Advertisement
Singapore markets closed

  • Straits Times Index

    3,313.48
    +8.49 (+0.26%)
     

  • Nikkei

    38,787.38
    -132.88 (-0.34%)
     

  • Hang Seng

    19,553.61
    +177.08 (+0.91%)
     

  • FTSE 100

    8,420.26
    -18.39 (-0.22%)
     

  • Bitcoin USD

    66,969.75
    +1,668.13 (+2.55%)
     

  • CMC Crypto 200

    1,366.68
    -7.16 (-0.52%)
     

  • S&P 500

    5,303.27
    +6.17 (+0.12%)
     

  • Dow

    40,003.59
    +134.21 (+0.34%)
     

  • Nasdaq

    16,685.97
    -12.35 (-0.07%)
     

  • Gold

    2,419.80
    +34.30 (+1.44%)
     

  • Crude Oil

    80.00
    +0.77 (+0.97%)
     

  • 10-Yr Bond

    4.4200
    +0.0430 (+0.98%)
     

  • FTSE Bursa Malaysia

    1,616.62
    +5.51 (+0.34%)
     

  • Jakarta Composite Index

    7,317.24
    +70.54 (+0.97%)
     

  • PSE Index

    6,618.69
    -9.51 (-0.14%)
     

Arteris Inc (AIP) Q1 2024 Earnings Call Transcript Highlights: Navigating Through Challenges ...

GuruFocus Research
·4-min read

  • Annual Contract Value (ACV) plus Royalties: $58.2 million

  • Revenue: $12.9 million, down 2% year-over-year, up 4% sequentially

  • Remaining Performance Obligations (RPO): $74.7 million, up 30% year-over-year

  • GAAP Gross Profit: $11.5 million, gross margin of 89%

  • Non-GAAP Gross Profit: $11.7 million, gross margin of 91%

  • GAAP Operating Loss: $9.1 million

  • Non-GAAP Operating Loss: $5.3 million

  • Net Loss: $9.4 million, diluted net loss per share of $0.25

  • Non-GAAP Net Loss: $5.6 million, diluted net loss per share of $0.15

  • Free Cash Flow: Positive $300,000

  • Cash, Cash Equivalents, and Investments: $53.4 million

Release Date: May 02, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Arteris Inc (NASDAQ:AIP) reported a solid first quarter of 2024 with annual contract value plus royalties of $58.2 million.

  • The company delivered a positive free cash flow quarter and reaffirmed its target of achieving positive free cash flow in 2024.

  • Arteris Inc (NASDAQ:AIP) saw robust licensing activity across all verticals, particularly in enterprise computing and automotive sectors.

  • The company announced significant system IP deals, including one with a top 10 semiconductor company, expanding deployment of Arteris network on chip IPs.

  • Arteris Inc (NASDAQ:AIP) released the latest version of its anchor cache coherent network on chip IP, supporting multiple protocols and functional safety, utilized by Mobileye.

Negative Points

  • Total revenue for the first quarter was $12.9 million, down 2% year over year.

  • GAAP operating loss for the first quarter was $9.1 million, indicating ongoing challenges in achieving profitability.

  • Non-GAAP operating loss was $5.3 million, although slightly improved from the prior year, still reflects operational losses.

  • Geopolitical uncertainties and U.S.-China trade restrictions continue to impact the business, although no further deterioration was noted at this time.

  • The company faces intense competition and rapid changes in technology, particularly in AI and machine learning, requiring fast adaptation and innovation.

Q & A Highlights

Q: Can you discuss the trends in Remaining Performance Obligations (RPO) and its impact on future revenue? A: Charles Janac, Chairman, President, and CEO of Arteris, explained that RPO increases as deals flow in faster than revenue is recognized. The shift to ratable revenue treatment has slowed the recognition of RPO into GAAP revenue, boosting the RPO growth rate to 30%. This growth rate is expected to normalize but will continue to rise due to strong deal flow.

ADVERTISEMENT

Q: How is the acceleration of AI and large language models impacting your business? A: Charles Janac noted that the AI sector is moving very quickly, which demands rapid silicon design cycles. This environment values the automation and productivity provided by Arteris, as companies seek to shorten design cycles significantly.

Q: What are the current trends in Average Selling Prices (ASPs) and how do they relate to your financial projections? A: Charles Janac reported that ASPs are increasing, aligning with initial IPO projections. He anticipates that the average deal size could exceed $1 million by 2026, driven by the complexity of chips and the increased use of system IP.

Q: Can you provide insights into the current state and future expectations of your business in China amidst geopolitical tensions? A: Charles Janac mentioned that while the situation in China has stabilized, Arteris is planning for a steady state of operations, without expecting significant improvements or deteriorations in the near term.

Q: What is the expected impact of new product launches on your revenue in the second half of the year? A: Charles Janac hinted at significant new product developments expected to impact revenue positively in the second half of the year, reflecting ongoing innovation efforts at Arteris.

Q: How is the increasing number of SOCs per car influencing your market opportunities in the automotive sector? A: Charles Janac affirmed that the trend towards higher SOC counts per car continues, driven by advancements in automated driving and other automotive technologies. This trend aligns with Arteris' growth projections in the automotive IP market.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.