Cover
Cover - shares | 3 Months Ended | |
Mar. 31, 2023 | Apr. 27, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Mar. 31, 2023 | |
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, $0.001 par value | |
Trading Symbol | AIP | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Emerging Growth Company | true | |
Entity Ex Transition Period | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 35,368,825 | |
Entity Central Index Key | 0001667011 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Current assets: | ||
Cash and cash equivalents | $ 28,505 | $ 37,423 |
Short-term investments | 32,426 | 30,728 |
Accounts receivable, net of allowance of $310 and $250 | 9,750 | 7,143 |
Prepaid expenses and other current assets | 5,096 | 5,818 |
Total current assets | 75,777 | 81,112 |
Property and equipment, net | 3,313 | 3,617 |
Long-term investments | 2,458 | 4,427 |
Equity method investment | 11,063 | 11,897 |
Operating lease right-of-use assets | 1,932 | 1,883 |
Intangibles, net | 4,383 | 4,575 |
Goodwill | 4,218 | 4,218 |
Other assets | 4,149 | 3,787 |
TOTAL ASSETS | 107,293 | 115,516 |
Current liabilities: | ||
Accounts payable | 1,215 | 572 |
Accrued expenses and other current liabilities | 9,992 | 12,095 |
Operating lease liabilities, current | 780 | 899 |
Deferred revenue, current | 27,794 | 28,839 |
Vendor financing arrangements, current | 1,161 | 1,264 |
Total current liabilities | 40,942 | 43,669 |
Deferred revenue, noncurrent | 22,270 | 21,840 |
Operating lease liabilities, noncurrent | 1,205 | 1,009 |
Vendor financing arrangements, noncurrent | 256 | 448 |
Deferred income, noncurrent | 9,699 | 9,993 |
Other liabilities | 1,153 | 1,022 |
Total liabilities | 75,525 | 77,981 |
Commitments and contingencies (Note 11) | ||
Stockholders' equity: | ||
Preferred Stock, Value, Issued | 0 | 0 |
Common stock, par value of $0.001 - 300,000,000 shares authorized as of March 31, 2023 and December 31, 2022; 35,298,223 and 34,625,875 shares issued and outstanding as of March 31, 2023 and December 31, 2022, respectively | 35 | 34 |
Additional paid-in capital | 107,009 | 103,778 |
Accumulated other comprehensive income | 112 | 101 |
Accumulated deficit | (75,388) | (66,378) |
Total stockholders' equity | 31,768 | 37,535 |
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY | $ 107,293 | $ 115,516 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Stockholders' equity: | ||
Accounts receivable, allowance | $ 310 | $ 250 |
Redeemable convertible preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Redeemable convertible preferred stock, authorized (in shares) | 10,000,000 | 10,000,000 |
Redeemable convertible preferred stock, issued (in shares) | 0 | 0 |
Redeemable convertible preferred stock, outstanding (in shares) | 0 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, authorized (in shares) | 300,000,000 | 300,000,000 |
Common stock, issued (in shares) | 35,298,223 | 34,625,875 |
Common stock, outstanding (in shares) | 35,298,223 | 34,625,875 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Loss - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Revenue | ||
Total revenue | $ 13,154 | $ 11,755 |
Cost of revenue | 1,124 | 979 |
Gross profit | 12,030 | 10,776 |
Operating expenses: | ||
Research and development | 11,381 | 9,456 |
Sales and marketing | 5,005 | 3,921 |
General and administrative | 4,401 | 4,015 |
Total operating expenses | 20,787 | 17,392 |
Loss from operations | (8,757) | (6,616) |
Interest expense | (32) | (20) |
Interest and other income (expense), net | 908 | (61) |
Loss before provision for income taxes and loss from equity method investment | (7,881) | (6,697) |
Loss from equity method investment, net of tax | (834) | 0 |
Provision for income taxes | 295 | 123 |
Net loss | $ (9,010) | $ (6,820) |
Net loss per share attributable to common stockholders | ||
Net loss per share attributable to common stockholders, basic (in dollars per share) | $ (0.26) | $ (0.22) |
Net loss per share attributable to common stockholders, diluted (in dollars per share) | $ (0.26) | $ (0.22) |
Weighted average shares used in computing per share amounts | ||
Weighted average shares used in computing per share amounts, basic (in shares) | 34,597,839 | 31,619,706 |
Weighted average shares used in computing per share amounts, basic (in shares) | 34,597,839 | 31,619,706 |
Licensing, support and maintenance | ||
Revenue | ||
Total revenue | $ 11,844 | $ 10,575 |
Variable royalties and other | ||
Revenue | ||
Total revenue | $ 1,310 | $ 1,180 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Statement of Comprehensive Income [Abstract] | ||
Net loss | $ (9,010) | $ (6,820) |
Other comprehensive income: | ||
Unrealized gains on available-for-sale securities, net of tax | 11 | 0 |
Comprehensive loss | $ (8,999) | $ (6,820) |
Condensed Consolidated Statem_3
Condensed Consolidated Statements of Stockholders' Equity - 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, 2021 | 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) | 125,010 | ||||
Issuance of common stock for cash upon exercise of stock options | 90 | 90 | |||
Issuance of common stock for settlement of restricted stock units (in shares) | 266,693 | ||||
Tax withholding on RSUs settlement (in shares) | (63,965) | ||||
Tax withholding on RSUs settlement | (824) | (824) | |||
Stock-based compensation expense | 2,309 | 2,309 | |||
Unrealized gains on available-for-sale securities, net of tax | 0 | ||||
Net loss | (6,820) | (6,820) | |||
Balance at end of period (in shares) at Mar. 31, 2022 | 31,858,420 | ||||
Balance at end of period at Mar. 31, 2022 | $ 47,659 | $ 31 | 93,520 | (81) | (45,811) |
Balance at beginning of period (in shares) at Dec. 31, 2022 | 34,625,875 | 34,625,875 | |||
Balance at beginning of period at Dec. 31, 2022 | $ 37,535 | $ 34 | 103,778 | 101 | (66,378) |
Stockholders’ Equity | |||||
Issuance of common stock for cash upon exercise of stock options (in shares) | 397,697 | 397,697 | |||
Issuance of common stock for cash upon exercise of stock options | $ 261 | $ 1 | 260 | ||
Issuance of common stock for settlement of restricted stock units (in shares) | 277,149 | ||||
Tax withholding on RSUs settlement (in shares) | (2,498) | ||||
Tax withholding on RSUs settlement | (14) | (14) | |||
Stock-based compensation expense | 2,985 | 2,985 | |||
Unrealized gains on available-for-sale securities, net of tax | 11 | 11 | |||
Net loss | $ (9,010) | (9,010) | |||
Balance at end of period (in shares) at Mar. 31, 2023 | 35,298,223 | 35,298,223 | |||
Balance at end of period at Mar. 31, 2023 | $ 31,768 | $ 35 | $ 107,009 | $ 112 | $ (75,388) |
Condensed Consolidated Statem_4
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (9,010) | $ (6,820) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Depreciation and amortization | 601 | 401 |
Stock-based compensation | 2,985 | 2,309 |
Operating non-cash lease expense | 27 | 25 |
Amortization of deferred income | (291) | 0 |
Loss from equity method investment | 834 | 0 |
Net accretion of discounts on available-for-sale securities | (259) | 0 |
Changes in operating assets and liabilities: | ||
Accounts receivable, net | (2,607) | 5,674 |
Prepaid expenses and other assets | 364 | (1,447) |
Accounts payable | 555 | (434) |
Accrued expenses and other liabilities | (974) | (1,370) |
Deferred revenue | (614) | 301 |
Net cash used in operating activities | (8,389) | (1,361) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property and equipment | (120) | (92) |
Purchases of available-for-sale securities | (4,909) | 0 |
Proceeds from maturities of available-for-sale securities | 5,450 | 0 |
Payments of deferred transaction costs relating to investment in Transchip | 0 | (191) |
Net cash provided by (used in) investing activities | 421 | (283) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Payments of contingent consideration for business combination | (1,000) | (1,573) |
Principal payments under vendor financing arrangements | (192) | (205) |
Proceeds from exercise of stock options | 256 | 90 |
Payments to tax authorities for shares withheld from employees | (14) | 0 |
Payments of deferred offering costs | 0 | (257) |
