Cover
Cover - shares | 9 Months Ended | |
Sep. 30, 2022 | Nov. 01, 2022 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Sep. 30, 2022 | |
Document Transition Report | false | |
Entity File Number | 001-40960 | |
Entity Registrant Name | Arteris, Inc. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 27-0117058 | |
Entity Address, Address Line One | 595 Millich Dr. | |
Entity Address, Address Line Two | Suite 200 | |
Entity Address, City or Town | Campbell | |
Entity Address, State or Province | CA | |
Entity Address, Postal Zip Code | 95008 | |
City Area Code | 408 | |
Local Phone Number | 470-7300 | |
Title of 12(b) Security | Common stock, $0.001 par value | |
Trading Symbol | AIP | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 33,425,197 | |
Entity Central Index Key | 0001667011 | |
Document Fiscal Year Focus | 2022 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Current assets: | ||
Cash and cash equivalents | $ 68,200 | $ 85,825 |
Short-term investments | 4,400 | 0 |
Accounts receivable, net | 9,638 | 13,873 |
Prepaid expenses and other current assets | 8,427 | 6,949 |
Total current assets | 90,665 | 106,647 |
Property and equipment, net | 3,502 | 2,438 |
Long-term investments | 1,983 | 0 |
Equity method investment | 12,181 | 0 |
Operating lease right-of-use assets | 2,124 | 2,765 |
Intangibles, net | 2,575 | 2,959 |
Goodwill | 2,677 | 2,677 |
Other assets | 3,115 | 2,957 |
TOTAL ASSETS | 118,822 | 120,443 |
Current liabilities: | ||
Accounts payable | 1,984 | 1,722 |
Accrued expenses and other current liabilities | 11,520 | 10,573 |
Operating lease liabilities, current | 1,033 | 961 |
Deferred revenue, current | 27,646 | 28,403 |
Vendor financing arrangements, current | 1,502 | 833 |
Total current liabilities | 43,685 | 42,492 |
Deferred revenue, noncurrent | 22,046 | 20,773 |
Operating lease liabilities, noncurrent | 1,134 | 1,851 |
Vendor financing arrangements, noncurrent | 433 | 266 |
Deferred income, noncurrent | 10,290 | 0 |
Other liabilities | 877 | 2,157 |
Total liabilities | 78,465 | 67,539 |
Commitments and contingencies (Note 10) | ||
Stockholders' equity: | ||
Preferred stock, par value of $0.001 - 10,000,000 shares authorized and no shares issued and outstanding as of September 30, 2022 and December 31, 2021 | 0 | 0 |
Common stock, par value of $0.001 - 300,000,000 shares authorized as of September 30, 2022 and December 31, 2021; 33,320,891 and 31,530,682 shares issued and outstanding as of September 30, 2022 and December 31, 2021, respectively | 33 | 31 |
Additional paid-in capital | 99,589 | 91,945 |
Accumulated other comprehensive loss | (102) | (81) |
Accumulated deficit | (59,163) | (38,991) |
Total stockholders' equity | 40,357 | 52,904 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 118,822 | $ 120,443 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2022 | Dec. 31, 2021 |
Stockholders' equity: | ||
Preferred stock, par or stated value per share (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, authorized (in shares) | 10,000,000 | 10,000,000 |
Preferred stock, shares outstanding (in shares) | 0 | 0 |
Preferred stock, shares issued (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized (in shares) | 300,000,000 | |
Common stock, issued (in shares) | 33,320,891 | 31,530,682 |
Common stock, outstanding (in shares) | 33,320,891 | 31,530,682 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Comprehensive Income (Loss), Net of Tax, Attributable to Parent [Abstract] | ||||
Net loss | $ (7,684) | $ (4,968) | $ (20,172) | $ (15,594) |
Unrealized loss on available-for-sale securities, net of tax | (21) | 0 | (21) | 0 |
Comprehensive loss | $ (7,705) | $ (4,968) | $ (20,193) | $ (15,594) |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Loss - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Revenue | ||||
Total revenue | $ 12,598 | $ 8,959 | $ 39,175 | $ 26,430 |
Cost of revenue | 928 | 883 | 3,196 | 2,618 |
Gross profit | 11,670 | 8,076 | 35,979 | 23,812 |
Operating expenses: | ||||
Research and development | 11,022 | 7,609 | 30,849 | 20,572 |
Sales and marketing | 4,411 | 3,242 | 12,788 | 7,971 |
General and administrative | 3,991 | 1,742 | 12,138 | 9,754 |
Total operating expenses | 19,424 | 12,593 | 55,775 | 38,297 |
Loss from operations | (7,754) | (4,517) | (19,796) | (14,485) |
Interest and other income (expense), net | 318 | (183) | 346 | (497) |
Loss before provision for income taxes | (7,436) | (4,700) | (19,450) | (14,982) |
Provision for income taxes | 248 | 268 | 722 | 612 |
Net loss | $ (7,684) | $ (4,968) | $ (20,172) | $ (15,594) |
Net loss per share attributable to common stockholders | ||||
Net loss per share attributable to common stockholders, basic (in dollars per share) | $ (0.23) | $ (0.24) | $ (0.63) | $ (0.79) |
Net loss per share attributable to common stockholders, diluted (in dollars per share) | $ (0.23) | $ (0.24) | $ (0.63) | $ (0.79) |
Weighted average shares used in computing per share amounts | ||||
Weighted average shares used in computing per share amounts, basic (in shares) | 32,836,014 | 20,578,386 | 32,228,429 | 19,768,574 |
Weighted average shares used in computing per share amounts, diluted (in shares) | 32,836,014 | 20,578,386 | 32,228,429 | 19,768,574 |
Licensing, support and maintenance | ||||
Revenue | ||||
Total revenue | $ 11,135 | $ 8,136 | $ 35,743 | $ 24,353 |
Variable royalties and other | ||||
Revenue | ||||
Total revenue | $ 1,463 | $ 823 | $ 3,432 | $ 2,077 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Redeemable Convertible Preferred Stock and Stockholders' Equity (Deficit) - USD ($) $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Other Comprehensive Loss | Accumulated Deficit |
Balance at beginning of period (in shares) at Dec. 31, 2020 | 4,471,316 | ||||
Balance at beginning of period at Dec. 31, 2020 | $ 5,712 | ||||
Balance at end of period (in shares) at Sep. 30, 2021 | 4,471,316 | ||||
Balance at end of period at Sep. 30, 2021 | $ 5,712 | ||||
Balance at beginning of period (in shares) at Dec. 31, 2020 | 18,486,989 | ||||
Balance at beginning of period at Dec. 31, 2020 | (12,008) | $ 18 | $ 3,612 | $ (31) | $ (15,607) |
Stockholders’ Equity | |||||
Stock issued during period (in shares) | 1,250,000 | ||||
Stock Issued During Period, Value, New Issues | 5,437 | $ 2 | 5,435 | ||
Issuance of common stock for cash upon exercise of stock options (in shares) | 832,329 | ||||
Issuance of common stock for cash upon exercise of stock options | 328 | $ 1 | 327 | ||
Issuance of common stock for settlement of restricted stock units (in shares) | 38,533 | ||||
Stock-based compensation expense | 1,144 | 1,144 | |||
Unrealized loss on available-for-sale securities, net of tax | 0 | ||||
Net loss | (15,594) | (15,594) | |||
Balance at end of period (in shares) at Sep. 30, 2021 | 20,607,851 | ||||
Balance at end of period at Sep. 30, 2021 | $ (20,693) | $ 21 | 10,518 | (31) | (31,201) |
Balance at beginning of period (in shares) at Jun. 30, 2021 | 4,471,316 | ||||
Balance at beginning of period at Jun. 30, 2021 | $ 5,712 | ||||
Balance at end of period (in shares) at Sep. 30, 2021 | 4,471,316 | ||||
Balance at end of period at Sep. 30, 2021 | $ 5,712 | ||||
Balance at beginning of period (in shares) at Jun. 30, 2021 | 20,525,254 | ||||
Balance at beginning of period at Jun. 30, 2021 | (16,189) | $ 21 | 10,054 | (31) | (26,233) |
Stockholders’ Equity | |||||
Issuance of common stock for cash upon exercise of stock options (in shares) | 60,395 | ||||
Issuance of common stock for cash upon exercise of stock options | 31 | 31 | |||
Issuance of common stock for settlement of restricted stock units (in shares) | 22,202 | ||||
Stock-based compensation expense | 433 | 433 | |||
Unrealized loss on available-for-sale securities, net of tax | 0 | ||||
Net loss | (4,968) | (4,968) | |||
Balance at end of period (in shares) at Sep. 30, 2021 | 20,607,851 | ||||
Balance at end of period at Sep. 30, 2021 | $ (20,693) | $ 21 | 10,518 | (31) | (31,201) |
Balance at beginning of period (in shares) at Dec. 31, 2021 | 0 | ||||
Balance at beginning of period at Dec. 31, 2021 | $ 0 | ||||
Balance at end of period (in shares) at Sep. 30, 2022 | 0 | ||||
Balance at end of period at Sep. 30, 2022 | $ 0 | ||||
Balance at beginning of period (in shares) at Dec. 31, 2021 | 31,530,682 | 31,530,682 | |||
Balance at beginning of period at Dec. 31, 2021 | $ 52,904 | $ 31 | 91,945 | (81) | (38,991) |
Stockholders’ Equity | |||||
Issuance of common stock for cash upon exercise of stock options (in shares) | 1,022,050 | 1,022,050 | |||
Issuance of common stock for cash upon exercise of stock options | $ 617 | $ 2 | 615 | ||
Issuance of common stock for settlement of restricted stock units (in shares) | 1,008,620 | ||||
Tax withholding on RSUs settlement (in shares) | (240,461) | ||||
Tax withholding on RSUs settlement | (2,053) | (2,053) | |||
Stock-based compensation expense | 9,082 | 9,082 | |||
Unrealized loss on available-for-sale securities, net of tax | (21) | (21) | |||
Net loss | $ (20,172) | (20,172) | |||
Balance at end of period (in shares) at Sep. 30, 2022 | 33,320,891 | 33,320,891 | |||
Balance at end of period at Sep. 30, 2022 | $ 40,357 | $ 33 | 99,589 | (102) | (59,163) |
Balance at beginning of period (in shares) at Jun. 30, 2022 | 0 | ||||
Balance at beginning of period at Jun. 30, 2022 | $ 0 | ||||
Balance at end of period (in shares) at Sep. 30, 2022 | 0 | ||||
Balance at end of period at Sep. 30, 2022 | $ 0 | ||||
Balance at beginning of period (in shares) at Jun. 30, 2022 | 32,622,817 | ||||
Balance at beginning of period at Jun. 30, 2022 | 45,710 | $ 33 | 97,237 | (81) | (51,479) |
Stockholders’ Equity | |||||
Issuance of common stock for cash upon exercise of stock options (in shares) | 255,108 | ||||
Issuance of common stock for cash upon exercise of stock options | 173 | $ 0 | 173 | ||
Issuance of common stock for settlement of restricted stock units (in shares) | 614,184 | ||||
Tax withholding on RSUs settlement (in shares) | (171,218) | ||||
Tax withholding on RSUs settlement | (1,210) | (1,210) | |||
Stock-based compensation expense | 3,389 | 3,389 | |||
Unrealized loss on available-for-sale securities, net of tax | (21) | (21) | |||
Net loss | $ (7,684) | (7,684) | |||
Balance at end of period (in shares) at Sep. 30, 2022 | 33,320,891 | 33,320,891 | |||
Balance at end of period at Sep. 30, 2022 | $ 40,357 | $ 33 | $ 99,589 | $ (102) | $ (59,163) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (20,172) | $ (15,594) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 1,568 | 1,107 |
Stock-based compensation | 9,082 | 1,144 |
Operating non-cash lease expense | (4) | (32) |
Amortization of deferred income | (94) | 0 |
Gain on deconsolidation of subsidiary (Note 13) | (149) | 0 |
Other, net | 10 | (8) |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | 4,234 | 6,226 |
Prepaid expenses and other assets | (1,799) | (3,932) |
Accounts payable | 408 | 415 |
Accrued expenses and other liabilities | 23 | 1,328 |
Deferred revenue | 517 | 5,340 |
Net cash used in operating activities | (6,376) | (4,006) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | (655) | (488) |
Payments relating to investment in equity method investment (Note 13) | (520) | 0 |
Purchases of available-for-sale securities | (6,399) | 0 |
Proceeds from principal portion of related party loan | 241 | 0 |
