Earnings Recap — Q2 FY2026
CY Q3 2026 · Reported August 6, 2026 · Beat 6 of last 6 quarters
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Arteris continues to benefit from the AI infrastructure buildout, with enterprise computing now averaging 29% of ACV plus royalties over the past four quarters and AI infrastructure representing some of the biggest deals in the quarter. The hyperscaler standardization win and the US design house ASIC win underscore the growing demand for high-performance, energy-efficient data movement in scale-up and scale-out architectures. The company's expanding royalty stream, including from Li Auto's autonomous driving chips, signals increasing silicon content in AI and physical AI systems.
Arteris delivered record ACV plus royalties of $99.5M, up 44% YoY, and record revenue of $24.1M, up 46% YoY. Trailing 12-month royalties hit a record $8.6M, up 65% YoY, and RPO backlog reached an all-time high of $135M. The quarter saw multiple large license wins across enterprise computing, automotive, aerospace/defense, and other verticals, including a hyperscaler standardizing on Arteris and a top US semiconductor design house using FlexGen for hyperscaler ASICs. Non-GAAP operating loss was $4.6M, impacted by $1.7M in French employer payroll taxes on RSU vesting and higher commissions. The company also announced the expanded Arm partnership for Cycuity security technology and the appointment of Sarab Sinha as new CFO starting September 8.
Management raised full-year 2026 revenue guidance to $95M-$98M, up $3.5M from prior guidance and representing 37% YoY growth at the midpoint. ACV plus royalties is expected to exit 2026 at $102M-$106M. Non-GAAP operating loss guidance was lowered to $10M-$7M, primarily due to higher French employer payroll taxes on RSU vesting and lower gross margins from government/Cycuity work. Non-GAAP free cash flow guidance was unchanged at $5M-$9M. Management expects to report a non-GAAP operating profit as early as Q4 2026, citing strong momentum and increasing customer engagement in the second half. They also noted the completion of the ATM program raising $72M to fund product investments and tuck-in acquisitions.
“We reached another record annual contract value plus royalties, exiting the quarter at $99.5 million representing a 44% year-on-year increase.”
on Record ACV plus royalties
“We are seeing a strong start to the to the third quarter. With momentum and increasing customer engagement leading us to believe that we will see continued strength in the second half of the year.”
on Second half momentum
“So it is a greenfield opportunity. There is not actually a whole lot of commercial situation solutions for what Cycuity does.”
on Arm partnership on Cycuity
Can you talk more about the expanded partnership with Arm on Cycuity? Should we think about it as a licensing deal and then get royalties? And did that displace a competing solution, or was this a greenfield opportunity?
Charlie confirmed it is a greenfield opportunity with few commercial alternatives. Arm is using Cycuity to identify weaknesses in high-end and midrange CPU designs, taking a leadership position in hardware security assurance. He also noted that other processor companies should follow Arm's lead. Nick added that Cycuity is currently a non-royalty-bearing software/EDA model, though future opportunities to fix weaknesses could change that.
You called out the US Design House win on an ASIC platform using chiplets and multidie offerings. Can you elaborate on whether this is a new customer and the timeline to materiality?
Charlie clarified it is not a new customer but was previously a relatively small customer. The hyperscaler is using a design partner to build chips to their specification, and after an extensive evaluation, this large semiconductor company chose Arteris for those designs. The application is data center hyperscaler.
On OpEx, is the bulk of the change in annual guidance related to the payroll tax increase or is there any additional OpEx increase?
Nick confirmed the majority of the $2M decrease in non-GAAP operating loss guidance is due to French employer payroll taxes on RSU vesting, driven by a spike in stock price during the quarter. He also cited lower gross margins from government work and higher sales commissions due to strong deal flow.