Second Quarter 2026
Filed Aug 6, 2026Arteris reported record revenue and higher ACV plus royalties, while operating losses increased year-over-year and the company issued estimated third-quarter and updated full-year 2026 guidance.
Revenue, trailing-twelve-months variable royalties, ACV plus royalties and RPO increased year-over-year, but GAAP and non-GAAP operating losses were higher than the prior-year quarter.
Key metrics
as reported| Metric | Value | q/q | y/y |
|---|---|---|---|
| Licensing, support and maintenance revenue (In thousands)GAAP | $ 20,824 | – | – |
| Variable royalties revenue (In thousands)GAAP | 2,103 | – | – |
| Professional services and other revenue (In thousands)GAAP | 1,207 | – | – |
| Total revenue (In thousands)GAAP | 24,134 | – | up 46% year-over-year |
| Cost of revenue (In thousands)GAAP | 3,607 | – | – |
| Gross profit (In thousands)GAAP | 20,527 | – | – |
| Research and development expense (In thousands)GAAP | 16,762 | – | – |
| Sales and marketing expense (In thousands)GAAP | 9,386 | – | – |
| General and administrative expense (In thousands)GAAP | 6,072 | – | – |
| Acquisition-related costs (In thousands)GAAP | 2,215 | – | – |
| Total operating expenses (In thousands)GAAP | 34,435 | – | – |
| Loss from operations (In thousands)GAAP | (13,908) | – | – |
| Trailing-twelve-months variable royaltiesother | $8.6 million | – | up 65% year-over-year |
| Annual Contract Value (ACV) plus royaltiesother | $99.5 million | – | up 44% year-over-year |
| Remaining Performance Obligation (RPO)other | $135 million | – | up 36% year-over-year |
| Operating lossGAAP | $13.9 million | – | – |
| Non-GAAP operating lossnon-GAAP | $4.6 million | – | – |
| Net lossGAAP | $14.1 million | – | – |
| Net loss per shareGAAP | $0.30 per share | – | – |
| Non-GAAP net lossnon-GAAP | $4.7 million | – | – |
| Non-GAAP net loss per sharenon-GAAP | $0.10 per share | – | – |
Q3 2026 and FY 2026 outlook
- RevenueQ3 2026: $24.0 - $25.0; FY 2026: $95.0 - $98.0
- NoteACV + royalties: Q3 2026: $99.0 - $103.0; FY 2026: $102.0 - $106.0
- NoteNon-GAAP operating loss: Q3 2026: $1.0 - $3.0; FY 2026: $7.0 - $10.0
- NoteFree cash flow: FY 2026: $5.0 - $9.0
- NoteArteris will no longer provide quarterly free cash flow guidance.
What drove it
- Second quarter deal activity was driven by record customer engagement in enterprise computing, automotive, aerospace and defense, communications, consumer electronics, and industrial markets.
- Customer confirmed design starts in the trailing-twelve-months ended June 30, 2026 increased 21% year-over-year compared to the previous trailing-twelve-months.
- Enterprise computing averaged 29% of Annual Contract Value plus royalties over the past four quarters.
- AI infrastructure deals were among Arteris' largest in the quarter.
- Arm expanded its partnership with Arteris, licensing Arteris hardware security assurance technology.
Concerns
- GAAP operating loss increased to $13.9 million from $8.2 million in the second quarter of 2025.
- Non-GAAP operating loss increased to $4.6 million from $3.5 million in the second quarter of 2025.
- Acquisition-related costs were $2,215 (In thousands), compared with — in the second quarter of 2025.
- The company cited competition, a history of net losses, customer adoption and renewal risk, macroeconomic conditions, tariffs, geopolitical conflicts, international operations and China-related risks among factors that could affect results.
What to watch
- Execution against Q3 2026 revenue guidance of $24.0 - $25.0 and ACV + royalties guidance of $99.0 - $103.0.
- Execution against FY 2026 revenue guidance of $95.0 - $98.0, ACV + royalties guidance of $102.0 - $106.0, non-GAAP operating loss guidance of $7.0 - $10.0, and free cash flow guidance of $5.0 - $9.0.