Net cash used in financing activities | (950) | (1,945) |
NET DECREASE IN CASH AND CASH EQUIVALENTS | (8,918) | (3,589) |
CASH AND CASH EQUIVALENTS, beginning of period | 37,423 | 85,825 |
CASH AND CASH EQUIVALENTS, end of period | 28,505 | 82,236 |
Noncash investing and financing activities: | ||
Operating lease right-of-use assets, exchanged for lease obligations | 297 | 0 |
Purchase of property and equipment through vendor financing | 0 | 33 |
Unpaid deferred transaction costs relating to investment in Transchip | $ 0 | $ 73 |
DESCRIPTION OF BUSINESS
DESCRIPTION OF BUSINESS | 3 Months Ended |
Mar. 31, 2023 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF BUSINESS | DESCRIPTION OF BUSINESSArteris, Inc. was incorporated in Delaware on April 12, 2004. Arteris, Inc. and its subsidiaries (collectively, the Company or Arteris) develop, license, and support 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. |
BASIS OF PRESENTATION AND SUMMA
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2023 | |
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, 2022 and the related notes included in the Company’s Form 10-K filed on February 28, 2023 (2022 Form 10-K) with the U.S. Securities and Exchange Commission (SEC). The December 31, 2022 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 unaudited condensed consolidated financial statements. The operating results for the three months ended March 31, 2023 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 unaudited condensed consolidated financial statements include the accounts of Arteris, Inc. and its wholly-owned subsidiaries. All intercompany transactions and accounts have been eliminated. Use of Estimates The preparation of the unaudited 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 unaudited condensed consolidated financial statements. 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 that the Company believes are creditworthy. Cash held at these financial institutions generally exceed federally insured limits. The Company is exposed to credit risk in the event of default by the financial institution holding its cash, cash equivalents, and investments to the extent recorded in the balance sheet. The Company has not experienced any losses to date related to these concentrations. 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 March 31, December 31, Customer A 15 % — % Customer B 11 % — % Customer C — % 32 % Revenue from the Company’s major customers representing 10% or more of total revenue was as follows: Three Months Ended 2023 2022 Customer D 11 % 20 % Customer C 10 % 17 % Significant Accounting Policies There have been no significant changes to the Company’s significant accounting policies during the three months ended March 31, 2023 from those disclosed in the annual consolidated financial statements for the year ended December 31, 2022. Recent Accounting Pronouncements Recently Adopted 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 (co llectively 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 adoption of the new guidance did not have a material impact on the Company’s consolidated financial statements and related disclosures. In September 2022, the FASB issued ASU 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations , which requires a buyer in a supplier finance program to disclose sufficient information about the program to allow a user of financial statements to understand the program's nature, activity during the period, changes from period to period, and potential magnitude. To achieve that objective, the buyer should disclose qualitative and quantitative information about its supplier finance programs. The amendments in this update do not affect the recognition, measurement, or financial statement presentation of obligations covered by supplier finance program. The guidance is effective for fiscal years beginning after December 15, 2022, except for the amendment on rollforward information which is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company considered key terms of the current vendor financing arrangements and concluded that the current vendor financing arrangements did not have any of the characteristics which would require additional disclosures. As a result, the adoption of the new guidance did not have an impact on the Company’s consolidated financial statements and related disclosures. See Note 10 for disclosures on the Company’s vendor financing arrangements. |
REVENUE
REVENUE | 3 Months Ended |
Mar. 31, 2023 | |
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 2023 2022 Licensing, support and maintenance $ 11,844 $ 10,575 Variable royalties 1,290 984 Other 20 196 Total $ 13,154 $ 11,755 Contract Balances The following table provides information about accounts receivable, net, contract assets and deferred revenue (in thousands): As of March 31, December 31, Accounts receivable, net $ 9,750 $ 7,143 Contract assets $ 1,014 $ 1,180 Deferred revenue $ 50,064 $ 50,679 The Company recognized revenue of $8.6 million and $7.4 million for the three months ended March 31, 2023 and 2022, respectively, that was included in the deferred revenue balance at the beginning of the respective periods. Contract assets are included in prepaid expenses and other current assets and other assets on the condensed consolidated balance sheets. As of March 31, 2023, non-cancelable contracted but unsatisfied or partially satisfied performance obligations that have not yet been recognized, which includes deferred revenue and amounts that will be invoiced and recognized as revenues in future periods is $56.4 million, of which $29.7 million is expected to be recognized over the next 12 months and the remainder thereafter. The Company has elected to exclude the potential future royalty receipts from this amount. 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 March 31, December 31, Short-term commission capitalized in prepaid expenses and other current assets $ 2,646 $ 2,636 Long-term commission capitalized in other assets 1,506 1,535 Total $ 4,152 $ 4,171 Amortization of capitalized sales commissions was $0.9 million and $0.7 million for the three months ended March 31, 2023 and 2022, respectively and are included in sales and marketing expense in the condensed consolidated statements of loss. |
NET LOSS PER SHARE
NET LOSS PER SHARE | 3 Months Ended |
Mar. 31, 2023 | |
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 2023 2022 Numerator: Net loss $ (9,010) $ (6,820) Denominator: Weighted-average shares outstanding - basic and diluted 34,597,839 31,619,706 Net loss per share, basic and diluted $ (0.26) $ (0.22) 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 anti-dilutive: As of March 31, 2023 March 31, 2022 Stock options 3,075,452 5,117,627 Restricted stock units 6,143,289 3,943,138 Restricted common shares issued for business combination (see Note 12) 331,574 — Total 9,550,315 9,060,765 |
Investments
Investments | 3 Months Ended |
Mar. 31, 2023 | |
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 (in thousands): As of March 31, 2023 Amortized Cost Unrealized Gains/(Losses) Aggregate Fair Value Assets: Money market funds $ 25,181 $ — $ 25,181 Commercial paper 3,163 (2) 3,161 Corporate bonds 4,735 (9) 4,726 U.S. government agency securities 18,094 (32) 18,062 U.S. treasury securities 8,934 1 8,935 Total financial assets $ 60,107 $ (42) $ 60,065 As of December 31, 2022 Amortized Cost Unrealized Losses Aggregate Fair Value Assets: Money market funds $ 30,428 $ — $ 30,428 Commercial paper 2,604 (1) 2,603 Corporate bonds 5,717 (10) 5,707 U.S. government agency securities 18,508 (40) 18,468 U.S. treasury securities 8,379 (2) 8,377 Total financial assets $ 65,636 $ (53) $ 65,583 The maturity dates of the Company’s investments are as follows (in thousands): March 31, 2023 Less than one year $ 57,607 1-2 years 2,458 Total $ 60,065 December 31, 2022 Less than one year $ 61,156 1-2 years 4,427 Total $ 65,583 All unrealized losses on available-for-sale securities have been in such position for less than one year as of March 31, 2023 and December 31, 2022. There were no credit losses of available-for-sale securities during the three months ended March 31, 2023. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2023 | |
