Arteris Q3 Revenue Jumps 48%, Full-Year Outlook Increased

Arteris Inc. (NASDAQ: AIP) reported record third-quarter 2026 revenue and increased its full-year outlook after license activity helped lift annual contract value plus royalties by 39% from a year earlier.

Revenue for the quarter ended Sept. 30 rose 48% year over year to $25.8 million, exceeding the company’s guidance range of $24 million to $25 million. Annual contract value plus royalties, or ACV plus royalties, reached $104 million, above guidance of $99 million to $103 million and up from $74.9 million a year earlier.

Remaining performance obligations, a measure of contracted revenue backlog, increased 29% year over year to a record $135 million. Arteris also reported record royalties and said it met or exceeded the top end of every metric for which it had issued third-quarter guidance.

Non-GAAP gross profit rose to $22.8 million from $15.9 million in the prior-year quarter. Non-GAAP gross margin was 89%, compared with 91% a year earlier and 87% in the second quarter of 2026. GAAP gross profit was $22.3 million.

Operating loss narrows on a non-GAAP basis

Non-GAAP operating expenses increased 24% year over year to $24.0 million, while GAAP operating expenses rose to $33.6 million from $24.4 million. The difference reflected adjustments including stock-based compensation, amortization of acquired intangible assets and acquisition-related costs.

Arteris posted a non-GAAP operating loss of $1.2 million, narrowing from $3.5 million in the third quarter of 2025 and $4.6 million in the preceding quarter. The GAAP operating loss was $11.3 million, compared with $8.7 million a year earlier and $13.9 million in the second quarter.

Free cash flow was negative $2.1 million, reversing from positive free cash flow of $2.5 million a year earlier and $8.6 million in the second quarter. The company ended the period with $120 million in cash, cash equivalents and investments, down from $123 million at the end of the previous quarter.

AI, cloud and automotive adoption supports license activity

Arteris attributed the quarter’s strong license activity to the integration of data-center, edge and physical-AI computing across its markets. The company also reported an increase in customers placing multi-product orders as semiconductor designs become more complex.

During the quarter, a leading hyperscale customer expanded its Arteris license to cover high-performance computing chips and chiplets. Two semiconductor companies broadened their use of Arteris technology for next-generation AI accelerators and data-center computing, while a major automotive manufacturer advanced successive generations of internally designed chips using the company’s technology.

Arteris said it has now surpassed 1,000 customer-confirmed design starts since its inception. It also expanded its chiplet and multi-die portfolio with FlexGen Multi-Die and Ncore Multi-Die, which support architectures used in areas including agentic AI workflows, high-performance computing, data centers, cloud infrastructure and physical AI.

In hardware security, Cycuity expanded its trusted third-party intellectual-property program through the Trusted and Assured Microelectronics program in collaboration with BAE Systems and SiFive.

Full-year revenue outlook increased

For the fourth quarter, Arteris expects ACV plus royalties of $103 million to $107 million, with the $105 million midpoint representing 26% year-over-year growth. Revenue is projected at $25.7 million to $26.7 million, implying 30% growth at the midpoint. Non-GAAP operating results are expected to range from a $900,000 loss to income of $1.1 million.

For full-year 2026, the company forecasts revenue of $98.5 million to $99.5 million, an increase of $2.5 million from its previous guidance. The $99 million midpoint would represent 40% year-over-year growth.

Full-year ACV plus royalties is expected to be between $103 million and $107 million, $1 million higher than the prior outlook. Arteris also increased its non-GAAP operating-income outlook by $300,000 and now expects a loss of $9.2 million to $7.2 million. Its free-cash-flow forecast was maintained at $5 million to $9 million.

The guidance remains subject to uncertainties including market conditions, global economic factors, access to financing and the company’s ability to maintain effective internal controls. Arteris did not provide GAAP reconciliations for forward-looking non-GAAP operating income or free cash flow, citing uncertainty around items that could materially affect the corresponding GAAP measures.