Net cash used in investing activities | (7,333) | (488) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Payments of contingent consideration for business acquisition | (1,573) | 0 |
Proceeds from issuance of common stock | 0 | 5,435 |
Principal payments under vendor financing arrangements | (635) | (418) |
Proceeds from exercise of stock options | 601 | 330 |
Payments to tax authorities for shares withheld from employees | (2,053) | 0 |
Payments of deferred offering costs | (256) | (906) |
Payments of principal portion of term loan | 0 | (450) |
Net cash (used in) provided by financing activities | (3,916) | 3,991 |
NET DECREASE IN CASH AND CASH EQUIVALENTS | (17,625) | (503) |
CASH AND CASH EQUIVALENTS, beginning of period | 85,825 | 11,744 |
CASH AND CASH EQUIVALENTS, end of period | 68,200 | 11,241 |
Noncash investing and financing activities: | ||
Equity obtained in equity method investment in exchange for contribution of license agreement (Note 13) | 11,563 | 0 |
Purchase of property and equipment through vendor financing and accrued expenses and other current liabilities | 1,809 | 186 |
Operating lease right-of-use assets exchanged for lease liabilities | 63 | 718 |
Unpaid deferred offering costs | $ 0 | $ 1,749 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 9 Months Ended |
Sep. 30, 2022 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS | DESCRIPTION OF BUSINESS Description of the Business Arteris, Inc. and its subsidiaries (collectively, the “Company” or “Arteris”) was incorporated in Delaware on April 12, 2004. The Company develops, licenses, and supports the on-chip interconnect fabric technology used in System-on-Chip (SoC) designs for a variety of devices and in the development and distribution of Network-on-Chip (NoC) interconnect intellectual property (IP). The Company also provides software and services to enable efficient deployment of NoC IP, IP support & maintenance services, professional services and training and on-site support services. The Company is headquartered in Campbell, California and has offices in the United States, France, Japan, South Korea and China. In October, 2021, the Company completed its initial public offering (IPO), in which it issued and sold 5,750,000 shares of its common stock at the public offering price of $14.00 per share, including 750,000 shares of its common stock upon the full exercise of the underwriters’ option to purchase additional shares. The Company received net proceeds of $71.1 million after deducting underwriting discounts and commissions and offering expenses. Deferred offering costs for the IPO were $3.8 million and consisted primarily of direct incremental accounting, legal and other fees related to the IPO. Prior to the IPO, all deferred offering costs were capitalized and included in other assets, non-current on the condensed consolidated balance sheets. Upon completion of the IPO, deferred offering costs were reclassified into stockholders’ equity (deficit) as a reduction of the IPO proceeds. COVID-19 Pandemic While the duration and extent of the COVID-19 pandemic depends on future developments that cannot be accurately predicted at this time, such as the extent and effectiveness of containment actions and emergence of new variants, it has already had an adverse effect on the global economy and the lasting effects of the pandemic continue to be unknown. In response to the COVID-19 pandemic, the measures implemented by various authorities have caused us to change the Company’s business practices, including those related to where employees work, the distance between employees in the Company’s facilities, limitations on in-person meetings between employees and with customers, suppliers, service providers and stakeholders, as well as restrictions on business travel to domestic and international locations and to attend trade shows, technical conferences and other events. The Company is unable to accurately predict the full impact that COVID-19 will have on its future results of operations, financial condition, liquidity and cash flows due to numerous uncertainties, including the duration and severity of the pandemic and containment measures. The Company will continue to monitor health orders issued by applicable governments to ensure compliance with evolving domestic and global COVID-19 guidelines. |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and do not include all disclosures normally required in annual consolidated financial statements prepared in accordance with GAAP. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2021 and the related notes included in the Company’s Form 10-K filed on March 7, 2022 (2021 Form 10-K) with the U.S. Securities and Exchange Commission (SEC). The December 31, 2021 condensed consolidated balance sheet was derived from the audited consolidated financial statements as of that date. In management’s opinion, the unaudited interim consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the condensed consolidated financial statements. The operating results for the three and nine months ended September 30, 2022 are not necessarily indicative of the results to be expected for the full year or any other future interim or annual period. Principles of Consolidation The condensed consolidated financial statements include the accounts of Arteris, Inc. and its wholly-owned subsidiaries. All inter-company transactions and accounts have been eliminated. Use of Estimates The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates relate to, among others, revenue recognition, the useful lives of assets, assessment of recoverability of property, plant and equipment, fair value of investments, impairment of the equity method investment, fair values of goodwill and other intangible assets, including impairments, leases, allowances for doubtful accounts, deferred tax assets and related valuation allowance, stock-based compensation, potential reserves relating to litigation and tax matters, collectability of certain receivables, fair value and amortization of deferred income, as well as other accruals or reserves. Actual results could differ from those estimates and such differences may be material to the condensed consolidated financial statements. Cash and Cash Equivalents The Company considers all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash equivalents. The Company’s cash equivalents include deposits in money market accounts which were unrestricted as to withdrawal or use and are stated at fair value. As of September 30, 2022, cash and cash equivalents consisted of primarily checking, savings, money market accounts and highly liquid investments with original maturities of three months or less. As of December 31, 2021, cash consisted primarily of checking and savings deposits. Interest earned on cash and cash equivalents is included in interest and other income (expense), net in the consolidated statements of loss. Concentrations of Credit Risk Financial instruments that potentially subject us to concentration of credit risk consist of cash and cash equivalents, investments and accounts receivable. Cash is currently held in three financial institutions and, at times, may exceed federally insured limits. The Company’ s accounts receivable are derived principally from revenue earned from customers located in Americas, Europe, Middle East and Asia Pacific regions. Accounts receivable from the Company’s major customers representing 10% or more of total accounts receivable was as follows: As of September 30, December 31, Customer A 30 % 21 % Customer B * 33 % Customer C * 12 % * Customer accounted for less than 10% of total accounts receivable at period end. Revenue from the Company’s major customers representing 10% or more of total revenue was as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Customer B 24 % 23 % 26 % 23 % Significant Accounting Policies There have been no significant changes to the Company’s significant accounting policies during the nine months ended September 30, 2022 from those disclosed in the annual consolidated financial statements for the year ended December 31, 2021, except for those disclosed in this document. Investments All investments in debt securities have been classified as “available-for-sale” and are carried at estimated fair value as determined based upon quoted market prices or pricing models for similar securities. Management determines the appropriate classification of its investments in debt securities at the time of purchase and reevaluates such designation as of each balance sheet date. Short-term investments have original maturities of greater than three months but one year or less as of the consolidated balance sheet dates. Long-term investments have maturities greater than one year as of the consolidated balance sheet dates. If the Company expects to sell a debt security within one year, it will classify the investment as a short-term investment regardless of its stated maturity date. The available-for-sale securities are reported at fair value with unrealized gains and losses included in accumulated other comprehensive income (loss). A decline in the fair value of the available-for-sale securities is recognized directly to net income (loss) if judged to be other than temporary. Interest earned on investments in debt securities, realized gains and losses and impairment losses, if any, on investments in debt securities are included in interest and other income (expense), net in the consolidated statements of loss. The cost of securities sold is based on the specific-identification method. Equity Method Investments The Company uses the equity method to account for its investments in companies which the Company does not control but is deemed to have the ability to exercise significant influence over operating and financial decisions of the investee. The Company generally measures an investment in the common stock of an investee initially at cost. The carrying value of the Company’s equity method investments is reported in equity method investment on the condensed consolidated balance sheets. The Company records its proportionate share of the income or loss in its equity method investments on a one-quarter lag. The cost is adjusted to recognize the Company's proportionate share of the investee’s net income or loss after the date of investment. The Company assesses investments for impairment whenever events or changes in circumstances indicate that the carrying value of an investment may not be recoverable. Distributions received from an investee reduce the carrying value of an investment and are recorded in the consolidated statements of cash flows using the nature of distribution approach. Recent Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and in May 2019 issued ASU No. 2019 - 05, Credit Losses (Topic 326): Targeted Transition Relief (collectively referred to as Topic 326 ), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. Topic 326 replaces the existing incurred loss impairment model with a forward-looking expected credit loss model which will result in earlier recognition of credit losses. Topic 326 is effective for the Company for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements and related disclosures. In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This standard requires contract assets and contract liabilities acquired in a business combination to be recognized in accordance with Topic 606 as if the acquirer had originated the contracts. The guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those years and early adoption is permitted. The Company is currently evaluating the impact that the standard will have on its consolidated financial statements and related disclosures. |