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 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 was $1.4 million and $1.7 million as of March 31, 2023 and December 31, 2022, 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 the Company’s incremental borrowing rate. 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 March 31, 2023 Level 1 Level 2 Level 3 Fair Value Assets: Cash equivalents: Money market funds $ 25,181 $ — $ — $ 25,181 Total cash equivalents 25,181 — — 25,181 Short-term investments: Commercial paper — 3,161 — 3,161 Corporate bonds — 3,971 — 3,971 U.S. government agency securities — 16,359 — 16,359 U.S. treasury securities — 8,935 — 8,935 Total short-term investments — 32,426 — 32,426 Long-term investments: Corporate bonds — 755 — 755 U.S. government agency securities — 1,703 — 1,703 Total long-term investments — 2,458 — 2,458 Total financial assets $ 25,181 $ 34,884 $ — $ 60,065 As of December 31, 2022 Level 1 Level 2 Level 3 Fair Value Assets: Cash equivalents: Money market funds $ 30,428 $ — $ — $ 30,428 Total cash equivalents 30,428 — — 30,428 Short-term investments: Commercial paper — 2,603 — 2,603 Corporate bonds — 3,971 — 3,971 U.S. government agency securities — 15,777 — 15,777 U.S. treasury securities — 8,377 — 8,377 Total short-term investments — 30,728 — 30,728 Long-term investments: Corporate bonds — 1,736 — 1,736 U.S. government agency securities — 2,691 — 2,691 Total long-term investments — 4,427 — 4,427 Total financial assets $ 30,428 $ 35,155 $ — $ 65,583 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 months ended March 31, 2023. |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL | 3 Months Ended |
Mar. 31, 2023 | |
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 March 31, 2023 (in thousands): Gross Fair Value Accumulated Amortization Net Book Value Developed technology $ 3,090 $ (843) $ 2,247 Customer relationships 1,830 (344) 1,486 IPR&D 500 — 500 Trade name and other 150 — 150 Total intangibles $ 5,570 $ (1,187) $ 4,383 Intangible assets, net consisted of the following as of December 31, 2022 (in thousands): Gross Fair Value Accumulated Amortization Net Book Value Developed technology $ 3,090 $ (708) $ 2,382 Customer relationships 1,830 (287) 1,543 IPR&D 500 — 500 Trade name and other 150 — 150 Total intangibles $ 5,570 $ (995) $ 4,575 Amortization expense of intangible assets was $0.2 million and $0.1 million for the three months ended March 31, 2023 and 2022, respectively. The expected future amortization expense of these intangible assets as of March 31, 2023 is as follows (in thousands) : Fiscal year ending December 31, Remainder of 2023 $ 575 2024 767 2025 739 2026 427 2027 427 Thereafter 798 Total future amortization expense $ 3,733 Goodwill As of March 31, 2023 and December 31, 2022, goodwill was $4.2 million. No goodwill impairments were recorded during the three months ended March 31, 2023 and 2022. |
ACQUISITION
ACQUISITION | 3 Months Ended |
Mar. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
ACQUISITION | ACQUISITION Semifore Acquisition On December 27, 2022, the Company acquired 100% of the issued and outstanding equity securities (the Acquisition) of Semifore, Inc. (Semifore), provider of hardware software interface (HSI) technology. Semifore technologies are used to effectively design, verify, document, and help in the validation of the hardware-software integration that is used in the SoC complex chip market. The addition of Semifore technologies and team expertise augments Arteris System IP and IP deployment automation to further enhance software control of the IP and SoC hardware. The Acquisition closed on December 27, 2022 and has been accounted for in accordance with the acquisition method of accounting for business combinations with the Company as the accounting acquirer. The consideration transferred for the acquisition was $3.1 million. The Company recorded $1.4 million for developed technology intangible assets with an estimated useful life of seven years and $0.7 million for customer relationships intangible assets with an estimated useful life of eight In connection with the acquisition, key employees and former owners of Semifore were issued a total of 663,143 shares of the Company’s common stock and obtained the right to additional cash payment totaling $1.8 million. Out of the 663,143 shares issued, 331,569 shares of common stock vested as of the closing date and the remaining 331,574 shares and $1.8 million cash payment will vest on the first and third anniversary of the closing date if certain key employees continue to be employed by the Company. These contingent cash payments and equity awards have been accounted for separately from the business combination and will be recognized by the Company as compensation costs in the subsequent periods as related services are provided. The Company recognized $0.3 million as compensation expense during the three months ended March 31, 2023. Under the acquisition method of accounting, the purchase price is allocated to identifiable assets acquired and liabilities assumed based on their fair values on the acquisition date. The following table provides the estimated fair values of the identifiable assets acquired and liabilities assumed as of the acquisition date (in thousands): FAIR VALUE Cash $ 267 Accounts receivable 372 Prepaid expenses and other current assets 63 Contract assets 15 Intangibles 2,120 Accounts payable (139) Deferred revenue (672) Deferred tax liability (484) Total identifiable net assets 1,542 Goodwill 1,541 Total purchase price $ 3,083 Goodwill generated from this business combination is attributed to synergies between the Company’s and Semifore’s respective products and services and is housed within the Company’s single operating segment. The Company does not have any tax basis in the total goodwill of $1.5 million and the goodwill is non-deductible for income tax purposes. The Company incurred $0.5 million acquisition-related expenses, which were recorded as general and administrative expenses in the consolidated statements of income (loss) for the year ended December 31, 2022. The Acquisition did not have a material impact on the Company’s condensed consolidated financial statements; therefore, historical and proforma disclosures have not been presented. |
LEASES
LEASES | 3 Months Ended |
Mar. 31, 2023 | |
Leases [Abstract] | |
LEASES | LEASES The Company leases its offices at various locations under noncancelable operating lease agreements expiring at various dates through 2032. 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 2023 2022 Operating lease cost $ 274 $ 273 Short-term lease cost 79 133 Total lease cost $ 353 $ 406 The weighted-average remaining term of the Company’s operating leases was 3.9 years and 3.1 years as of March 31, 2023 and December 31, 2022, respectively, and the weighted-average discount rate used to measure the present value of the operating lease liabilities was 10.0% and 7.5% as of March 31, 2023 and December 31, 2022, respectively. Cash payments made related to operating lease liabilities were $0.3 million for both the three months ended March 31, 2023 and 2022. Maturities of operating lease liabilities as of March 31, 2023 were as follows (in thousands): Fiscal year ending December 31, Remainder of 2023 $ 773 2024 501 2025 331 2026 265 2027 265 Thereafter 211 Total undiscounted cash flows $ 2,346 Less: imputed interest (361) Present value of lease liabilities $ 1,985 Operating lease liabilities, current $ 780 Operating lease liabilities, non-current 1,205 Total lease liabilities $ 1,985 |
BORROWINGS
BORROWINGS | 3 Months Ended |
Mar. 31, 2023 | |
