Record ACV + Royalties and Revenue Growth
ACV plus royalties reached a record $92.8M, up 39% year-over-year; total Q1 revenue was a record $22.9M, also up 39% year-over-year.
Arteris
· AIP
May 12th, 2026
Summary
- Earnings Call Date:
- 2026-05-12
- Change Since:
- +26.52%
- Next Earnings Date:
- 2026-08-11
Earnings Call Sentiment
PositiveOverall the call conveyed strong commercial momentum and clear operational progress: record ACV, revenue, accelerated royalties, raised guidance, strategic M&A, and awards. Financially the company remains in transition to profitability with GAAP losses, a negative Q1 free cash flow impacted by acquisition costs, and an early-stage security acquisition integration. Management emphasized discipline on OpEx and provided positive full-year guidance and a path to non-GAAP profitability, leading to a favorable outlook despite near-term variability and leadership transition risk.
Company Guidance
Management raised and detailed its near‑ and full‑year targets: for the next quarter they expect ACV plus royalties of $95–$99M, revenue of $23–$24M, a non‑GAAP operating loss of $3–$2M and free cash flow of +$2–$8M (and said they will no longer guide quarterly free cash flow); for full‑year 2026 they raised guidance to exit ACV plus royalties of $102–$106M (up $2M), revenue of $91–$95M (up $2M; ~32% YoY at the midpoint), non‑GAAP operating loss of $8.5–$4.5M (improved $0.5M) and non‑GAAP free cash flow of +$5–$9M; management also noted Q1 RPO of $118M with just over half expected to convert to revenue in the next 12 months and reiterated a path to non‑GAAP operating profitability as early as Q4 2026.
Substantial Royalty Acceleration
Trailing 12-month royalties were $7.9M, up 67% year-over-year and a new record; management noted that Q1 year-over-year royalties were up over 100%, driving stronger recurring revenue.
Strong Contract Backlog and RPO
Remaining performance obligations (RPO) totaled $118M at quarter end, up 33% year-over-year, with just over half expected to be recognized as revenue in the next 12 months.
High Gross Margins
Non-GAAP gross profit was $20.1M with an 87% non-GAAP gross margin (GAAP gross margin 86%), indicating strong software/IP gross economics.
Raised Full-Year Guidance
Management raised full-year 2026 guidance: revenue to $91M–$95M (up $2M from prior guidance, ~32% year-over-year growth at midpoint) and ACV exit to $102M–$106M; non-GAAP operating loss guidance improved by $0.5M.
Positive Cash Position and No Debt
Ended the quarter with $41.9M in cash, cash equivalents and investments and no financial debt; company is free-cash-flow positive on an annual basis (delivered in 2025) and guiding to positive FCF for 2026.
Broad Industry Wins and AI Momentum
Won license deals across enterprise computing (including hyperscalers and HBM memory suppliers), automotive (Renesas R-Car Gen5), communications, aerospace & defense, and noted that two-thirds of customer engagements are for AI chips.
Strategic M&A and Partnerships
Acquired Semifore (chip cybersecurity), announced collaboration with MIPS, and reported promising early commercial and government orders for the security business.
Recognition and Product Traction
FlexGen Smart NoC adoption increasing; new chiplet/multi-die products expected in production in 2026; company ranked #4 in Fast Company's North America Most Innovative Companies (2026) and won a 2026 Stevie Award for technology innovation.
Operating Discipline and Margin Improvement
Non-GAAP operating expense was $22.6M with management committing to limit OpEx growth to 50% of revenue growth; over three years G&A grew at less than one-third the rate of revenue, driving a 31 percentage point improvement in non-GAAP operating margin.
Operator
Good afternoon, everyone, and welcome to the Arteris First Quarter 2026 Earnings Call. Please note that this call is being recorded and simultaneously webcast. All material contained in the webcast is the sole property and copyright of Arteris with all rights reserved. For opening remarks and introductions, I will now turn the call over to Erica Mannion at Sapphire Investor Relations. Please go ahead.
Erica Mannion
Thank you, and good afternoon. With me today from Arteris are Charlie Janac, chief executive officer and Nick Hawkins, chief financial officer. Charlie will begin with a brief review of the business results for the first quarter ended March 31, 2026. Nick will review the financial results for the first quarter of 2020 followed by the company's outlook for the second quarter and the full year of 2026. We will then open the call for questions. Before we begin, I would like to remind you that management will make statements during this call that are forward looking statements within the meaning of federal securities laws. These statements are based on management's current expectations and assumptions and involve material risks and uncertainties that could cause actual results and events to materially differ from those anticipated. And you should not place undue reliance on forward looking statements.
Additional information regarding these risks uncertainties, and factors that could cause results to differ appear in the press release of Arteris issued today. And in the documents and reports filed by Arteris from time to time with the Securities and Exchange Commission. Please note...
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