REVENUE
REVENUE | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
REVENUE | REVENUE Disaggregated Revenue The following table shows revenue by product and services groups (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Licensing, support and maintenance $ 11,135 $ 8,136 $ 35,743 $ 24,353 Variable royalties 695 739 2,266 1,913 Other 768 84 1,166 164 Total $ 12,598 $ 8,959 $ 39,175 $ 26,430 Contract Balances The following table provides information about accounts receivable, net, contract assets and deferred revenue (in thousands): As of September 30, December 31, Accounts receivable, net $ 9,638 $ 13,873 Contract assets $ 2,240 $ 1,486 Deferred revenue $ 49,692 $ 49,176 The Company recognized revenue of $9.4 million and $6.2 million for the three months ended September 30, 2022 and 2021, respectively, and $22.0 million and $14.7 million for the nine months ended September 30, 2022 and 2021, respectively, that was included in the deferred revenue balance at the beginning of the respective periods. Contracted but unsatisfied performance obligations were $49.7 million and $49.3 million as of September 30, 2022 and December 31, 2021, respectively, and included unearned revenue and non-cancelable Flexible Spending Account (FSA) Agreements from customers where actual product selection and quantities of specific products are to be determined by customers at a future period. FSA commitments amounted to nil and $0.2 million as of September 30, 2022 and December 31, 2021, respectively. The Company has elected to exclude the potential future royalty receipts from the remaining performance obligations. The contracted but unsatisfied or partially unsatisfied performance obligations, excluding non-cancelable FSA, expected to be recognized in revenue over the next 12 months as of September 30, 2022 are $28.9 million, with the remainder recognized thereafter. Costs of Obtaining a Contract with a Customer Incremental costs of obtaining a contract with a customer consist primarily of direct sales commissions incurred upon execution of the contract. These costs are required to be capitalized under ASC 340-40, Other Assets and Deferred Costs — Contracts With Customers , and amortized over the license term. As direct sales commissions paid for term extensions are commensurate with the amounts paid for initial contracts, the deferred incremental costs for initial contracts and for term extensions are recognized over the respective contract terms. Total capitalized direct commission costs were as follows (in thousands): As of September 30, December 31, Short-term commissions capitalized in prepaid expenses and other current assets $ 2,435 $ 2,289 Long-term commissions capitalized in other assets 1,554 1,719 Total $ 3,989 $ 4,008 Amortization of capitalized sales commissions was $0.9 million and $0.6 million for the three months ended September 30, 2022 and 2021, respectively, and $2.5 million and $1.5 million for the nine months ended September 30, 2022 and 2021, respectively. Amortization of capitalized sales commissions are included in sales and marketing expense in the condensed consolidated statements of loss. |
NET LOSS PER SHARE
NET LOSS PER SHARE | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
NET LOSS PER SHARE | NET LOSS PER SHARE The following table presents the calculation of basic and diluted net loss per share attributable to common stockholders (in thousands, except share and per share data): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Numerator: Net loss $ (7,684) $ (4,968) $ (20,172) $ (15,594) Denominator: Weighted-average shares outstanding - basic and diluted 32,836,014 20,578,386 32,228,429 19,768,574 Net loss per share, basic and diluted $ (0.23) $ (0.24) $ (0.63) $ (0.79) Since the Company was in a loss position for all periods presented, the diluted earnings per share is equal to the basic earnings per share as the effect of potentially dilutive securities would have been antidilutive. The following table summarizes the potentially dilutive securities that were excluded from the calculation of diluted earnings per share because they would be antidilutive: As of September 30, 2022 September 30, 2021 Stock options 4,037,721 5,964,043 Restricted stock units 5,104,347 3,935,229 Redeemable convertible preferred stock — 4,471,316 Total 9,142,068 14,370,588 |
Investments
Investments | 9 Months Ended |
Sep. 30, 2022 | |
Investments, Debt and Equity Securities [Abstract] | |
Investments | INVESTMENTS The following tables summarize the fair value and amortized cost of the Company’s cash equivalents and available-for-sale securities by major security type: Amortized Cost Unrealized Gain/(Loss) Aggregate Fair Value Assets: Money market funds $ 43,334 $ — $ 43,334 Commercial paper 2,444 (1) 2,443 Corporate bonds 2,483 (8) 2,475 U.S. government agency securities 14,940 (12) 14,928 U.S. treasury securities 4,498 — 4,498 Total financial assets $ 67,699 $ (21) $ 67,678 The maturity dates of the Company’s investments are as follows: September 30, 2022 Less than one year $ 65,695 1-2 years 1,983 Total $ 67,678 |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS Assets Measured and Recorded at Fair Value on a Non-Recurring Basis Equity method investments, and certain non-financial assets, such as intangible assets and property, plant and equipment, are remeasured at fair value only if an impairment or observable price adjustment is recognized in the current period. Financial Instruments Not Recorded at Fair Value on a Recurring Basis Financial instruments not recorded at fair value on a recurring basis include vendor financing arrangements. The carrying value of the vendor financing agreements were $1.9 million as of September 30, 2022 and $1.1 million as of December 31, 2021, respectively. The Company’s vendor financing arrangements are classified within Level 2 because these borrowings are not actively traded and have a variable interest rate structure based upon market rates currently available to the Company for debt with similar terms and maturities. The estimated fair values of these financial instruments approximate their carrying values . Financial Instruments Recorded at Fair Value on a Recurring Basis The following tables summarize the Company’s financial assets measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands): As of September 30, 2022 Level 1 Level 2 Level 3 Fair Value Assets: Cash equivalents: Money market funds $ 43,334 $ — $ — $ 43,334 Commercial paper — 2,000 — 2,000 U.S. government agency securities — 11,463 — 11,463 U.S. treasury securities — 4,498 — 4,498 Total cash equivalents 43,334 17,961 — 61,295 Short-term investments: Commercial paper — 443 — 443 Corporate bonds — 1,986 — 1,986 U.S. government agency securities — 1,971 — 1,971 Total short-term investments — 4,400 — 4,400 Long-term investments: Corporate bonds — 489 — 489 U.S. government agency securities — 1,494 — 1,494 Total long-term investments — 1,983 — 1,983 Total financial assets $ 43,334 $ 24,344 $ — $ 67,678 Money market funds are highly liquid investments and are actively traded. The fair value is based on quoted prices for identical assets in active markets and therefore classified as Level 1 of the fair value hierarchy. The Company’s other investments are considered Level 2 financial instruments as their fair values are determined using inputs that are directly or indirectly observable in active or less active markets. There were no transfers between levels during the three and nine months ended September 30, 2022. |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
INTANGIBLE ASSETS AND GOODWILL | INTANGIBLE ASSETS AND GOODWILL Intangible assets, net Intangible assets, net consisted of the following as of September 30, 2022 (in thousands): Gross Fair Value Accumulated Amortization Net Book Value Developed technology $ 1,700 $ (623) $ 1,077 Customer relationships 1,100 (252) 848 IPR&D 500 — 500 Trade name and other 150 — 150 Total intangibles $ 3,450 $ (875) $ 2,575 Intangible assets, net consisted of the following as of December 31, 2021 (in thousands): Gross Fair Value Accumulated Amortization Net Book Value Developed technology $ 1,700 $ (368) $ 1,332 Customer relationships 1,100 (149) 951 IPR&D 500 — 500 Trade name and other 176 — 176 Total intangibles $ 3,476 $ (517) $ 2,959 Amortization expense of intangible assets was $0.1 million for both the three months ended September 30, 2022 and 2021, and $0.4 million for both the nine months ended September 30, 2022 and 2021. The expected future amortization expense of these intangible assets as of September 30, 2022 is as follows (in thousands) : Fiscal year ending December 31, Amount Remainder of 2022 $ 120 2023 478 2024 478 2025 449 2026 138 Thereafter 262 Total future amortization expense $ 1,925 Goodwill As of September 30, 2022 and December 31, 2021, goodwill was $2.7 million. No goodwill impairments were recorded during the three and nine months ended September 30, 2022 and 2021. |
LEASES
LEASES | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
LEASES | LEASESThe Company leases its offices at various locations under noncancelable operating lease agreements expiring at various dates through 2027. Under the terms of these agreements, the Company also bears the costs for certain insurance, property tax, and maintenance. The terms of certain lease agreements provide for increasing rental payments at fixed intervals. Total operating lease related costs were as follows (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Operating lease cost $ 263 $ 333 $ 802 $ 807 Short-term lease cost 38 25 263 77 Total lease cost $ 301 $ 358 $ 1,065 $ 884 The weighted-average remaining term of the Company’s operating leases was 3.2 years and 3.6 years as of September 30, 2022 and December 31, 2021, respectively, and the weighted-average discount rate used to measure the present value of the operating lease liabilities was 7.5% as of both September 30, 2022 and December 31, 2021. Maturities of operating lease liabilities as of September 30, 2022 were as follows (in thousands): Fiscal year ending December 31, Amount Remainder of 2022 $ 296 2023 990 2024 449 2025 278 2026 212 Thereafter 212 Total undiscounted cash flows $ 2,437 Less: imputed interest (270) Present value of lease liabilities $ 2,167 Operating lease liabilities, current $ 1,033 Operating lease liabilities, non-current 1,134 $ 2,167 |
BORROWINGS
BORROWINGS | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
BORROWINGS | BORROWINGS Vendor financing arrangements —The Company has various vendor financing arrangements with extended pa yment terms on the purchase of software licenses and equipment. In order to determine the present value of the commitments, the Company used an imputed interest rate of 7.5%, which is reflective of its collateralized borrowing rate with similar terms to that of the software licenses and equipment transactions. Vendor financing arrangements as of September 30, 2022 were as follows (in thousands): Fiscal year ending December 31, Amount Remainder of 2022 $ 402 2023 1,100 2024 556 Total undiscounted cash flows $ 2,058 Less: imputed interest (123) Present value of vendor financing arrangements $ 1,935 Vendor financing arrangements, current $ 1,502 Vendor financing arrangements, noncurrent 433 $ 1,935 Interest expense was less than $0.1 million for both the three months ended September 30, 2022 and 2021. Interest expense was $0.1 million for both the nine months ended September 30, 2022 and 2021. |