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 10.0%, which is an estimate based on the Company’s collateralized borrowing rate. Vendor financing arrangements as of March 31, 2023 were as follows (in thousands): Fiscal year ending December 31, Amount Remainder of 2023 $ 936 2024 556 Total undiscounted cash flows $ 1,492 Less: Imputed interest (75) Present value of vendor financing arrangements $ 1,417 Vendor financing arrangements, current $ 1,161 Vendor financing arrangements, noncurrent 256 $ 1,417 Interest expense from vendor financing arrangements was less than $0.1 million for both the three months ended March 31, 2023 and 2022 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS 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 months ended March 31, 2023 and 2022 and the condensed consolidated financial statements do not include liabilities for any potential indemnity-related obligations as of March 31, 2023 and December 31, 2022 . Legal —The Company has been and will continue to be subject to legal proceedings and claims. In the normal course of business, the Company may receive inquiries or become involved in legal disputes regarding such litigation matters. Pursuant to ASC 450, Contingencies, the Company makes a provision for a liability relating to legal matters when it is both probable that a liability has been incurred, and the amount of the loss can be reasonably estimated. These provisions are reviewed at least quarterly and adjusted to reflect the impacts of negotiations, estimated settlements, legal rulings, advice of legal counsel and other information and events pertaining to a particular matter. In December 2022, the Company received notice of a complaint filed against the Company and two other defendants that are entities in the semiconductor industry by Network System Technologies, LLC in the United States District Court for the Western District of Texas, and two additional complaints were filed in the Eastern District of Texas against certain companies, including some customers of the Company, asserting among other things patent infringement relating to the Company’s technology and seeking damages and injunctive relief. The Company intends to vigorously defend itself in respect to these complaints and anticipates an increase in legal expenses to do so. Due to the inherent uncertainties and complex technical issues arising from such intellectual property litigation, the Company cannot predict or guarantee any result of such intellectual property litigation. As with any such litigation at its initial stages, the Company cannot comment on the possible final litigation results of ongoing litigation or the risk whether the Company may not prevail in such intellectual property litigation. In addition, such litigation may make it necessary to support or defend the Company or the Company’s customers relating to the claims in the litigation. Further, the ultimate outcome of the litigation, like any litigation, is uncertain and, regardless of outcome, litigation can have an adverse impact on the Company because of defense costs, potential negative publicity, diversion of management resources and other factors, which in turn may have a material adverse impact on the Company’s business, consolidated financial position, results of operations, or cash flows. As intellectual property claims are inherently unpredictable, the Company is currently evaluating whether such matters may have a material adverse effect on the Company’s financial position, results of operations, or cash flows. In addition, significant judgement is required in both the determination of probability and determination as to whether a loss is reasonably estimable. Future revisions to such estimates could materially impact the Company’s results. Accordingly, there can be no assurance that existing or any future legal proceedings for liability estimates arising in the ordinary course of business or otherwise will not have a material adverse effect on the Company’s business, consolidated financial position, results of operations or cash flows. |
STOCK-BASED COMPENSATION
STOCK-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2023 | |
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 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 (SARs), 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 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, SARs, restricted stock awards, RSUs, 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 or 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 March 31, 2023, there had been no offering period under the ESPP. 2022 Employment Inducement Incentive Plan The Company adopted the 2022 Employment Inducement Incentive Plan (the 2022 Inducement Plan) effective November 3, 2022, pursuant to which it reserved 2,000,000 shares of its common stock. The 2022 Inducement Plan provides for a variety of stock-based compensation awards, including stock options, SARs, restricted stock awards, restricted stock unit awards, performance bonus awards, performance stock unit awards, dividend equivalents, or other stock or cash based awards. Awards under the 2022 Inducement Plan can only be made to newly hired employees. Shares Available for Future Grant Shares available for future grant consisted of the following: As of March 31, Shares available for future grant under the 2021 Plan 4,581,516 Shares available for future grant under the 2021 ESPP 1,268,564 Shares available for future grant under the 2022 Inducement Plan 1,228,680 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 Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (Years) Aggregate Intrinsic Value ($'000s) BALANCE—December 31, 2022 3,542,836 $ 1.08 6.17 $ 11,416 Exercised (397,697) $ 0.66 Canceled (69,687) $ 1.67 BALANCE—March 31, 2023 3,075,452 $ 1.12 6.18 $ 9,571 Options vested and exercisable—March 31, 2023 2,503,254 $ 1.01 5.93 $ 8,066 The aggregate intrinsic value of the options exercised for the three months ended March 31, 2023 and 2022 was $2.0 million and $1.6 million, respectively. The total grant-date fair value of options vested was $0.1 million for both the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023, there was $0.3 million of unamortized stock-based compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of 1.6 years. The Company had no stock option grants during the three months ended March 31, 2023. Restricted Stock Units and Awards The following table summarizes the restricted stock unit activities under the Company’s 2016 and 2021 Plan and the 2022 Inducement Plan: Restricted Stock Units Number of Shares Weighted-Average Grant Date Fair Value Unvested—December 31, 2022 5,619,013 $ 7.24 Granted 1,050,858 $ 5.00 Vested (277,149) $ 7.78 Canceled (249,433) $ 6.54 Unvested—March 31, 2023 6,143,289 $ 6.86 The total grant-date fair value of restricted stock units vested was $2.2 million and $1.1 million during the three months ended March 31, 2023 and 2022, respectively. As of March 31, 2023, there was $40.6 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 3.1 years. Restricted Common Stock In connection with the Semifore Acquisition (see Note 8), the Company issued 331,574 shares of common stock that will vest on the first and third anniversary of the closing of the Acquisition contingent on the continued employment of certain key employees. As of March 31, 2023, 331,574 shares of common stock remain unvested. These shares had a grant date fair value of $1.3 million based on the closing stock price on the acquisition date. The Company will recognize total compensation cost of $1.3 million to be amortized on a straight-line basis over the total vesting period of three years. As of March 31, 2023, the total unamortized compensation cost was $1.2 million . 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 March 31, 2023 2022 Cost of revenue $ 83 $ 96 Research and development 1,429 1,144 Sales and marketing 685 271 General and administrative 788 798 Total stock-based compensation $ 2,985 $ 2,309 During the three months ended March 31, 2023, the Company recognized $0.1 million as stock-based compensation expense for common stock issued as part of the Semifore Acquisition. |
EQUITY METHOD INVESTMENT
EQUITY METHOD INVESTMENT | 3 Months Ended |
Mar. 31, 2023 | |
