loss) to happen. Things to watch in Q3: whether the non-GAAP loss actually narrows to the guided range, royalty revenue staying above $2 million a quarter, and how much the Cycuity earn-out ends up costing.