Arteris Q2 2026 Earnings: Record Revenue Comes With Wider GAAP Losses

Arteris (Nasdaq: AIP) reported Q2 2026 revenue of $24.1 million, up 46% from $16.5 million a year earlier, while GAAP net loss per share widened to $0.30 from $0.22. Contract activity remained elevated, with ACV plus royalties reaching $99.5 million and RPO reaching $135 million, but operating expenses grew faster than gross profit. Quarterly free cash flow turned positive at $8.6 million.

Core financial results

Revenue growth came from all three reported revenue categories. Licensing, support and maintenance remained the largest contributor, while variable royalties and professional services also increased. However, higher cost of revenue and operating expenses resulted in wider GAAP and non-GAAP operating losses.

The following figures cover the three months ended June 30, 2026, unless otherwise indicated.

Non-GAAP net loss in dollar terms increased slightly to $4.7 million from $4.4 million even though the per-share loss improved. The difference reflects, in part, a higher weighted-average share count of 47.3 million versus 41.8 million a year earlier.

Revenue streams and business activity

Licensing, support and maintenance revenue increased 38% to $20.8 million and accounted for approximately 86% of quarterly revenue. Variable royalties rose 50% to $2.1 million, while professional services and other revenue increased to $1.2 million from only $12,000 in the prior-year quarter.

Several forward-looking operating metrics also grew:

• Trailing-12-month variable royalties increased 65% to $8.6 million.
• ACV plus royalties rose 44% to a record $99.5 million.
• Remaining performance obligations increased 36% to a record $135 million.
• Confirmed design starts for the trailing 12 months increased 21% from the preceding trailing-12-month period.

Management identified data center chips and chiplet development as an important growth driver. Enterprise computing represented an average of 29% of ACV plus royalties over the last four quarters, and AI infrastructure agreements were among the company’s largest deals during Q2. Arteris also reported customer activity across automotive, aerospace and defense, communications, consumer electronics, and industrial markets.

Reported customer developments included the use of Arteris technology in Speedata’s Callisto analytics processor and Li Auto’s internally designed autonomous-driving chips. SiEngine selected the company’s technology for automotive cockpit and driver-assistance applications, while Arm expanded its relationship with Arteris to include hardware security assurance technology.

Revenue growth was offset by faster operating expense growth

Gross profit increased by approximately $5.8 million, but total operating expenses rose by $11.4 million, or about 50%, to $34.4 million. That imbalance caused the GAAP operating loss to widen to $13.9 million.

Research and development expense increased 38% to $16.8 million, sales and marketing expense rose 48% to $9.4 million, and general and administrative expense increased 35% to $6.1 million. Arteris also recorded $2.2 million of acquisition-related costs, compared with none in Q2 2025.

The gap between GAAP and non-GAAP operating results was significant. Arteris excluded $6.3 million of stock-based compensation, $777,000 of acquired-intangible amortization, and $2.2 million of acquisition-related costs from its non-GAAP operating loss. Even after those adjustments, the non-GAAP operating loss widened to $4.6 million, showing that the increase was not solely attributable to acquisition accounting and stock compensation.

Gross margin also decreased four percentage points to 85% as cost of revenue more than doubled to $3.6 million. The company did not provide a specific explanation allocating this decline among revenue mix, acquired operations, or other factors.

Cash flow turned positive, while equity issuance drove the cash build

Quarterly operating cash flow improved to $9.2 million from an outflow of $2.5 million. After $595,000 of capital expenditures, free cash flow was $8.6 million, compared with negative $2.8 million a year earlier.

For the first six months of 2026, however, operating cash flow was a more modest $2.1 million and free cash flow was $1.3 million. The balance-sheet increase in cash therefore came primarily from financing rather than operating profits. Arteris raised $72.5 million through an at-the-market common stock offering during the first half.

At June 30, the company held $93.3 million in cash and cash equivalents and approximately $30.0 million in short- and long-term investments. That compares with $33.9 million of cash and $25.6 million of investments at the end of 2025. Common shares outstanding increased to 49.1 million from 44.3 million over the same period.

Deferred revenue totaled $108.9 million, up from $95.3 million at year-end. Together with the higher RPO balance, this provides visibility into contracted future revenue, although the timing and amount ultimately recognized remain uncertain.

Guidance

Arteris issued Q3 estimates and updated its full-year 2026 outlook. The Q3 revenue range implies performance ranging from roughly flat to 4% above Q2, while the projected non-GAAP operating loss would narrow sequentially from Q2’s $4.6 million. The release did not include the previous full-year ranges, so the size of the update cannot be determined from the supplied information.

Arteris said it will no longer provide quarterly free cash flow guidance. It did not provide a forward-looking reconciliation of non-GAAP guidance to GAAP results because future adjustment items cannot be estimated without unreasonable effort.

Management perspective

CEO K. Charles Janac said most new customer designs now incorporate some form of AI computing. Management views data center, edge-device, and physical-AI development as important sources of future demand, with customer design starts serving as an indicator of potential future royalty activity.

Arteris also announced that Saurabh Sinha will become chief financial officer on September 8, 2026. He will succeed Nick Hawkins, who was identified as CFO in the earnings release’s investor contact information.

Recent insider transactions

The supplied insider data shows 734,733 shares purchased across 24 transactions and 3,065,887 shares sold across 53 transactions during the last six months. That resulted in net sales of 2,331,154 shares, equivalent to 18.8% of the reported 10.08 million insider shares held.

The latest reported entries include open-market sales, an option exercise, and zero-value stock awards. Indirect transactions associated with the same beneficial ownership may appear under more than one reporting person, so the reported values should not be added together without reviewing the underlying filings.

These transactions establish that reported insider activity was net selling over the six-month period, but the supplied information does not disclose each transaction’s purpose and therefore does not support conclusions about insiders’ views of the company’s prospects.

Risks investors should monitor

• Losses continued to widen: Revenue grew 46%, but operating expenses increased about 50%, resulting in larger GAAP and non-GAAP operating losses.
• Gross margin declined: Gross margin fell from 89% to 85%. Continued cost-of-revenue growth could limit the benefit of higher sales.
• Operating metrics may not convert immediately into revenue: ACV plus royalties, RPO, and confirmed design starts increased, but they are not equivalent to recognized revenue. Recognition depends on contract timing, customer activity, and product adoption.
• Liquidity growth involved dilution: Quarterly cash flow improved, but the cash balance increased primarily because of the $72.5 million at-the-market stock issuance. Shares outstanding rose by approximately 4.8 million from year-end.
• Royalty growth depends on customers’ products: Future royalties require customers to commercialize chips using Arteris technology and achieve sufficient market adoption across end markets including enterprise computing, automotive, and consumer electronics.

Summary

Arteris delivered record Q2 revenue and substantial growth in ACV plus royalties, RPO, and customer design starts, with AI-related enterprise computing activity supporting demand. The central issue remains the gap between top-line growth and profitability: operating expenses increased faster than gross profit, widening both GAAP and non-GAAP operating losses. Positive quarterly free cash flow and stronger liquidity provide support, but investors should monitor margin trends, expense scaling, the conversion of contracted activity into recognized revenue, and the dilution associated with equity financing.