Commitments and Contingencies Disclosure [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 five 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 of $0.3 million for the license agreement. The Company’s ownership interest of Transchip’s common stock was 35.0% on a fully diluted basis as of March 31, 2023. 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. As of March 31, 2023, the carrying value of the investment in Transchip was $11.1 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. T he Company’s loss from its proportionate share of its equity method investment in Transchip was $0.8 million for the three months ended March 31, 2023. The Company concluded that t here were no indicators of impairment related to the Company’s equity method investment in Transchip as of March 31, 2023. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2023 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | INCOME TAXES The Company’s effective tax rate was (3.4)% and (1.8)% for the three months ended March 31, 2023 and 2022, respectively. The Company’s income tax provision was $0.3 million and $0.1 million for the three months ended March 31, 2023 and 2022, 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 increase in the income tax provision for the period ended March 31, 2023 compared to the period ended March 31, 2022. The Company’s management continuously evaluates the need for a valuation allowance and, as of March 31, 2023, concluded that a full valuation allowance on its federal, state, and certain foreign jurisdictions deferred tax assets was still appropriate. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2023 | |
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 for both the three months ended March 31, 2023 and 2022. 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. Prior to signing the consulting agreement, 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 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 March 31, 2023 , the Company paid Ms. Geday $0.1 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 December 2022, the Company entered into a three-month non-exclusive evaluation license agreement with Transchip. Under the agreement, the Company licensed certain technology products for no licensing fee. In March 2023, the Company entered into an amendment to extend the non-exclusive license agreement by three months for no licensing fee. See Note 13 for additional discussion on the Company’s transactions with Transchip. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2023 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS In April 2023, the Company entered into a new lease agreement to lease an approximately 12,000 square foot space for its corporate headquarters in Campbell, California. The lease term commences in October 2023 through March 2029, with total rental payments of $2.8 million and a one five-year option to extend the initial lease term. |
BASIS OF PRESENTATION AND SUM_2
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2023 | |
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, 2022 and the related notes included in the Company’s Form 10-K filed on February 28, 2023 (2022 Form 10-K) with the U.S. Securities and Exchange Commission (SEC). The December 31, 2022 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 unaudited condensed consolidated financial statements. |
Principles of Consolidation | Principles of Consolidation The unaudited condensed consolidated financial statements include the accounts of Arteris, Inc. and its wholly-owned subsidiaries. All intercompany transactions and accounts have been eliminated. |
Use of Estimates | Use of Estimates The preparation of the unaudited 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 unaudited condensed consolidated financial statements. |
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 that the Company believes are creditworthy. Cash held at these financial institutions generally exceed federally insured limits. The Company is exposed to credit risk in the event of default by the financial institution holding its cash, cash equivalents, and investments to the extent recorded in the balance sheet. The Company has not experienced any losses to date related to these concentrations. The Company’s accounts receivable are derived principally from revenue earned from customers located in Americas, Europe, Middle East and Asia Pacific regions. |
Recent Accounting Pronouncements | Recent Accounting Pronouncements Recently Adopted 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 (co llectively 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 adoption of the new guidance did not have a material impact on the Company’s consolidated financial statements and related disclosures. In September 2022, the FASB issued ASU 2022-04, Liabilities - Supplier Finance Programs (Subtopic 405-50): Disclosure of Supplier Finance Program Obligations , which requires a buyer in a supplier finance program to disclose sufficient information about the program to allow a user of financial statements to understand the program's nature, activity during the period, changes from period to period, and potential magnitude. To achieve that objective, the buyer should disclose qualitative and quantitative information about its supplier finance programs. The amendments in this update do not affect the recognition, measurement, or financial statement presentation of obligations covered by supplier finance program. The guidance is effective for fiscal years beginning after December 15, 2022, except for the amendment on rollforward information which is effective for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company considered key terms of the current vendor financing arrangements and concluded that the current vendor financing arrangements did not have any of the characteristics which would require additional disclosures. As a result, the adoption of the new guidance did not have an impact on the Company’s consolidated financial statements and related disclosures. See Note 10 for disclosures on the Company’s vendor financing arrangements. |
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 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 was $1.4 million and $1.7 million as of March 31, 2023 and December 31, 2022, 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 the Company’s incremental borrowing rate. The estimated fair values of these financial instruments approximate their carrying values. |
BASIS OF PRESENTATION AND SUM_3
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
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 March 31, December 31, Customer A 15 % — % Customer B 11 % — % Customer C — % 32 % Revenue from the Company’s major customers representing 10% or more of total revenue was as follows: Three Months Ended 2023 2022 Customer D 11 % 20 % Customer C 10 % 17 % |
REVENUE (Tables)
REVENUE (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | The following table shows revenue by product and services groups (in thousands): Three Months Ended 2023 2022 Licensing, support and maintenance $ 11,844 $ 10,575 Variable royalties 1,290 984 Other 20 196 Total $ 13,154 $ 11,755 |
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 March 31, December 31, Accounts receivable, net $ 9,750 $ 7,143 Contract assets $ 1,014 $ 1,180 Deferred revenue $ 50,064 $ 50,679 |
Capitalized Direct Commission Costs | Total capitalized direct commission costs were as follows (in thousands): As of March 31, December 31, Short-term commission capitalized in prepaid expenses and other current assets $ 2,646 $ 2,636 Long-term commission capitalized in other assets 1,506 1,535 Total $ 4,152 $ 4,171 |
NET LOSS PER SHARE (Tables)
NET LOSS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
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 2023 2022 Numerator: Net loss $ (9,010) $ (6,820) Denominator: Weighted-average shares outstanding - basic and diluted 34,597,839 31,619,706 Net loss per share, basic and diluted $ (0.26) $ (0.22) |
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 anti-dilutive: As of March 31, 2023 March 31, 2022 Stock options 3,075,452 5,117,627 Restricted stock units 6,143,289 3,943,138 Restricted common shares issued for business combination (see Note 12) 331,574 — Total 9,550,315 9,060,765 |
