Arteris Inc (AIP) Q2 2024 Earnings Call Highlights: Record Contract Values and Positive Cash ...
Total Revenue: $14.6 million, up 13% sequentially.
Annual Contract Value plus Royalties: $60.1 million, a record high.
Remaining Performance Obligations: $77.5 million, a 19% year-over-year increase.
GAAP Gross Profit: $13.1 million, with a gross margin of 90%.
Non-GAAP Gross Profit: $13.4 million, with a gross margin of 92%.
GAAP Operating Expense: $20.6 million, flat compared to the first quarter.
Non-GAAP Operating Expense: $16.8 million, 1% lower sequentially, and 6% lower year-over-year.
GAAP Operating Loss: $7.4 million, compared to $8.7 million in the prior year period.
Non-GAAP Operating Loss: $3.5 million, better than the top end of guidance.
Net Loss: $8.3 million or $0.22 per share.
Non-GAAP Net Loss: $4.4 million or $0.11 per share.
Cash, Cash Equivalents, and Investments: $53.9 million.
Free Cash Flow: Positive $300,000.
Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Arteris Inc (NASDAQ:AIP) achieved record annual contract value plus royalties of $60.1 million in the second quarter of 2024.
The company delivered positive free cash flow for the second consecutive quarter.
Arteris Inc (NASDAQ:AIP) expanded its customer base with seven new customers licensing its system IP products.
The company signed four new license deals with current customers, including top global technology companies.
Arteris Inc (NASDAQ:AIP) was included in the Russell 2000 Index, reflecting its growing market presence.
Negative Points
GAAP operating loss for the second quarter was $7.4 million, indicating ongoing financial challenges.
Non-GAAP net loss in the quarter was $4.4 million, highlighting continued profitability issues.
The company faces challenges from cyclicality in the semiconductor industry, impacting some segments.
There is a capital crunch in China, affecting startups and potentially limiting growth opportunities in the region.
Arteris Inc (NASDAQ:AIP) is experiencing some impact on royalties due to shipment volume declines in certain sectors.
Q & A Highlights
Q: How is the licensing and design activity progressing, especially in the AI and automotive ADAS domains, given the cyclicality in the semiconductor industry? A: K. Charles Janac, CEO, explained that Arteris remains diversified across applications, geographies, and customer sizes, which helps mitigate cyclicality impacts. While there are some declines in shipment volumes affecting royalties, design activity remains robust as companies invest in R&D to prepare for future revenue. Industrial applications led design starts this quarter, with AI slightly less than previous quarters.
Q: Are economic conditions influencing customers to rely more on external IP vendors like Arteris instead of internal teams? A: Janac noted that economic challenges often lead companies to consider external IP solutions to save on OpEx and R&D costs. Arteris is seeing progress in converting companies that previously relied on internal IP to their solutions, as they offer cost savings and efficiency.
Q: What are the reasons some prospects haven't signed on as customers yet? A: Janac mentioned that while progress is being made, some companies face internal politics or have specialized technology directions that are not aligned with Arteris's offerings. However, Arteris continues to establish footholds in large companies each quarter.
Q: How is the situation in China affecting Arteris's business? A: Janac stated that the situation in China remains stable, with no significant changes. There is a capital crunch affecting startups, but design activity remains robust, and Arteris's business from China is steady as planned.
Q: Are there any updates on new product developments? A: Janac indicated that while they are not ready to discuss specifics, progress is being made, and they have started delivering new products to customers.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.