Arteris, Inc. Annual Report: A Deeper Dive into 2025 Performance

This report provides a comprehensive summary of Arteris, Inc.'s performance for the fiscal year ending December 31, 2025. As both a "Smaller Reporting Company" and an "Emerging Growth Company," Arteris benefits from certain regulatory flexibilities, allowing for fewer disclosure requirements and potentially greater agility. However, this also indicates a developing business model and potentially higher investment risk compared to more established companies.

Business Overview: What Arteris Does

Arteris leads in providing network-on-chip (NoC) interconnect intellectual property (IP) – essential technology that manages data flow within complex System-on-Chip (SoC) designs. Think of it as the digital highway system inside a computer chip. Arteris's solutions are crucial for advanced applications in automotive, artificial intelligence/machine learning (AI/ML), and data center markets, enabling chips to perform faster, more efficiently, and more reliably.

Financial Performance: 2025 Highlights

Arteris showed significant progress in 2025, driven by continued market penetration and strategic investments:

• Revenue Growth: The company reported $52.5 million in revenue, a robust 28% increase from the previous fiscal year.
• Net Loss: While revenue grew, Arteris heavily invested in research and development (R&D) and market expansion. This resulted in a net loss of $12.8 million, or ($0.28) per share. This loss represents an improvement from the prior year's net loss of $18.5 million, signaling a positive trend toward profitability.

Management's Discussion and Analysis (MD&A) Highlights

Arteris's 2025 financial performance reflects a strategic balance: aggressive market expansion alongside continuous investment in technology leadership. The 28% revenue growth to $52.5 million primarily stemmed from increasing demand for high-performance NoC IP in advanced automotive and AI/ML applications, as customers sought more efficient and reliable chip designs.

Despite this growth, the company reported a net loss of $12.8 million, an improvement from the prior year. Arteris continued significant investments in research and development to enhance its IP portfolio and expand its market reach. These investments are vital for maintaining a competitive edge in the rapidly evolving semiconductor landscape.

Financial Health (Liquidity and Capital Resources): As of December 31, 2025, Arteris maintained a healthy cash and cash equivalents balance of $78.2 million. This provides ample liquidity for ongoing operations and strategic initiatives. The company used $6.5 million in cash from operations during the year, primarily to fund working capital requirements and ongoing R&D initiatives. This strong cash position supports current operations and planned strategic initiatives, including the integration of Cycuity Inc.

Market Snapshot

As of June 30, 2025, Arteris's publicly traded shares (excluding insider holdings) had a market value of approximately $295.0 million. By February 5, 2026, the company had 45.5 million shares of common stock outstanding.

Key Strategic Developments in 2025

Arteris made several strategic moves to strengthen its market position and expand its technological capabilities:

• Acquisition of Cycuity Inc.: On December 10, 2025, Arteris announced its agreement to acquire Cycuity Inc., a specialist in advanced hardware security IP. This acquisition, which closed in January 2026, is a pivotal move. It integrates robust security features directly into Arteris's NoC solutions, addressing the growing demand for secure-by-design SoCs, particularly in the automotive and defense sectors. This significantly enhances Arteris's competitive edge by offering a more comprehensive and secure IP portfolio.
• Collaboration with TransChip Technology: Throughout 2025, Arteris deepened its collaboration with TransChip Technology, a leading developer of high-performance AI accelerators. This partnership focused on co-developing optimized NoC interconnects specifically for TransChip's next-generation AI processing units. The goal is to deliver unparalleled data throughput and low latency. This collaboration is expected to open new revenue streams and solidify Arteris's position in the rapidly expanding AI chip market.

Competitive Position

Arteris operates in a highly competitive intellectual property market. It faces competition from both established semiconductor IP vendors and the in-house design teams of large semiconductor companies. Arteris differentiates itself through its specialized focus on NoC interconnect IP, offering solutions critical for optimizing data flow in complex SoC designs across high-growth markets like automotive, AI/ML, and data centers.

The recent acquisition of Cycuity Inc. strategically integrates advanced hardware security directly into Arteris's NoC solutions. This provides a significant competitive advantage by addressing the growing demand for secure-by-design chips. This integration positions Arteris to offer a more comprehensive and secure IP portfolio, enhancing its value proposition to customers seeking robust and high-performance interconnect solutions.

Risk Factors: What Investors Should Consider

Investing in Arteris, as an Emerging Growth Company, involves specific risks:

• Market Adoption: Arteris's success heavily relies on the continued adoption of NoC technology in new chip designs, which industry trends and competitor offerings can influence.
• Competition: The company faces intense competition from established IP vendors and in-house solutions developed by large semiconductor companies.
• Profitability: Despite revenue growth, Arteris has not yet achieved sustained profitability, and there is no guarantee it will do so in the future.
• Reliance on Key Customers: A significant portion of revenue may concentrate among a few large semiconductor design firms, making the company susceptible to their business cycles.
• Technological Obsolescence: The semiconductor industry evolves rapidly, and Arteris must continuously innovate to keep its IP relevant and competitive.

Future Outlook

Arteris is strategically positioned to capitalize on the increasing complexity of SoC designs and the growing demand for high-performance, secure, and energy-efficient interconnect solutions. The Cycuity acquisition and TransChip collaboration underscore the company's commitment to expanding its technological footprint and market reach. Management remains focused on driving revenue growth, achieving operational efficiencies, and ultimately moving toward sustainable profitability by leveraging its differentiated IP and strategic partnerships.