Arteris Q2 2026 earnings: Revenue rose 46% while losses widened

Arteris (Nasdaq: AIP) reported Q2 2026 revenue of $24.1 million, up 46% from $16.5 million a year earlier, while its GAAP net loss per share widened to $0.30 from $0.22. ACV plus royalties and remaining performance obligations reached record levels, but lower gross margin and higher operating expenses pushed the operating loss higher. Quarterly free cash flow turned positive at $8.6 million.

Core performance data

Revenue increased across all three reported categories, led by licensing, support and maintenance. However, gross profit grew more slowly than revenue, and operating expenses increased by about 50%, preventing the top-line expansion from translating into narrower losses.

The following figures are for the three months ended June 30, 2026. Dollar amounts are in millions except per-share data.

Revenue mix and business activity

Licensing, support and maintenance revenue rose about 38% to $20.8 million from $15.1 million. Quarterly variable royalties increased approximately 50% to $2.1 million, while professional services and other revenue increased to $1.2 million from $12,000, contributing another $1.2 million to the overall revenue increase.

The company’s forward-looking business indicators also expanded. ACV plus royalties reached $99.5 million, up 44%, while trailing-12-month variable royalties rose 65% to $8.6 million. Remaining performance obligations increased 36% to $135 million. ACV plus royalties combines annualized fixed contract fees with trailing-12-month variable royalties and other revenue, while RPO represents contracted revenue not yet recognized.

Customer-confirmed design starts increased 21% for the trailing 12 months compared with the preceding 12-month period. Management said most new designs now incorporate some form of AI compute, with data-center chips and chiplets remaining an important source of activity. Enterprise computing accounted for an average of 29% of ACV plus royalties over the past four quarters, and AI infrastructure agreements were among the company’s largest deals during Q2.

Arteris also disclosed customer activity involving Speedata’s analytics processor, Li Auto’s autonomous-driving chips, SiEngine’s automotive products and an expanded hardware-security partnership with Arm.

Revenue growth was offset by lower margins and faster expense growth

GAAP gross margin fell to 85% from 89%, while non-GAAP gross margin declined to 87% from 91%. Cost of revenue more than doubled to $3.6 million, outpacing the 46% increase in revenue. The company did not provide a specific explanation for the margin decline.

Operating expenses increased to $34.4 million from $23.0 million. Research and development expense rose to $16.8 million, sales and marketing increased to $9.4 million, and general and administrative expense reached $6.1 million. Arteris also recorded $2.2 million of acquisition-related costs, compared with none a year earlier.

The widening GAAP loss was partly affected by stock-based compensation, acquired-intangible amortization and acquisition costs. These adjustments totaled approximately $9.3 million in Q2 2026, compared with $4.7 million a year earlier. Still, the non-GAAP operating loss also widened to $4.6 million, indicating that the change was not solely attributable to acquisition accounting and other excluded expenses.

Cash flow and balance sheet

The cash-flow result was considerably better than the income-statement loss. Operating activities generated $9.2 million during Q2, compared with a $2.5 million outflow a year earlier. After $595,000 of capital expenditure, free cash flow was $8.6 million.

For the first six months of 2026, operating cash flow was $2.1 million and free cash flow was $1.3 million. These year-to-date figures should not be confused with the stronger standalone second-quarter results.

Arteris ended June with $93.3 million of cash and cash equivalents and $28.8 million of short-term investments, for a combined $122.1 million. That compared with $54.6 million at the end of 2025. The increase was primarily financing-led: Arteris raised $72.5 million through its at-the-market stock offering during the first half, while total financing cash inflow was $73.6 million. Common shares outstanding increased to 49.1 million from 44.3 million at year-end.

Deferred revenue rose to $108.9 million, including current and noncurrent balances, from $95.3 million at the end of 2025. Stockholders’ equity improved to $67.7 million from a deficit of $14.6 million, reflecting the capital raise and other changes during the period.

Earnings guidance

Arteris provided estimates for Q3 and updated its full-year 2026 guidance. The release did not include the previous full-year ranges, so the size or direction of the revisions cannot be quantified. At the midpoint, the Q3 revenue range is close to Q2 revenue, while the projected non-GAAP operating loss would be smaller than the Q2 result.

Arteris has discontinued quarterly free-cash-flow guidance. It did not provide a forward-looking reconciliation of the non-GAAP operating-loss guidance to GAAP results because future excluded expenses cannot be estimated without unreasonable effort.

Recent insider transactions

During the reported six-month period, insiders purchased 730,733 shares across 23 transactions and sold 2,791,887 shares across 49 transactions, resulting in net sales of 2,061,154 shares. Total insider holdings were reported at 10.08 million shares, with a net transaction percentage of negative 17.00%.

The latest 10 reported entries include sales, a derivative-security exercise and stock grants. The value column below represents reported transaction value rather than the number of shares.

These records describe reported transactions but do not establish the insiders’ views about the company’s prospects. Several entries involve indirect ownership and should not be mechanically added together as unique share volume.

Risks investors need to monitor

• Losses continue despite rapid revenue growth. Both GAAP and non-GAAP operating losses widened as expenses increased, making cost control and operating leverage important measures in coming quarters.
• Gross margin moved lower. GAAP and non-GAAP gross margins each declined by four percentage points. Continued pressure could limit the benefit of future revenue growth.
• Design activity may take time to produce royalties. Confirmed design starts are an indicator of potential future royalty activity, but royalty revenue depends on customers bringing products to market and achieving commercial adoption. RPO also includes both cancelable and non-cancelable contracted amounts, and its recognition timing remains uncertain.
• The stronger cash position came largely from issuing stock. Operating cash flow was positive for the first half, but the $72.5 million at-the-market offering was the main source of the balance-sheet increase and raised the number of shares outstanding.

Summary

Arteris delivered 46% revenue growth and substantial increases in ACV plus royalties, RPO and customer design activity during Q2 2026. That demand momentum was accompanied by lower gross margin and operating expenses that grew slightly faster than revenue, resulting in wider GAAP and non-GAAP operating losses. The positive quarterly free cash flow and larger liquidity position provide financial support, but investors will need to watch whether design activity converts into royalties, margins stabilize and the company delivers the narrower non-GAAP loss reflected in its Q3 guidance.