COMMITMENT AND CONTINGENCIES
COMMITMENT AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2022 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitment and Contingencies | COMMITMENTS AND CONTINGENCIES Indemnifications —The Company often enters into limited indemnification provisions in license agreements in the ordinary course of the Company’s licensing business. Pursuant to these provisions, which are often inserted into license agreements in the semiconductor IP and software licensing industries, the Company agrees to indemnify, hold harmless, and reimburse the indemnified parties up to a capped amount for losses suffered or incurred by such indemnified parties due to third party claims if such claims are determined to be caused by the Company. The term of these indemnification provisions is generally either for a term of years or perpetual, in each case beginning on the execution date of the agreement. The Company has also agreed to indemnify under indemnity agreements with its directors and officers, to the extent legally permissible, against liabilities incurred in connection with any action in which such individual may be involved by reason of such individual being or having been a director or officer, other than certain liabilities arising from willful misconduct of the individual. The Company has incurred no actual payment obligations from these above-noted indemnification provisions and director and officer indemnity agreements for three and nine months ended September 30, 2022 and 2021 and the condensed consolidated financial statements do not include liabilities for any potential indemnity-related obligations as of September 30, 2022 and December 31, 2021. Legal— In the normal course of business, the Company may receive inquiries or become involved in legal disputes regarding various litigation matters. Although claims are inherently unpredictable, the Company currently is not aware of any matters that may have a material adverse effect on the Company’s financial position, results of operations, or cash flows. The Company has no other material contractual noncancelable commitments as of September 30, 2022 and December 31, 2021. |
REDEEMABLE CONVERTIBLE PREFERRE
REDEEMABLE CONVERTIBLE PREFERRED STOCK, PREFERRED STOCK AND COMMON STOCK | 9 Months Ended |
Sep. 30, 2022 | |
Equity [Abstract] | |
REDEEMABLE CONVERTIBLE PREFERRED STOCK, PREFERRED STOCK AND COMMON STOCK | REDEEMABLE CONVERTIBLE PREFERRED STOCK, PREFERRED STOCK AND COMMON STOCK Redeemable Convertible Preferred Stock Immediately prior to the closing of the IPO, all shares of the Company’s redeemable convertible preferred stock outstanding, totaling 4,471,316, were automatically converted into an equal number of shares of common stock and their carrying value of $5.7 million was reclassified into stockholders’ equity. As of both September 30, 2022 and December 31, 2021, there were zero shares of redeemable convertible preferred stock issued and outstanding. Preferred Stock In connection with the IPO, the Company amended and restated its certificate of incorporation to authorize 10,000,000 shares of preferred stock with a par value of $0.001, which shares of preferred stock are currently undesignated. Common Stock Holders of common stock are entitled to one vote per share and to receive dividends and, upon liquidation or dissolution, are entitled to receive all assets available for distribution to common stockholders. The common stock has no preemptive or other subscription rights and there are no redemption or sinking fund provisions with respect to such shares. Common stock is subordinate to the preferred stock with respect to dividend rights and rights upon liquidation, winding-up, and dissolution of the Company. In connection with the IPO, the Company amended and restated its certificate of incorporation to authorize 300,000,000 shares of common stock. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2022 | |
Share-based Payment Arrangement [Abstract] | |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION 2016 Stock Plan On October 10, 2016, the Company amended and restated the 2013 Equity Incentive Plan (the 2013 Plan) and changed the name of the plan to Arteris, Inc. 2016 Incentive Plan (the 2016 Plan). Adoption of the 2016 Plan provides for participation by foreign nationals or those employed outside of the United States. The 2016 Plan provides for the granting of the following types of stock awards: incentive stock options, non-statutory stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards (RSUs) and other stock awards. The number of shares authorized for award was 20,803,838. The Company has granted awards of common stock in the form of 14,142,208 shares as of December 31, 2021. Following the Company’s IPO in October 2021, all future grants will be made under the 2021 Plan (as defined below), w ith none remaining available for future grant under the 2016 Plan. 2021 Stock Plan The Company adopted the 2021 Incentive Award Plan (the 2021 Plan) effective October 26, 2021. The 2021 Plan provides for a variety of stock-based compensation awards, including stock options, stock appreciation rights, or SARs, restricted stock awards, restricted stock unit awards, performance bonus awards, performance stock unit awards, dividend equivalents, or other stock or cash based awards. Following the effectiveness of the 2021 Plan, the Company will not make any further grants under the 2016 Plan. However, the 2016 Plan will continue to govern the terms and conditions of the outstanding awards granted under this plan. Shares of common stock subject to awards granted under the 2016 Plan that are forfeited, lapse unexercised and withheld to cover taxes which following the effective date of the 2021 Plan are not issued under the 2016 Plan will be available for issuance under the 2021 Plan. 2021 Employee stock purchase plan The Company adopted the 2021 Employee Stock Purchase Plan (the 2021 ESPP) effective on October 26, 2021. The 2021 ESPP would enable eligible employees of the Company to purchase shares of common stock at a discount to fair market value. As of September 30, 2022, there had been no offering period under the ESPP. Shares Available for Future Grant Shares available for future grant consisted of the following: As of September 30, Shares available for future grant under the 2021 Plan 3,469,764 Shares available for future grant under the 2021 ESPP 922,306 The Company issues new shares upon a share option exercise or release of restricted stock units. Stock Options The following table summarizes the stock option activities under the Company’s 2016 Plan: Options Outstanding Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (Years) Aggregate Intrinsic Value ($'000s) BALANCE—December 31, 2021 5,407,170 $ 0.96 7.16 $ 108,964 Exercised (1,022,050) $ 0.60 Canceled (347,399) $ 1.19 BALANCE—September 30, 2022 4,037,721 $ 1.03 6.49 $ 22,738 Options vested and exercisable—September 30, 2022 3,011,042 $ 0.90 6.09 $ 17,354 The aggregate intrinsic value of the options exercised during the nine months ended September 30, 2022 and 2021 was $9.8 million and $1.2 million, respectively. The total grant-date fair value of options vested was $0.3 million during both the nine months ended September 30, 2022 and 2021. As of September 30, 2022, there was $0.5 million of unamortized stock-based compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of 2.0 years. The Company had no stock option grants during the nine months ended September 30, 2022 and 2021. Restricted Stock Units The following table summarizes the restricted stock units activities under the Company’s 2016 and 2021 Plans: Restricted Stock Units Number of Shares Weighted-Average Grant Date Fair Value Unvested—December 31, 2021 3,925,097 $ 5.60 Granted 2,440,603 $ 11.76 Vested (1,008,620) $ 6.22 Forfeited (252,733) $ 12.07 Unvested—September 30, 2022 5,104,347 $ 8.11 The total grant-date fair value of restricted stock units vested was $6.3 million and less than $0.1 million during the nine months ended September 30, 2022 and 2021, respectively. As of September 30, 2022, there was $34.0 million of unamortized stock-based compensation cost related to unvested restricted stock units, which is expected to be recognized over a weighted-average period of 3.2 years. Stock-based Compensation Stock-based compensation expense is recorded on a departmental basis, based on the classification of the award holder. The following table presents the amount of stock-based compensation related to stock-based awards to employees on the Company’s condensed consolidated statements of loss (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Cost of revenue $ 118 $ 15 $ 474 $ 42 Research and development 1,798 225 4,435 645 Sales and marketing 679 23 1,678 72 General and administrative 794 170 2,495 385 Total stock-based compensation $ 3,389 $ 433 $ 9,082 $ 1,144 |
EQUITY METHOD INVESTMENT
EQUITY METHOD INVESTMENT | 9 Months Ended |
Sep. 30, 2022 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Equity Method Investment | EQUITY METHOD INVESTMENT On February 21, 2022, Arteris IP (Hong Kong) Ltd. (AHK), a wholly-owned subsidiary of the Company, entered into a Share Purchase and Shareholders Agreement (the SPA) with certain investors and Ningbo Transchip Information Consulting Partnership (Limited Partnership) (Management Co). The transaction closed on June 20, 2022. The Company, the investors and Management Co, pursuant to the SPA, subscribed to the registered capital of Transchip Technology (Nanjing) Co., Ltd. (Transchip), a formerly wholly-owned subsidiary of the Company. As a result, the registered capital of Transchip increased to $29.4 million. The Company subscribed for the registered capital of approximately $11.9 million, of which $11.6 million of the contribution was contributed in-kind by way of an interconnect solutions technology license by the Company pursuant to a five-yea technology license and services agreement which can be extended automatically for another five -year term, and the remaining was paid in cash. The license agreement provides Transchip the right to software licenses, services, software updates and technical support. On the closing date, the license agreement including the support and maintenance services to be provided to Transchip was valued to be $11.6 million, which was recorded as deferred income and will be recognized as interest and other income (expense), net over a period of ten years on a straight line basis after delivery of the license. The license was delivered to Transchip on September 2, 2022. For the three and nine months ended September 30, 2022, the Company recognized income of $0.1 million for the license agreement. Deconsolidation of Transchip as a subsidiary Before the closing of the transaction, Transchip was a wholly-owned subsidiary of the Company with limited