Arteris rides the AI wave: record royalties, a cybersecurity push, and a path to profitability
Q2 2026: revenue up 46%, ACV+royalties hit $99.5M, and the company says non-GAAP operating profit could come as soon as Q4.
AIP · Earnings Call · 2026-08-06
A record quarter in the AI infrastructure boom
Arteris delivered a blowout second quarter, with total revenue up 46% year-over-year to $24.1M and ACV plus royalties up 44% to $99.5M, both record highs. The growth is being driven by the relentless push into AI and high-performance computing, where HPC data centers and high bandwidth memory are dominant themes across the semiconductor ecosystem. The company's customers are designing ever more complex chiplets and SoCs for AI workloads, and Arteris is the critical interconnect IP at the heart of these designs. As CEO Charlie Janac put it: “the majority of our customers' design starts supported AI or HPC use cases” — Karel Charles Janac, Chief Executive Officer · 2026-08-06 and he highlighted a landmark win from a hyperscaler: “One of the world's largest hyperscale cloud companies has chosen to adopt and standardize on Arteris's infrastructure silicon system IT.” — Karel Charles Janac, Chief Executive Officer · 2026-08-06 The royalty stream is accelerating too. Trailing 12-month royalties grew 65% year-over-year to $8.6M, with a healthy mix of customers across verticals. Nick Hawkins noted, “royalties continue to show strong growth, driven by a healthy mix of customers across all of our verticals, and with exciting new royalty streams coming online every quarter.” — Nicholas Bryan Hawkins, Chief Financial Officer · 2026-08-06 Total revenue has grown from $14M in late 2020 to $23M in the latest quarter, and the trend is clearly accelerating.Cybersecurity: the Arm endorsement
Beyond the core NoC business, Arteris is building a second growth engine in semiconductor cybersecurity. The acquisition of Cycuity earlier this year brought hardware security assurance technology, and an expanded partnership with Arm is a major validation. “The security hardware security assurance technology is already in use by Arm, during the design phase of selected CPUs.” — Karel Charles Janac, Chief Executive Officer · 2026-08-06 This is a greenfield opportunity, as Janac explained, because few commercial solutions exist for hardware security assurance. The move aligns with the company's growing hardware security theme and could be a door-opener to the entire semiconductor industry. The prior quarter's commentary already highlighted the importance of security, with Janac noting a 15x growth in hardware security attacks (from Q4 2025: “So, hardware security assurance is becoming a major issue.” — Karel Charles Janac, Chief Executive Officer · 2026-02-12). This is a strategic pivot toward a broader set of IP products.Path to profitability and a new CFO
The company continues to execute on its operating leverage model, and now expects to report a non-GAAP operating profit as early as the fourth quarter of 2026. As retiring CFO Nick Hawkins said:This milestone is supported by a strong balance sheet: the company raised $72M via an ATM in the quarter, ending with $123M in cash and no debt. Operating margin is still negative at -50.8%, but it has improved from -64% a year ago, and the improvement is expected to continue as revenue scales. The CFO transition is notable: Nick Hawkins, who led the company through its IPO and to positive free cash flow, is handing over to Sarab Sinha. The company stressed a smooth transition. While the stock has pulled back ~50% from its June peak, the fundamental story remains strong. The market had priced in a lot of the good news; the pullback may reflect profit-taking after a 118% run. But with the AI tailwind and the cybersecurity expansion, Arteris is positioning itself as a critical IP supplier for the AI era.we continue to believe that Arteris is on a path to profitability. And we expect to report a non-GAAP operating profit for a period as early as the fourth quarter of the current year.