Investments (Tables)
Investments (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
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 (in thousands): As of March 31, 2023 Amortized Cost Unrealized Gains/(Losses) Aggregate Fair Value Assets: Money market funds $ 25,181 $ — $ 25,181 Commercial paper 3,163 (2) 3,161 Corporate bonds 4,735 (9) 4,726 U.S. government agency securities 18,094 (32) 18,062 U.S. treasury securities 8,934 1 8,935 Total financial assets $ 60,107 $ (42) $ 60,065 As of December 31, 2022 Amortized Cost Unrealized Losses Aggregate Fair Value Assets: Money market funds $ 30,428 $ — $ 30,428 Commercial paper 2,604 (1) 2,603 Corporate bonds 5,717 (10) 5,707 U.S. government agency securities 18,508 (40) 18,468 U.S. treasury securities 8,379 (2) 8,377 Total financial assets $ 65,636 $ (53) $ 65,583 |
Debt Securities, Held-to-maturity, Nonaccrual | The maturity dates of the Company’s investments are as follows (in thousands): March 31, 2023 Less than one year $ 57,607 1-2 years 2,458 Total $ 60,065 December 31, 2022 Less than one year $ 61,156 1-2 years 4,427 Total $ 65,583 |
Fair Value Measures and Disclos
Fair Value Measures and Disclosures (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
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 March 31, 2023 Level 1 Level 2 Level 3 Fair Value Assets: Cash equivalents: Money market funds $ 25,181 $ — $ — $ 25,181 Total cash equivalents 25,181 — — 25,181 Short-term investments: Commercial paper — 3,161 — 3,161 Corporate bonds — 3,971 — 3,971 U.S. government agency securities — 16,359 — 16,359 U.S. treasury securities — 8,935 — 8,935 Total short-term investments — 32,426 — 32,426 Long-term investments: Corporate bonds — 755 — 755 U.S. government agency securities — 1,703 — 1,703 Total long-term investments — 2,458 — 2,458 Total financial assets $ 25,181 $ 34,884 $ — $ 60,065 As of December 31, 2022 Level 1 Level 2 Level 3 Fair Value Assets: Cash equivalents: Money market funds $ 30,428 $ — $ — $ 30,428 Total cash equivalents 30,428 — — 30,428 Short-term investments: Commercial paper — 2,603 — 2,603 Corporate bonds — 3,971 — 3,971 U.S. government agency securities — 15,777 — 15,777 U.S. treasury securities — 8,377 — 8,377 Total short-term investments — 30,728 — 30,728 Long-term investments: Corporate bonds — 1,736 — 1,736 U.S. government agency securities — 2,691 — 2,691 Total long-term investments — 4,427 — 4,427 Total financial assets $ 30,428 $ 35,155 $ — $ 65,583 |
INTANGIBLE ASSETS AND GOODWILL
INTANGIBLE ASSETS AND GOODWILL (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Intangible Assets | Intangible assets, net consisted of the following as of March 31, 2023 (in thousands): Gross Fair Value Accumulated Amortization Net Book Value Developed technology $ 3,090 $ (843) $ 2,247 Customer relationships 1,830 (344) 1,486 IPR&D 500 — 500 Trade name and other 150 — 150 Total intangibles $ 5,570 $ (1,187) $ 4,383 Intangible assets, net consisted of the following as of December 31, 2022 (in thousands): Gross Fair Value Accumulated Amortization Net Book Value Developed technology $ 3,090 $ (708) $ 2,382 Customer relationships 1,830 (287) 1,543 IPR&D 500 — 500 Trade name and other 150 — 150 Total intangibles $ 5,570 $ (995) $ 4,575 |
Schedule of Future Amortization Expense | The expected future amortization expense of these intangible assets as of March 31, 2023 is as follows (in thousands) : Fiscal year ending December 31, Remainder of 2023 $ 575 2024 767 2025 739 2026 427 2027 427 Thereafter 798 Total future amortization expense $ 3,733 |
ACQUISITION (Tables)
ACQUISITION (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Business Combination and Asset Acquisition [Abstract] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The following table provides the estimated fair values of the identifiable assets acquired and liabilities assumed as of the acquisition date (in thousands): FAIR VALUE Cash $ 267 Accounts receivable 372 Prepaid expenses and other current assets 63 Contract assets 15 Intangibles 2,120 Accounts payable (139) Deferred revenue (672) Deferred tax liability (484) Total identifiable net assets 1,542 Goodwill 1,541 Total purchase price $ 3,083 |
LEASES (Tables)
LEASES (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Leases [Abstract] | |
Operating Lease Costs | Total operating lease related costs were as follows (in thousands): Three Months Ended 2023 2022 Operating lease cost $ 274 $ 273 Short-term lease cost 79 133 Total lease cost $ 353 $ 406 |
Maturities of Operating Lease Liabilities | Maturities of operating lease liabilities as of March 31, 2023 were as follows (in thousands): Fiscal year ending December 31, Remainder of 2023 $ 773 2024 501 2025 331 2026 265 2027 265 Thereafter 211 Total undiscounted cash flows $ 2,346 Less: imputed interest (361) Present value of lease liabilities $ 1,985 Operating lease liabilities, current $ 780 Operating lease liabilities, non-current 1,205 Total lease liabilities $ 1,985 |
BORROWINGS (Tables)
BORROWINGS (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Vendor Financing Arrangements | Vendor financing arrangements as of March 31, 2023 were as follows (in thousands): Fiscal year ending December 31, Amount Remainder of 2023 $ 936 2024 556 Total undiscounted cash flows $ 1,492 Less: Imputed interest (75) Present value of vendor financing arrangements $ 1,417 Vendor financing arrangements, current $ 1,161 Vendor financing arrangements, noncurrent 256 $ 1,417 |
STOCK-BASED COMPENSATION (Table
STOCK-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2023 | |
Share-based Payment Arrangement [Abstract] | |
Shares Available for Future Grant | Shares available for future grant consisted of the following: As of March 31, Shares available for future grant under the 2021 Plan 4,581,516 Shares available for future grant under the 2021 ESPP 1,268,564 Shares available for future grant under the 2022 Inducement Plan 1,228,680 |
Summary of Stock Options Activity | The following table summarizes the stock option activities under the Company’s 2016 Plan: Options Outstanding Number of Shares Weighted-Average Exercise Price Weighted-Average Remaining Contractual Term (Years) Aggregate Intrinsic Value ($'000s) BALANCE—December 31, 2022 3,542,836 $ 1.08 6.17 $ 11,416 Exercised (397,697) $ 0.66 Canceled (69,687) $ 1.67 BALANCE—March 31, 2023 3,075,452 $ 1.12 6.18 $ 9,571 Options vested and exercisable—March 31, 2023 2,503,254 $ 1.01 5.93 $ 8,066 |
Summary of Restricted Stock Units Activity | The following table summarizes the restricted stock unit activities under the Company’s 2016 and 2021 Plan and the 2022 Inducement Plan: Restricted Stock Units Number of Shares Weighted-Average Grant Date Fair Value Unvested—December 31, 2022 5,619,013 $ 7.24 Granted 1,050,858 $ 5.00 Vested (277,149) $ 7.78 Canceled (249,433) $ 6.54 Unvested—March 31, 2023 6,143,289 $ 6.86 |
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 March 31, 2023 2022 Cost of revenue $ 83 $ 96 Research and development 1,429 1,144 Sales and marketing 685 271 General and administrative 788 798 Total stock-based compensation $ 2,985 $ 2,309 |
BASIS OF PRESENTATION AND SUM_4
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounts Receivable Concentration Risk (Details) - Accounts Receivable - Customer Concentration Risk | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Customer A | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 15% | 0% |
Customer B | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 11% | 0% |
Customer C | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 0% | 32% |
BASIS OF PRESENTATION AND SUM_5
BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Concentration Risk (Details) - Revenue from Contract with Customer Benchmark - Customer Concentration Risk | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Customer D | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 11% | 20% |
Customer C | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 10% | 17% |
REVENUE - Disaggregation of Rev
REVENUE - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 13,154 | $ 11,755 |