operations. Upon closing of the transaction, the Company no longer has control, and therefore deconsolidated Transchip. Accordingly, upon closing of the transaction, the Company derecognized all the assets and liabilities of Transchip and recognized a disposal gain of $0.1 million, included in interest and other income (expense), net in the condensed consolidated statements of loss for the nine months ended September 30, 2022. Upon deconsolidation, the Company also recorded a nine-month related party loan to Transchip of $0.3 million, in prepaid expenses and other current assets within its condensed consolidated balance sheet, which was previously eliminated as an intercompany loan in the Company’s consolidated financial statements. This loan carries an annual interest rate of 4% and expired on August 31, 2022. The Company received the payment of principal and interest of $0.3 million on September 2, 2022. Investment of Transchip as an equity investee Following the consummation of the foregoing transactions, the Company held 40.3% common stock of Transchip on a fully diluted basis. The Company accounts for its common stock investment in Transchip as an equity method investment as it does not control but has significant influence over operating and financing policies of Transchip. Transchip is the Company’s only equity method investment. The Company invested $12.2 million, including transaction costs of $0.3 million in Transchip. On September 15, 2022, Transchip completed a second funding with additional investors. The Company did not provide additional investments in the second funding. As a result, the Company’s ownership interest in Transchip was diluted to 35.0% of the common stock of Transchip on a fully diluted basis. The impact to the Company’s condensed consolidated statements of loss was immaterial. As of September 30, 2022, the carrying value of the investment in Transchip was $12.2 million. There was no significant difference between the Company’s carrying value of the investment in Transchip and its share of underlying equity in net assets of Transchip. During the three and nine months ended September 30, 2022, the Company’s loss from its proportionate share of its equity method investment in Transchip was immaterial. The Company concluded that t here were no indicators of impairment related to the Company’s equity method investment in Transchip as of September 30, 2022. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2022 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company’s effective tax rate was (3.9)% and (4.1)% for the nine months ended September 30, 2022 and 2021, respectively. The Company’s income tax provision was $0.7 million and $0.6 million for the nine months ended September 30, 2022 and 2021, respectively. The change in forecasted foreign withholding tax, changes in the geographic mix of worldwide earnings which are taxed at different rates, and the impact of losses in jurisdictions with full valuation allowances, has resulted in an insignificant change in the income tax provision for the period ended September 30, 2022 compared to the period ended September 30, 2021. The Company’s management continuously evaluates the need for a valuation allowance and, as of September 30, 2022, concluded that a full valuation allowance on its US federal, state, and certain foreign jurisdictions deferred tax assets was still appropriate. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2022 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS The Company defines related parties as directors, executive officers, nominees for director, stockholders that have significant influence over the Company, or are a greater than 10% beneficial owner of the Company’s capital and their affiliates or immediate family members. In November 2020, the Company entered into a lease agreement with Isabelle Geday, a member of the Board of Directors. The lease payments were less than $0.1 million and $0.1 million for the three months ended September 30, 2022 and 2021, respectively. The lease payments were $0.1 million and $0.2 million for the nine months ended September 30, 2022 and 2021, respectively. In addition, the Company signed a consulting agreement with Ms. Geday on December 1, 2021, which was subsequently assigned to Magillem Design Services S.A., effective January 10, 2022. Ms. Geday was paid as an executive employee of the Company from December 1, 2020 through November 30, 2021. As a consultant, Ms. Geday will provide services for an initial three-year term, commencing December 1, 2021, and is eligible to receive $26,445 per month for the first 12 months of the consulting term and $19,445 per month for the remaining 24 months of the consulting term. For the three months ended September 30, 2022, the Company paid Ms. Geday $0.1 million for consulting services. For the nine months ended September 30, 2022, the Company paid Ms. Geday $0.2 million for consulting services. Lastly, the 455,000 stock options and 62,200 RSUs granted in connection with Ms. Geday’s prior employment continue to vest. In connection with the deconsolidation of Transchip, the Company had recorded a short-term loan to Transchip, including interest, of $0.3 million in prepaid expenses and other current assets on its condensed consolidated balance sheet. The Company received the payment of principal and interest of $0.3 million on September 2, 2022. |
BASIS OF PRESENTATION AND SUM_2
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (GAAP) for interim financial information and do not include all disclosures normally required in annual consolidated financial statements prepared in accordance with GAAP. Accordingly, these unaudited condensed consolidated financial statements should be read in conjunction with the audited consolidated financial statements for the year ended December 31, 2021 and the related notes included in the Company’s Form 10-K filed on March 7, 2022 (2021 Form 10-K) with the U.S. Securities and Exchange Commission (SEC). The December 31, 2021 condensed consolidated balance sheet was derived from the audited consolidated financial statements as of that date. In management’s opinion, the unaudited interim consolidated financial statements have been prepared on the same basis as the annual financial statements and reflect all adjustments, which include only normal recurring adjustments necessary for the fair statement of the condensed consolidated financial statements. |
Principles of Consolidation | Principles of Consolidation The condensed consolidated financial statements include the accounts of Arteris, Inc. and its wholly-owned subsidiaries. All inter-company transactions and accounts have been eliminated. |
Use of Estimates | Use of Estimates The preparation of the condensed consolidated financial statements in conformity with GAAP requires management to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Such estimates relate to, among others, revenue recognition, the useful lives of assets, assessment of recoverability of property, plant and equipment, fair value of investments, impairment of the equity method investment, fair values of goodwill and other intangible assets, including impairments, leases, allowances for doubtful accounts, deferred tax assets and related valuation allowance, stock-based compensation, potential reserves relating to litigation and tax matters, collectability of certain receivables, fair value and amortization of deferred income, as well as other accruals or reserves. Actual results could differ from those estimates and such differences may be material to the condensed consolidated financial statements. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company considers all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash equivalents. The Company’s cash equivalents include deposits in money market accounts which were unrestricted as to withdrawal or use and are stated at fair value. As of September 30, 2022, cash and cash equivalents consisted of primarily checking, savings, money market accounts and highly liquid investments with original maturities of three months or less. As of December 31, 2021, cash consisted primarily of checking and savings deposits. Interest earned on cash and cash equivalents is included in interest and other income (expense), net in the consolidated statements of loss. |
Concentrations of Credit Risk | Concentrations of Credit Risk Financial instruments that potentially subject us to concentration of credit risk consist of cash and cash equivalents, investments and accounts receivable. Cash is currently held in three financial institutions and, at times, may exceed federally insured limits. The Company’ s accounts receivable are derived principally from revenue earned from customers located in Americas, Europe, Middle East and Asia Pacific regions. |
Investment | Investments All investments in debt securities have been classified as “available-for-sale” and are carried at estimated fair value as determined based upon quoted market prices or pricing models for similar securities. Management determines the appropriate classification of its investments in debt securities at the time of purchase and reevaluates such designation as of each balance sheet date. Short-term investments have original maturities of greater than three months but one year or less as of the consolidated balance sheet dates. Long-term investments have maturities greater than one year as of the consolidated balance sheet dates. If the Company expects to sell a debt security within one year, it will classify the investment as a short-term investment regardless of its stated maturity date. The available-for-sale securities are reported at fair value with unrealized gains and losses included in accumulated other comprehensive income (loss). A decline in the fair value of the available-for-sale securities is recognized directly to net income (loss) if judged to be other than temporary. |
Equity Method Investments | Equity Method Investments The Company uses the equity method to account for its investments in companies which the Company does not control but is deemed to have the ability to exercise significant influence over operating and financial decisions of the investee. The Company generally measures an investment in the common stock of an investee initially at cost. The carrying value of the Company’s equity method investments is reported in equity method investment on the condensed consolidated balance sheets. The Company records its proportionate share of the income or loss in its equity method investments on a one-quarter lag. The cost is adjusted to recognize the Company's proportionate share of the investee’s net income or loss after the date of investment. The Company assesses investments for impairment whenever events or changes in circumstances indicate that the carrying value of an investment may not be recoverable. Distributions received from an investee reduce the carrying value of an investment and are recorded in the consolidated statements of cash flows using the nature of distribution approach. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments and in May 2019 issued ASU No. 2019 - 05, Credit Losses (Topic 326): Targeted Transition Relief (collectively referred to as Topic 326 ), which requires the measurement and recognition of expected credit losses for financial assets held at amortized cost. Topic 326 replaces the existing incurred loss impairment model with a forward-looking expected credit loss model which will result in earlier recognition of credit losses. Topic 326 is effective for the Company for fiscal years beginning after December 15, 2022, and interim periods within those fiscal years. The Company does not expect the adoption of this guidance to have a material impact on its consolidated financial statements and related disclosures. In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. This standard requires contract assets and contract liabilities acquired in a business combination to be recognized in accordance with Topic 606 as if the acquirer had originated the contracts. The guidance is effective for fiscal years beginning after December 15, 2022, including interim periods within those years and early adoption is permitted. The Company is currently evaluating the impact that the standard will have on its consolidated financial statements and related disclosures. |