- Progress in enterprise computing and AI infrastructure, which management identified as key growth areas.
- Saurabh Sinha's start as Chief Financial Officer on September 8, 2026.
- Customer design-start activity and the conversion of RPO of $135 million into future revenue.
Analysis
Arteris reported second-quarter revenue of $24.1 million, up 46% year-over-year. The reported revenue mix included licensing, support and maintenance revenue of $ 20,824 (In thousands), variable royalties revenue of 2,103 (In thousands), and professional services and other revenue of 1,207 (In thousands). The company also reported trailing-twelve-months variable royalties of $8.6 million, up 65% year-over-year, supporting management's emphasis on royalty growth alongside licensing activity.
Business indicators were also stronger year-over-year. ACV plus royalties reached $99.5 million, up 44% year-over-year, while RPO was $135 million, up 36% year-over-year. Management said customer confirmed design starts increased 21% in the trailing-twelve-months ended June 30, 2026 compared with the prior trailing-twelve-months. Enterprise computing, data center chip and chiplet development, and AI infrastructure deals were identified as meaningful demand drivers.
Profitability remained the principal counterweight to the revenue and business-metric growth. GAAP loss from operations was $(13,908) (In thousands), compared with $(8,248) (In thousands) in the second quarter of 2025. Non-GAAP operating loss was $4.6 million, compared with $3.5 million. Operating expenses totaled 34,435 (In thousands), compared with 23,008 (In thousands), and included acquisition-related costs of 2,215 (In thousands), compared with — in the prior-year quarter.
For the third quarter, Arteris guided revenue to $24.0 - $25.0, ACV plus royalties to $99.0 - $103.0, and non-GAAP operating loss to $1.0 - $3.0. Full-year guidance calls for revenue of $95.0 - $98.0, ACV plus royalties of $102.0 - $106.0, non-GAAP operating loss of $7.0 - $10.0, and free cash flow of $5.0 - $9.0. The company said it will no longer provide quarterly free cash flow guidance.
Capital-return activity, cash, debt, and actual operating and free cash flow were not included in the provided filing text. The next reported period will show whether elevated customer engagement, design starts, RPO and AI-related activity translate into the guided revenue and improving non-GAAP operating-loss profile.
Management, verbatim
In the second quarter we delivered multiple record-breaking results, including new highs in Annual Contract Value plus royalties exiting the quarter at $99.5 million, up 44% year-over-year, and record revenue, royalties and Remaining Performance Obligation
K. Charles Janac, President and Chief Executive Officer
Customer design activity remained strong, with number of design starts up 21% over the trailing-twelve-months compared to the previous trailing-twelve-months, as the majority of new designs now incorporate some form of AI compute. Data center chip and chiplet development remains a key growth driver, with enterprise computing averaging 29% of our Annual Contract Value plus royalties over the past four quarters and AI infrastructure deals among our largest in the quarter. With this momentum, we believe we remain well positioned to support our customers as they innovate across data centers, edge devices, and physical AI systems in the years ahead,
K. Charles Janac, President and Chief Executive Officer
Not in the filing
stated, not guessed- GAAP gross margin
- Non-GAAP gross profit
- Non-GAAP gross margin
- Prior-year net loss
- Prior-year GAAP net loss per share
- Prior-year non-GAAP net loss
- Prior-year non-GAAP net loss per share
- Diluted share count
- Actual operating cash flow
- Actual free cash flow
- Cash and cash equivalents
- Debt
- Capital returns, including share repurchases and dividends
- Prior-quarter comparisons
- Segment revenue disclosures
- Prior outlook for comparison
- Q3 2026 gross margin guidance
- Q3 2026 operating expenses guidance
- Q3 2026 tax-rate guidance
- FY 2026 gross margin guidance
- FY 2026 operating expenses guidance
- FY 2026 tax-rate guidance
AlphaAI analysis generated from the company’s SEC earnings filing (Form 8-K Item 2.02, or Form 6-K for a foreign private issuer). Every figure was cross-checked against the filing text; consensus estimates, price targets and share-price reactions are not shown because they are not in the filing. AI-generated research, not investment advice.