Licensing, support and maintenance | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 11,844 | 10,575 |
Variable royalties | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | 1,290 | 984 |
Other | ||
Disaggregation of Revenue [Line Items] | ||
Total revenue | $ 20 | $ 196 |
REVENUE - Contract Balances on
REVENUE - Contract Balances on Condensed Consolidated Balance Sheet (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Revenue from Contract with Customer [Abstract] | ||
Accounts receivable, net of allowance of $310 and $250 | $ 9,750 | $ 7,143 |
Contract assets | 1,014 | 1,180 |
Deferred revenue | $ 50,064 | $ 50,679 |
REVENUE - Narrative (Details)
REVENUE - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Disaggregation of Revenue [Line Items] | ||
Deferred revenue, revenue recognized | $ 8.6 | $ 7.4 |
Unsatisfied performance obligations | 56.4 | |
Amortization of capitalized sales commissions | $ 0.9 | $ 0.7 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-04-01 | ||
Disaggregation of Revenue [Line Items] | ||
Remaining performance obligation, expected timing of satisfaction | 12 months | |
Unsatisfied performance obligations, excluding flexible spending account commitment | $ 29.7 |
REVENUE - Capitalized Direct Co
REVENUE - Capitalized Direct Commission Costs (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Revenue from Contract with Customer [Abstract] | ||
Short-term commission capitalized in prepaid expenses and other current assets | $ 2,646 | $ 2,636 |
Long-term commission capitalized in other assets | 1,506 | 1,535 |
Total | $ 4,152 | $ 4,171 |
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 | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Numerator: | ||
Net loss | $ (9,010) | $ (6,820) |
Denominator: | ||
Weighted-average shares outstanding - basic (in shares) | 34,597,839 | 31,619,706 |
Weighted-average shares outstanding - diluted (in shares) | 34,597,839 | 31,619,706 |
Net loss per share, basic (in dollars per share) | $ (0.26) | $ (0.22) |
Net loss per share, diluted (in dollars per share) | $ (0.26) | $ (0.22) |
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 | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 9,550,315 | 9,060,765 |
Stock options | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 3,075,452 | 5,117,627 |
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) | 6,143,289 | 3,943,138 |
Restricted common shares issued for business combination (see Note 12) | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Antidilutive securities excluded from computation of earnings per share (in shares) | 331,574 | 0 |
Investments - Debt Securities,
Investments - Debt Securities, Available-for-sale (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Cost | $ 60,107 | $ 65,636 |
Unrealized Gains/(Losses) | (42) | (53) |
Aggregate Fair Value | 60,065 | 65,583 |
Money market funds | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Cost | 25,181 | 30,428 |
Aggregate Fair Value | 25,181 | 30,428 |
Commercial paper | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Cost | 3,163 | 2,604 |
Unrealized Gains/(Losses) | (2) | (1) |
Aggregate Fair Value | 3,161 | 2,603 |
Corporate bonds | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Cost | 4,735 | 5,717 |
Unrealized Gains/(Losses) | (9) | (10) |
Aggregate Fair Value | 4,726 | 5,707 |
U.S. government agency securities | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Cost | 18,094 | 18,508 |
Unrealized Gains/(Losses) | (32) | (40) |
Aggregate Fair Value | 18,062 | 18,468 |
U.S. treasury securities | ||
Schedule of Held-to-maturity Securities [Line Items] | ||
Amortized Cost | 8,934 | 8,379 |
Unrealized Gains/(Losses) | 1 | (2) |
Aggregate Fair Value | $ 8,935 | $ 8,377 |
Investments - Debt Securities_2
Investments - Debt Securities, Held-to-maturity, Nonacrrual (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Investments, Debt and Equity Securities [Abstract] | ||
Less than one year | $ 57,607 | $ 61,156 |
1-2 years | 2,458 | 4,427 |
Total | $ 60,065 | $ 65,583 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Millions | Mar. 31, 2023 | Dec. 31, 2022 |
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 | $ 1.4 | $ 1.7 |
FAIR VALUE MEASUREMENTS - Fair
FAIR VALUE MEASUREMENTS - Fair Value, Assets Measured on Recurring Basis (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||
Total cash equivalents | $ 25,181 | $ 30,428 |
Total short-term investments | 32,426 | 30,728 |
Total long-term investments | 2,458 | 4,427 |
Total financial assets | 60,065 | 65,583 |
Level 1 | ||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||
Total cash equivalents | 25,181 | 30,428 |
Total short-term investments | 0 | 0 |
Total long-term investments | 0 | 0 |
Total financial assets | 25,181 | 30,428 |
Level 2 | ||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||
Total cash equivalents | 0 | 0 |
Total short-term investments | 32,426 | 30,728 |
Total long-term investments | 2,458 | 4,427 |
Total financial assets | 34,884 | 35,155 |
Level 3 | ||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||
Total cash equivalents | 0 | 0 |
Total short-term investments | 0 | 0 |
Total long-term investments | 0 | 0 |
Total financial assets | 0 | 0 |
Money market funds | ||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||
Total cash equivalents | 25,181 | 30,428 |
Money market funds | Level 1 | ||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||
Total cash equivalents | 25,181 | 30,428 |
Money market funds | Level 2 | ||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||
Total cash equivalents | 0 | 0 |
Money market funds | Level 3 | ||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||
Total cash equivalents | 0 | 0 |
Commercial paper | ||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||
Total short-term investments | 3,161 | 2,603 |
Commercial paper | Level 1 | ||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||
Total short-term investments | 0 | 0 |
Commercial paper | Level 2 | ||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||
Total short-term investments | 3,161 | 2,603 |
Commercial paper | Level 3 | ||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||
Total short-term investments | 0 | 0 |
Corporate bonds | ||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||
Total short-term investments | 3,971 | 3,971 |
Total long-term investments | 755 | 1,736 |
Corporate bonds | Level 1 | ||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||
Total short-term investments | 0 | 0 |
Total long-term investments | 0 | 0 |
Corporate bonds | Level 2 | ||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||
Total short-term investments | 3,971 | 3,971 |
Total long-term investments | 755 | 1,736 |
Corporate bonds | Level 3 | ||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||
Total short-term investments | 0 | 0 |
Total long-term investments | 0 | 0 |
U.S. government agency securities | ||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||
Total short-term investments | 16,359 | 15,777 |
Total long-term investments | 1,703 | 2,691 |
U.S. government agency securities | Level 1 | ||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||
Total short-term investments | 0 | 0 |
Total long-term investments | 0 | 0 |
U.S. government agency securities | Level 2 | ||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||
Total short-term investments | 16,359 | 15,777 |
Total long-term investments | 1,703 | 2,691 |
U.S. government agency securities | Level 3 | ||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||
Total short-term investments | 0 | 0 |
Total long-term investments | 0 | 0 |
U.S. treasury securities | ||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||
Total short-term investments | 8,935 | 8,377 |
U.S. treasury securities | Level 1 | ||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||
Total short-term investments | 0 | 0 |
U.S. treasury securities | Level 2 | ||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||
Total short-term investments | 8,935 | 8,377 |
U.S. treasury securities | Level 3 | ||
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items] | ||