Fair value of financial instruments | Assets Measured and Recorded at Fair Value on a Non-Recurring Basis Equity method investments, and certain non-financial assets, such as intangible assets and property, plant and equipment, are remeasured at fair value only if an impairment or observable price adjustment is recognized in the current period. Financial Instruments Not Recorded at Fair Value on a Recurring Basis Financial instruments not recorded at fair value on a recurring basis include vendor financing arrangements. The carrying value of the vendor financing agreements were $1.9 million as of September 30, 2022 and $1.1 million as of December 31, 2021, respectively. The Company’s vendor financing arrangements are classified within Level 2 because these borrowings are not actively traded and have a variable interest rate structure based upon market rates currently available to the Company for debt with similar terms and maturities. The estimated fair values of these financial instruments approximate their carrying values . Money market funds are highly liquid investments and are actively traded. The fair value is based on quoted prices for identical assets in active markets and therefore classified as Level 1 of the fair value hierarchy. The Company’s other investments are considered Level 2 financial instruments as their fair values are determined using inputs that are directly or indirectly observable in active or less active markets. There were no transfers between levels during the three and nine months ended September 30, 2022. |
BASIS OF PRESENTATION AND SUM_3
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Accounting Policies [Abstract] | |
Schedules of Concentration of Risk | Accounts receivable from the Company’s major customers representing 10% or more of total accounts receivable was as follows: As of September 30, December 31, Customer A 30 % 21 % Customer B * 33 % Customer C * 12 % * Customer accounted for less than 10% of total accounts receivable at period end. Revenue from the Company’s major customers representing 10% or more of total revenue was as follows: Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Customer B 24 % 23 % 26 % 23 % |
REVENUE (Tables)
REVENUE (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following table shows revenue by product and services groups (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Licensing, support and maintenance $ 11,135 $ 8,136 $ 35,743 $ 24,353 Variable royalties 695 739 2,266 1,913 Other 768 84 1,166 164 Total $ 12,598 $ 8,959 $ 39,175 $ 26,430 |
Contract Balances on Condensed Consolidated Balance Sheet | The following table provides information about accounts receivable, net, contract assets and deferred revenue (in thousands): As of September 30, December 31, Accounts receivable, net $ 9,638 $ 13,873 Contract assets $ 2,240 $ 1,486 Deferred revenue $ 49,692 $ 49,176 |
Capitalized Direct Commission Costs | Total capitalized direct commission costs were as follows (in thousands): As of September 30, December 31, Short-term commissions capitalized in prepaid expenses and other current assets $ 2,435 $ 2,289 Long-term commissions capitalized in other assets 1,554 1,719 Total $ 3,989 $ 4,008 |
NET LOSS PER SHARE (Tables)
NET LOSS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Earnings Per Share [Abstract] | |
Schedule of Net Loss Per Share | The following table presents the calculation of basic and diluted net loss per share attributable to common stockholders (in thousands, except share and per share data): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Numerator: Net loss $ (7,684) $ (4,968) $ (20,172) $ (15,594) Denominator: Weighted-average shares outstanding - basic and diluted 32,836,014 20,578,386 32,228,429 19,768,574 Net loss per share, basic and diluted $ (0.23) $ (0.24) $ (0.63) $ (0.79) |
Schedule of Potentially Dilutive Securities Excluded from the Calculation of Diluted Earnings Per Share | The following table summarizes the potentially dilutive securities that were excluded from the calculation of diluted earnings per share because they would be antidilutive: As of September 30, 2022 September 30, 2021 Stock options 4,037,721 5,964,043 Restricted stock units 5,104,347 3,935,229 Redeemable convertible preferred stock — 4,471,316 Total 9,142,068 14,370,588 |
Investments - Debt and Equity S
Investments - Debt and Equity Securities (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Investments, Debt and Equity Securities [Abstract] | |
Debt Securities, Available-for-sale | The following tables summarize the fair value and amortized cost of the Company’s cash equivalents and available-for-sale securities by major security type: Amortized Cost Unrealized Gain/(Loss) Aggregate Fair Value Assets: Money market funds $ 43,334 $ — $ 43,334 Commercial paper 2,444 (1) 2,443 Corporate bonds 2,483 (8) 2,475 U.S. government agency securities 14,940 (12) 14,928 U.S. treasury securities 4,498 — 4,498 Total financial assets $ 67,699 $ (21) $ 67,678 |
Debt Securities, Held-to-maturity, Nonaccrual | The maturity dates of the Company’s investments are as follows: September 30, 2022 Less than one year $ 65,695 1-2 years 1,983 Total $ 67,678 |
Fair Value Measures and Disclos
Fair Value Measures and Disclosures (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Fair Value Disclosures [Abstract] | |
Fair Value, Assets Measured on Recurring Basis | The following tables summarize the Company’s financial assets measured at fair value on a recurring basis by level within the fair value hierarchy (in thousands): As of September 30, 2022 Level 1 Level 2 Level 3 Fair Value Assets: Cash equivalents: Money market funds $ 43,334 $ — $ — $ 43,334 Commercial paper — 2,000 — 2,000 U.S. government agency securities — 11,463 — 11,463 U.S. treasury securities — 4,498 — 4,498 Total cash equivalents 43,334 17,961 — 61,295 Short-term investments: Commercial paper — 443 — 443 Corporate bonds — 1,986 — 1,986 U.S. government agency securities — 1,971 — 1,971 Total short-term investments — 4,400 — 4,400 Long-term investments: Corporate bonds — 489 — 489 U.S. government agency securities — 1,494 — 1,494 Total long-term investments — 1,983 — 1,983 Total financial assets $ 43,334 $ 24,344 $ — $ 67,678 |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangible assets, net consisted of the following as of September 30, 2022 (in thousands): Gross Fair Value Accumulated Amortization Net Book Value Developed technology $ 1,700 $ (623) $ 1,077 Customer relationships 1,100 (252) 848 IPR&D 500 — 500 Trade name and other 150 — 150 Total intangibles $ 3,450 $ (875) $ 2,575 Intangible assets, net consisted of the following as of December 31, 2021 (in thousands): Gross Fair Value Accumulated Amortization Net Book Value Developed technology $ 1,700 $ (368) $ 1,332 Customer relationships 1,100 (149) 951 IPR&D 500 — 500 Trade name and other 176 — 176 Total intangibles $ 3,476 $ (517) $ 2,959 |
Schedule of Future Amortization Expense | The expected future amortization expense of these intangible assets as of September 30, 2022 is as follows (in thousands) : Fiscal year ending December 31, Amount Remainder of 2022 $ 120 2023 478 2024 478 2025 449 2026 138 Thereafter 262 Total future amortization expense $ 1,925 |
LEASES (Tables)
LEASES (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Leases [Abstract] | |
Operating Lease Costs | Total operating lease related costs were as follows (in thousands): Three Months Ended Nine Months Ended 2022 2021 2022 2021 Operating lease cost $ 263 $ 333 $ 802 $ 807 Short-term lease cost 38 25 263 77 Total lease cost $ 301 $ 358 $ 1,065 $ 884 |
Maturities of Operating Lease Liabilities | Maturities of operating lease liabilities as of September 30, 2022 were as follows (in thousands): Fiscal year ending December 31, Amount Remainder of 2022 $ 296 2023 990 2024 449 2025 278 2026 212 Thereafter 212 Total undiscounted cash flows $ 2,437 Less: imputed interest (270) Present value of lease liabilities $ 2,167 Operating lease liabilities, current $ 1,033 Operating lease liabilities, non-current 1,134 $ 2,167 |
BORROWINGS (Tables)
BORROWINGS (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Debt Disclosure [Abstract] | |
Schedule of Vendor Financing Arrangements | Vendor financing arrangements as of September 30, 2022 were as follows (in thousands): Fiscal year ending December 31, Amount Remainder of 2022 $ 402 2023 1,100 2024 556 Total undiscounted cash flows $ 2,058 Less: imputed interest (123) Present value of vendor financing arrangements $ 1,935 Vendor financing arrangements, current $ 1,502 Vendor financing arrangements, noncurrent 433 $ 1,935 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2022 | |
Share-based Payment Arrangement [Abstract] | |
Shares Available for Future Grant | Shares available for future grant consisted of the following: As of September 30, Shares available for future grant under the 2021 Plan 3,469,764 Shares available for future grant under the 2021 ESPP 922,306 |
Summary of Stock Options Activity | The following table summarizes the stock option activities under the Company’s 2016 Plan: Options Outstanding Number of Options Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (Years) Aggregate Intrinsic Value ($'000s) BALANCE—December 31, 2021 5,407,170 $ 0.96 7.16 $ 108,964 Exercised (1,022,050) $ 0.60 Canceled (347,399) $ 1.19 BALANCE—September 30, 2022 4,037,721 $ 1.03 6.49 $ 22,738 Options vested and exercisable—September 30, 2022 3,011,042 $ 0.90 6.09 $ 17,354 |
Summary of Restricted Stock Units Activity | The following table summarizes the restricted stock units activities under the Company’s 2016 and 2021 Plans: Restricted Stock Units Number of Shares Weighted-Average Grant Date Fair Value Unvested—December 31, 2021 3,925,097 $ 5.60 Granted 2,440,603 $ 11.76 Vested (1,008,620) $ 6.22 Forfeited (252,733) $ 12.07 Unvested—September 30, 2022 5,104,347 $ 8.11 |
Stock-Based Compensation Related to Stock-Based Awards to Employees | The following table presents the amount of stock-based compensation related to stock-based awards to employees on the Company’s condensed consolidated statements of loss (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2022 2021 2022 2021 Cost of revenue $ 118 $ 15 $ 474 $ 42 Research and development 1,798 225 4,435 645 Sales and marketing 679 23 1,678 72 General and administrative 794 170 2,495 385 Total stock-based compensation $ 3,389 $ 433 $ 9,082 $ 1,144 |
DESCRIPTION OF BUSINESS (Detail
DESCRIPTION OF BUSINESS (Details) $ / shares in Units, $ in Millions | 1 Months Ended |
Oct. 31, 2021 USD ($) $ / shares shares | |
IPO | |
Subsidiary, Sale of Stock [Line Items] | |
Sale of stock, number of shares issued in transaction (in shares) | shares | 5,750,000 |
Sale of stock (in dollars per share) | $ / shares | $ 14 |
Sale of stock, consideration received on transaction | $ | $ 71.1 |
Deferred offering costs | $ | $ 3.8 |
Over-Allotment Option | |
Subsidiary, Sale of Stock [Line Items] | |
Sale of stock, number of shares issued in transaction (in shares) | shares | 750,000 |
BASIS OF PRESENTATION AND SUM_4
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Schedule of Concentration of Risk (Details) - Customer Concentration Risk | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Customer A | Accounts Receivable | |||||
Disaggregation of Revenue [Line Items] | |||||
Concentration risk, percentage | 30% | 21% | |||
Customer B | Revenue from Contract with Customer Benchmark | |||||
Disaggregation of Revenue [Line Items] | |||||
Concentration risk, percentage | 24% | 23% | 26% | 23% | |
Customer B | Accounts Receivable | |||||
Disaggregation of Revenue [Line Items] | |||||
Concentration risk, percentage | 33% | ||||
Customer C | Accounts Receivable | |||||
Disaggregation of Revenue [Line Items] | |||||
Concentration risk, percentage | 12% |
REVENUE - Disaggregation of Rev
REVENUE - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 12,598 | $ 8,959 | $ 39,175 | $ 26,430 |
Licensing, support and maintenance | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 11,135 | 8,136 | 35,743 | 24,353 |
Variable royalties | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | 695 | 739 | 2,266 | 1,913 |
Other | ||||
Disaggregation of Revenue [Line Items] | ||||
Total revenue | $ 768 | $ 84 | $ 1,166 | $ 164 |
REVENUE - Contract Balances on
REVENUE - Contract Balances on Condensed Consolidated Balance Sheet (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Revenue from Contract with Customer [Abstract] | ||
Accounts receivable, net | $ 9,638 | $ 13,873 |
Contract assets | 2,240 | 1,486 |
Deferred revenue | $ 49,692 | $ 49,176 |
REVENUE - Narrative (Details)
REVENUE - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Disaggregation of Revenue [Line Items] | |||||
Deferred revenue, revenue recognized | $ 9.4 | $ 6.2 | $ 22 | $ 14.7 | |
Unsatisfied performance obligations | 49.7 | 49.7 | $ 49.3 | ||
Flexible spending account commitment | 0 | 0 | $ 0.2 | ||
Amortization of capitalized sales commissions | $ 0.9 | $ 0.6 | $ 2.5 | $ 1.5 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2022-10-01 | |||||
Disaggregation of Revenue [Line Items] | |||||
Remaining performance obligation, expected timing of satisfaction, excluding flexible spending account | 12 months | 12 months | |||
Unsatisfied performance obligations, excluding flexible spending account commitment | $ 28.9 | $ 28.9 |
REVENUE - Capitalized Direct Co
REVENUE - Capitalized Direct Commission Costs (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Revenue from Contract with Customer [Abstract] | ||
Short-term commissions capitalized in prepaid expenses and other current assets | $ 2,435 | $ 2,289 |
Long-term commissions capitalized in other assets | 1,554 | 1,719 |
Total | $ 3,989 | $ 4,008 |
NET LOSS PER SHARE - Schedule o
NET LOSS PER SHARE - Schedule of Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Numerator: | ||||
Net loss | $ (7,684) | $ (4,968) | $ (20,172) | $ (15,594) |
Denominator: | ||||
Weighted-average shares outstanding - basic (in shares) | 32,836,014 | 20,578,386 | 32,228,429 | 19,768,574 |
Weighted-average shares outstanding - diluted (in shares) | 32,836,014 | 20,578,386 | 32,228,429 | 19,768,574 |
Net loss per share, basic (in dollars per share) | $ (0.23) | $ (0.24) | $ (0.63) | $ (0.79) |
Net loss per share, diluted (in dollars per share) | $ (0.23) | $ (0.24) | $ (0.63) | $ (0.79) |
NET LOSS PER SHARE - Schedule_2
NET LOSS PER SHARE - Schedule of Potentially Dilutive Securities Excluded from the Calculation of Diluted Earnings Per Share (Details) - shares | 9 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 9,142,068 | 14,370,588 |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 4,037,721 | 5,964,043 |
Restricted stock units | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 5,104,347 | 3,935,229 |
Redeemable convertible preferred stock | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 4,471,316 |
Investments - Debt Securities,
Investments - Debt Securities, Available-for-sale (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Schedule of Held-to-maturity Securities [Line Items] | |
Amortized Cost | $ 67,699 |
Unrealized Gain/(Loss) | (21) |
Aggregate Fair Value | 67,678 |
Money market funds | |
Schedule of Held-to-maturity Securities [Line Items] | |
Amortized Cost | 43,334 |
Aggregate Fair Value | 43,334 |
Commercial paper | |
Schedule of Held-to-maturity Securities [Line Items] | |
Amortized Cost | 2,444 |
Unrealized Gain/(Loss) | (1) |
Aggregate Fair Value | 2,443 |
Corporate bonds | |
Schedule of Held-to-maturity Securities [Line Items] | |
Amortized Cost | 2,483 |
Unrealized Gain/(Loss) | (8) |
Aggregate Fair Value | 2,475 |
U.S. government agency securities | |
Schedule of Held-to-maturity Securities [Line Items] | |
Amortized Cost | 14,940 |
Unrealized Gain/(Loss) | (12) |
Aggregate Fair Value | 14,928 |
U.S. treasury securities | |
Schedule of Held-to-maturity Securities [Line Items] | |
Amortized Cost | 4,498 |
Aggregate Fair Value | $ 4,498 |
Investments - Debt Securities_2
Investments - Debt Securities, Held-to-maturity, Nonacrrual (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Investments, Debt and Equity Securities [Abstract] | |
Less than one year | $ 65,695 |
1-2 years | 1,983 |
Total | $ 67,678 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Millions | Sep. 30, 2022 | Dec. 31, 2021 |
Reported Value Measurement | ||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||
Carrying value of term loan and vendor financing agreements | $ 1.9 | $ 1.1 |
FAIR VALUE MEASUREMENTS - Sched
FAIR VALUE MEASUREMENTS - Schedule of Derivative Assets at Fair Value (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | |
Cash equivalents: | $ 61,295 |
Short-term investments: | 4,400 |
Long-term investments: | 1,983 |
Total financial assets | 67,678 |
Level 1 | |
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | |
Cash equivalents: | 43,334 |
Short-term investments: | 0 |
Long-term investments: | 0 |
Total financial assets | 43,334 |
Level 2 | |
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | |
Cash equivalents: | 17,961 |
Short-term investments: | 4,400 |
Long-term investments: | 1,983 |
Total financial assets | 24,344 |
Level 3 | |
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | |
Cash equivalents: | 0 |
Short-term investments: | 0 |
Long-term investments: | 0 |
Total financial assets | 0 |
Money market funds | |
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | |
Cash equivalents: | 43,334 |
Money market funds | Level 1 | |
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | |
Cash equivalents: | 43,334 |
Money market funds | Level 2 | |
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | |
Cash equivalents: | 0 |
Money market funds | Level 3 | |
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | |
Cash equivalents: | 0 |
Commercial paper | |
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | |
Cash equivalents: | 2,000 |
Short-term investments: | 443 |
Commercial paper | Level 1 | |
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | |
Cash equivalents: | 0 |
Short-term investments: | 0 |
Commercial paper | Level 2 | |
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | |
Cash equivalents: | 2,000 |
Short-term investments: | 443 |
Commercial paper | Level 3 | |
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | |
Cash equivalents: | 0 |
Short-term investments: | 0 |
U.S. government agency securities | |
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | |
Cash equivalents: | 11,463 |
Short-term investments: | 1,971 |
Long-term investments: | 1,494 |
U.S. government agency securities | Level 1 | |
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | |
Cash equivalents: | 0 |
Short-term investments: | 0 |
Long-term investments: | 0 |
U.S. government agency securities | Level 2 | |
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | |
Cash equivalents: | 11,463 |
Short-term investments: | 1,971 |
Long-term investments: | 1,494 |
U.S. government agency securities | Level 3 | |
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | |
Cash equivalents: | 0 |
Short-term investments: | 0 |
Long-term investments: | 0 |
U.S. treasury securities | |
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | |
Cash equivalents: | 4,498 |
U.S. treasury securities | Level 1 | |
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | |
Cash equivalents: | 0 |
U.S. treasury securities | Level 2 | |
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | |
Cash equivalents: | 4,498 |
U.S. treasury securities | Level 3 | |
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | |
Cash equivalents: | 0 |
Corporate bonds | |
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | |
Short-term investments: | 1,986 |
Long-term investments: | 489 |
Corporate bonds | Level 1 | |
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | |
Short-term investments: | 0 |
Long-term investments: | 0 |
Corporate bonds | Level 2 | |
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | |
Short-term investments: | 1,986 |
Long-term investments: | 489 |
Corporate bonds | Level 3 | |
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | |
Short-term investments: | 0 |
Long-term investments: | $ 0 |
INTANGIBLE ASSETS AND GOODWIL_2
INTANGIBLE ASSETS AND GOODWILL - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 3,450 | $ 3,476 |
Finite-lived intangible assets, accumulated amortization | (875) | (517) |
Total future amortization expense | 1,925 | |
Intangible assets, net | 2,575 | 2,959 |
IPR&D | ||
Finite-Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets, gross | 500 | 500 |
Finite-lived intangible assets, accumulated amortization | 0 | 0 |
Trade name and other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets, gross | 150 | 176 |
Finite-lived intangible assets, accumulated amortization | 0 | 0 |
Developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | 1,700 | 1,700 |
Finite-lived intangible assets, accumulated amortization | (623) | (368) |
Total future amortization expense | 1,077 | 1,332 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | 1,100 | 1,100 |
Finite-lived intangible assets, accumulated amortization | (252) | (149) |
Total future amortization expense | $ 848 | $ 951 |
INTANGIBLE ASSETS AND GOODWIL_3
INTANGIBLE ASSETS AND GOODWILL - Narrative (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||||
Amortization expense | $ 100,000 | $ 100,000 | $ 400,000 | $ 400,000 | |
Goodwill | 2,677,000 | 2,677,000 | $ 2,677,000 | ||
Goodwill impairments | $ 0 | $ 0 | $ 0 | $ 0 |
INTANGIBLE ASSETS AND GOODWIL_4
INTANGIBLE ASSETS AND GOODWILL - Schedule of Future Amortization Expense (Details) $ in Thousands | Sep. 30, 2022 USD ($) |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
Remainder of 2022 | $ 120 |
2023 | 478 |
2024 | 478 |
2025 | 449 |
2026 | 138 |
Thereafter | 262 |
Total future amortization expense | $ 1,925 |
LEASES - Operating Lease Costs
LEASES - Operating Lease Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Leases [Abstract] | ||||
Operating lease cost | $ 263 | $ 333 | $ 802 | $ 807 |
Short-term lease cost | 38 | 25 | 263 | 77 |
Total lease cost | $ 301 | $ 358 | $ 1,065 | $ 884 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) | Sep. 30, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
Weighted average remaining lease term, operating lease | 3 years 2 months 12 days | 3 years 7 months 6 days |
Weighted average discount rate, operating lease | 7.50% | 7.50% |
LEASES - Maturities of Operatin
LEASES - Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands | Sep. 30, 2022 | Dec. 31, 2021 |
Leases [Abstract] | ||
Remainder of 2022 | $ 296 | |
2023 | 990 | |
2024 | 449 | |
2025 | 278 | |
2026 | 212 | |
Thereafter | 212 | |
Total undiscounted cash flows | 2,437 | |
Less: imputed interest | (270) | |
Present value of lease liabilities | 2,167 | |
Operating lease liabilities, current | 1,033 | $ 961 |
Operating lease liabilities, non-current | $ 1,134 | $ 1,851 |
BORROWINGS - Narrative (Details
BORROWINGS - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Debt Instrument [Line Items] | ||||
Interest expense | $ 0.1 | $ 0.1 | $ 0.1 | $ 0.1 |
Vendor Financing Arrangements | ||||
Debt Instrument [Line Items] | ||||
Interest rate, effective percentage | 7.50% | 7.50% |
BORROWINGS - Schedule of Vendor
BORROWINGS - Schedule of Vendor Financing Arrangements (Details) - Vendor Financing Arrangements $ in Thousands | Sep. 30, 2022 USD ($) |
Debt Instrument [Line Items] | |
Remainder of 2022 | $ 402 |
2023 | 1,100 |
2024 | 556 |
Total undiscounted cash flows | 2,058 |
Less: imputed interest | (123) |
Present value of vendor financing arrangements | 1,935 |
Vendor financing arrangements, current | 1,502 |
Vendor financing arrangements, noncurrent | $ 433 |
REDEEMABLE CONVERTIBLE PREFER_2
REDEEMABLE CONVERTIBLE PREFERRED STOCK, PREFERRED STOCK AND COMMON STOCK (Details) $ / shares in Units, $ in Thousands | Sep. 30, 2022 USD ($) vote $ / shares shares | Jun. 30, 2022 USD ($) | Dec. 31, 2021 USD ($) $ / shares shares | Oct. 31, 2021 USD ($) shares | Sep. 30, 2021 USD ($) | Jun. 30, 2021 USD ($) | Dec. 31, 2020 USD ($) |
Temporary Equity [Line Items] | |||||||
Temporary equity, carrying value | $ | $ 0 | $ 0 | $ 0 | $ 5,700 | $ 5,712 | $ 5,712 | $ 5,712 |
Redeemable convertible preferred stock, issued (in shares) | 0 | 0 | |||||
Preferred stock, authorized (in shares) | 10,000,000 | 10,000,000 | 10,000,000 | ||||
Preferred stock, par or stated value per share (in dollars per share) | $ / shares | $ 0.001 | $ 0.001 | |||||
Number of votes per common share | vote | 1 | ||||||
Common stock, authorized (in shares) | 300,000,000 | 300,000,000 | |||||
IPO | |||||||
Temporary Equity [Line Items] | |||||||
Common shares issued upon conversion (in shares) | 4,471,316 |
STOCK-BASED COMPENSATION - Narr
STOCK-BASED COMPENSATION - Narrative (Details) - USD ($) $ in Millions | 9 Months Ended | 12 Months Ended | |
Sep. 30, 2022 | Sep. 30, 2021 | Dec. 31, 2021 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Exercises in period, intrinsic value | $ 9.8 | $ 1.2 | |
Aggregate intrinsic value, vested | 0.3 | $ 0.3 | |
Option, cost not yet recognized | $ 0.5 | ||
Nonvested award, unrecognized, period for recognition | 2 years | ||
Granted (in shares) | 0 | 0 | |
2016 Stock Plan | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Number of shares authorized for award (in shares) | 20,803,838 | ||
Non-option equity instruments, granted (in shares) | 14,142,208 | ||
Shares available for future grant (in shares) | 0 | ||
Restricted stock units | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Nonvested award, unrecognized, period for recognition | 3 years 2 months 12 days | ||
Grants in period, vested, grant date fair value | $ 6.3 | $ 0.1 | |
Nonvested award, excluding options, unrecognized | $ 34 |
STOCK-BASED COMPENSATION - Shar
STOCK-BASED COMPENSATION - Shares Available for Future Grant (Details) | Sep. 30, 2022 shares |
2021 Stock Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares available for future grant (in shares) | 3,469,764 |
2021 Employee Stock Purchase Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares available for future grant (in shares) | 922,306 |
STOCK-BASED COMPENSATION - Summ
STOCK-BASED COMPENSATION - Summary of Stock Options Activity (Details) $ / shares in Units, $ in Thousands | 9 Months Ended | 12 Months Ended |
Sep. 30, 2022 USD ($) $ / shares shares | Dec. 31, 2021 USD ($) $ / shares shares | |
Number of Options | ||
Balance at beginning of period (in shares) | shares | 5,407,170 | |
Exercised (in shares) | shares | (1,022,050) | |
Canceled (in shares) | shares | (347,399) | |
Balance at end of period (in shares) | shares | 4,037,721 | 5,407,170 |
Number of shares, options vested and exercisable (in shares) | shares | 3,011,042 | |
Weighted-Average Exercise Price | ||
Balance at beginning of period (in dollars per share) | $ / shares | $ 0.96 | |
Exercised (in dollars per share) | $ / shares | 0.60 | |
Canceled (in dollars per share) | $ / shares | 1.19 | |
Balance at end of period (in dollars per share) | $ / shares | 1.03 | $ 0.96 |
Weighted-average exercise price, options vested and exercisable (in dollars per share) | $ / shares | $ 0.90 | |
Stock Options Additional Disclosures | ||
Weighted-average remaining contractual term | 6 years 5 months 26 days | 7 years 1 month 28 days |
Weighted-average remaining contractual term, options vested and exercisable | 6 years 1 month 2 days | |
Aggregate intrinsic value, balance | $ | $ 22,738 | $ 108,964 |
Aggregate intrinsic value, options vested and exercisable | $ | $ 17,354 |
STOCK-BASED COMPENSATION - Su_2
STOCK-BASED COMPENSATION - Summary of Restricted Stock Units Activity (Details) - Restricted stock units | 9 Months Ended |
Sep. 30, 2022 $ / shares shares | |
Number of Shares | |
Unvested, balance at beginning of period (in shares) | shares | 3,925,097 |
Granted (in shares) | shares | 2,440,603 |
Vested (in shares) | shares | (1,008,620) |
Forfeited (in shares) | shares | (252,733) |
Unvested, balance at end of period (in shares) | shares | 5,104,347 |
Weighted-Average Grant Date Fair Value | |
Unvested, balance at beginning of period (in dollars per share) | $ / shares | $ 5.60 |
Granted (in dollars per share) | $ / shares | 11.76 |
Vested (in dollars per share) | $ / shares | 6.22 |
Forfeited (in dollars per share) | $ / shares | 12.07 |
Unvested, balance at end of period (in dollars per share) | $ / shares | $ 8.11 |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock-Based Compensation Related to Stock-Based Awards to Employees (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation | $ 3,389 | $ 433 | $ 9,082 | $ 1,144 |
Cost of revenue | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation | 118 | 15 | 474 | 42 |
Research and development | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation | 1,798 | 225 | 4,435 | 645 |
Sales and marketing | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation | 679 | 23 | 1,678 | 72 |
General and administrative | ||||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||||
Total stock-based compensation | $ 794 | $ 170 | $ 2,495 | $ 385 |
EQUITY METHOD INVESTMENT (Detai
EQUITY METHOD INVESTMENT (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2022 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 16, 2022 | Sep. 02, 2022 | Dec. 31, 2021 | |
Subsidiary or Equity Method Investee [Line Items] | ||||||
Equity method investment | $ 12,181 | $ 12,181 | $ 0 | |||
Income from equity investment | (100) | (100) | ||||
Gain on deconsolidation of subsidiary (Note 13) | 149 | $ 0 | ||||
Loans and leases receivable, related parties | $ 300 | $ 300 | ||||
Loan annual interest rate | 4% | 4% | ||||
Proceeds from collection of short-term loans to related parties | $ 300 | |||||
TransChip Technology | ||||||
Subsidiary or Equity Method Investee [Line Items] | ||||||
Equity method investment | $ 12,200 | $ 12,200 | ||||
Arteris IP (Hong Kong) Ltd. | TransChip Technology | ||||||
Subsidiary or Equity Method Investee [Line Items] | ||||||
Percentage of voting interests acquired | 40.30% | 40.30% | 35% | |||
The Investors | The Investors | ||||||
Subsidiary or Equity Method Investee [Line Items] | ||||||
Equity method investment | $ 11,600 | $ 11,600 | ||||
The Investors | Arteris IP (Hong Kong) Ltd. | ||||||
Subsidiary or Equity Method Investee [Line Items] | ||||||
Share purchase agreement, registered capital | 29,400 | |||||
Amount of shares subscribed | 11,900 | $ 11,900 | ||||
Share purchase agreement, agreement term | 5 years | |||||
Share purchase agreement, deferred income, recognition period | 10 years | |||||
TransChip Technology | ||||||
Subsidiary or Equity Method Investee [Line Items] | ||||||
Equity investment investments, transaction value | $ 11,600 | $ 11,600 | ||||
Equity method investment, transaction costs | $ 300 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | |
Income Tax Disclosure [Abstract] | ||||
Effective income tax rate | (3.90%) | (4.10%) | ||
Income tax provision | $ 248,000 | $ 268,000 | $ 722,000 | $ 612,000 |
Unrecognized tax benefits | 3,100,000 | 2,500,000 | 3,100,000 | 2,500,000 |
Income tax penalties and interest accrued related to unrecognized tax benefits | $ 0 | $ 0 | $ 0 | $ 0 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2022 | Sep. 30, 2021 | Sep. 30, 2022 | Sep. 30, 2021 | Sep. 02, 2022 | |
Related Party Transaction [Line Items] | |||||
Granted (in shares) | 0 | 0 | |||
Proceeds from collection of short-term loans to related parties | $ 300,000 | ||||
Restricted stock units | |||||
Related Party Transaction [Line Items] | |||||
Granted (in shares) | 2,440,603 | ||||
Affiliated Entity | |||||
Related Party Transaction [Line Items] | |||||
Lease payment due to related party | $ 100,000 | $ 100,000 | |||
Affiliated Entity | Isabelle Geday | Consulting Agreement | |||||
Related Party Transaction [Line Items] | |||||
Related party transaction, agreement term | 3 years | ||||
Payment for consulting service | 100,000 | $ 200,000 | |||
Affiliated Entity | Isabelle Geday | Consulting Agreement | Related Party Transaction, Tranche One | |||||
Related Party Transaction [Line Items] | |||||
Related party transaction, agreement term | 12 months | ||||
Due to related parties, monthly amount | 26,445 | $ 26,445 | |||
Affiliated Entity | Isabelle Geday | Consulting Agreement | Related Party Transaction, Tranche Two | |||||
Related Party Transaction [Line Items] | |||||
Related party transaction, agreement term | 24 months | ||||
Due to related parties, monthly amount | $ 19,445 | $ 19,445 | |||
Affiliated Entity | Isabelle Geday | Prior Employment Agreement | |||||
Related Party Transaction [Line Items] | |||||
Granted (in shares) | 455,000 | ||||
Affiliated Entity | Isabelle Geday | Prior Employment Agreement | Restricted stock units | |||||
Related Party Transaction [Line Items] | |||||
Lease payment due to related party | $ 100,000 | $ 200,000 | |||
Granted (in shares) | 62,200 |