Total short-term investments | $ 0 | $ 0 |
INTANGIBLE ASSETS AND GOODWIL_2
INTANGIBLE ASSETS AND GOODWILL - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Finite-Lived Intangible Assets [Line Items] | ||
Intangible assets, gross | $ 5,570 | $ 5,570 |
Finite-lived intangible assets, accumulated amortization | (1,187) | (995) |
Total future amortization expense | 3,733 | |
Intangible assets, net | 4,383 | 4,575 |
IPR&D | ||
Finite-Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets, gross | 500 | 500 |
Trade name and other | ||
Finite-Lived Intangible Assets [Line Items] | ||
Indefinite-lived intangible assets, gross | 150 | 150 |
Developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | 3,090 | 3,090 |
Finite-lived intangible assets, accumulated amortization | (843) | (708) |
Total future amortization expense | 2,247 | 2,382 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Finite-lived intangible assets, gross | 1,830 | 1,830 |
Finite-lived intangible assets, accumulated amortization | (344) | (287) |
Total future amortization expense | $ 1,486 | $ 1,543 |
INTANGIBLE ASSETS AND GOODWIL_3
INTANGIBLE ASSETS AND GOODWILL - Narrative (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||
Amortization expense | $ 200,000 | $ 100,000 | |
Goodwill | 4,218,000 | $ 4,218,000 | |
Goodwill impairments | $ 0 | $ 0 |
INTANGIBLE ASSETS AND GOODWIL_4
INTANGIBLE ASSETS AND GOODWILL - Schedule of Future Amortization Expense (Details) $ in Thousands | Mar. 31, 2023 USD ($) |
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract] | |
Remainder of 2023 | $ 575 |
2024 | 767 |
2025 | 739 |
2026 | 427 |
2027 | 427 |
Thereafter | 798 |
Total future amortization expense | $ 3,733 |
ACQUISITION - Narrative (Detail
ACQUISITION - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Dec. 27, 2022 | Mar. 31, 2023 | Dec. 31, 2022 | |
Business Acquisition [Line Items] | |||
Options, grants in period, gross (in shares) | 0 | ||
Goodwill | $ 4,218 | $ 4,218 | |
Restricted stock units | |||
Business Acquisition [Line Items] | |||
Equity instrument other than options, grants in period (in shares) | 1,050,858 | ||
Equity instruments other than options, vested in period (in shares) | 277,149 | ||
Semifore | |||
Business Acquisition [Line Items] | |||
Percentage of voting interests acquired | 100% | ||
Total purchase price | $ 3,083 | $ 3,100 | |
Equity instrument other than options, grants in period (in shares) | 663,143 | ||
Acquisition related costs | $ 500 | ||
Equity instruments other than options, vested in period (in shares) | 331,569 | ||
Contingent compensation | 300 | ||
Goodwill | $ 1,541 | ||
Semifore | Restricted stock units | |||
Business Acquisition [Line Items] | |||
Acquisition related costs | $ 1,800 | ||
Semifore | Restricted Stock | |||
Business Acquisition [Line Items] | |||
Options, grants in period, gross (in shares) | 331,574 | ||
Semifore | Developed technology | |||
Business Acquisition [Line Items] | |||
Finite-lived intangibles | $ 1,400 | ||
Useful life | 7 years | ||
Semifore | Customer relationships | |||
Business Acquisition [Line Items] | |||
Finite-lived intangibles | $ 700 | ||
Useful life | 8 years |
ACQUISITION - Schedule of Recog
ACQUISITION - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Dec. 27, 2022 | Mar. 31, 2023 | Dec. 31, 2022 | |
Business Acquisition [Line Items] | |||
Goodwill | $ 4,218 | $ 4,218 | |
Semifore | |||
Business Acquisition [Line Items] | |||
Cash | $ 267 | ||
Accounts receivable | 372 | ||
Prepaid expenses and other current assets | 63 | ||
Contract assets | 15 | ||
Intangibles | 2,120 | ||
Accounts payable | (139) | ||
Deferred revenue | (672) | ||
Deferred tax liability | (484) | ||
Total identifiable net assets | 1,542 | ||
Goodwill | 1,541 | ||
Total purchase price | $ 3,083 | $ 3,100 |
LEASES - Operating Lease Costs
LEASES - Operating Lease Costs (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Leases [Abstract] | ||
Operating lease cost | $ 274 | $ 273 |
Short-term lease cost | 79 | 133 |
Total lease cost | $ 353 | $ 406 |
LEASES - Narrative (Details)
LEASES - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | |
Leases [Abstract] | |||
Weighted average remaining lease term, operating lease | 3 years 10 months 24 days | 3 years 1 month 6 days | |
Weighted average discount rate, operating lease | 10% | 7.50% | |
Cash payments | $ 0.3 | $ 0.3 |
LEASES - Maturities of Operatin
LEASES - Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands | Mar. 31, 2023 | Dec. 31, 2022 |
Leases [Abstract] | ||
Remainder of 2023 | $ 773 | |
2024 | 501 | |
2025 | 331 | |
2026 | 265 | |
2027 | 265 | |
Thereafter | 211 | |
Total undiscounted cash flows | 2,346 | |
Less: imputed interest | (361) | |
Present value of lease liabilities | 1,985 | |
Operating lease liabilities, current | 780 | $ 899 |
Operating lease liabilities, non-current | $ 1,205 | $ 1,009 |
BORROWINGS - Narrative (Details
BORROWINGS - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Debt Instrument [Line Items] | ||
Interest expense | $ 0.1 | $ 0.1 |
Vendor Financing Arrangements | ||
Debt Instrument [Line Items] | ||
Interest rate, effective percentage | 10% |
BORROWINGS - Schedule of Vendor
BORROWINGS - Schedule of Vendor Financing Arrangements (Details) - Vendor Financing Arrangements $ in Thousands | Mar. 31, 2023 USD ($) |
Debt Instrument [Line Items] | |
Remainder of 2023 | $ 936 |
2024 | 556 |
Total undiscounted cash flows | 1,492 |
Less: Imputed interest | (75) |
Present value of vendor financing arrangements | 1,417 |
Vendor financing arrangements, current | 1,161 |
Vendor financing arrangements, noncurrent | $ 256 |
STOCK-BASED COMPENSATION - Narr
STOCK-BASED COMPENSATION - Narrative (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | ||||
Dec. 27, 2022 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2021 | Nov. 03, 2022 | Oct. 10, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Exercises in period, intrinsic value | $ 2,000 | $ 1,600 | ||||
Aggregate intrinsic value, vested | 100 | 100 | ||||
Option, cost not yet recognized | $ 300 | |||||
Nonvested award, unrecognized, period for recognition | 1 year 7 months 6 days | |||||
Granted (in shares) | 0 | |||||
Compensation expenses | $ 2,985 | 2,309 | ||||
Semifore | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Compensation expenses | $ 100 | |||||
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 | |||||
2022 Employment Inducement Incentive Plan | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Capital shares reserved for future issuance (in shares) | 2,000,000 | |||||
Restricted stock units | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Nonvested award, unrecognized, period for recognition | 3 years 1 month 6 days | |||||
Grants in period, vested, grant date fair value | $ 2,200 | $ 1,100 | ||||
Nonvested award, excluding options, unrecognized | 40,600 | |||||
Restricted Stock | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Grant date fair value | 1,300 | |||||
Compensation expenses | $ 1,300 | |||||
Award vesting period | 3 years | |||||
Unamortized cost | $ 1,200 | |||||
Restricted Stock | Semifore | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Granted (in shares) | 331,574 |
STOCK-BASED COMPENSATION - Shar
STOCK-BASED COMPENSATION - Shares Available for Future Grant (Details) | Mar. 31, 2023 shares |
Shares available for future grant under the 2021 Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares available for future grant (in shares) | 4,581,516 |
Shares available for future grant under the 2021 ESPP | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares available for future grant (in shares) | 1,268,564 |
Shares available for future grant under the 2022 Inducement Plan | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Shares available for future grant (in shares) | 1,228,680 |
STOCK-BASED COMPENSATION - Summ
STOCK-BASED COMPENSATION - Summary of Stock Options Activity (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2023 | Dec. 31, 2022 | |
Number of Shares | ||
Balance at beginning of period (in shares) | 3,542,836 | |
Exercised (in shares) | (397,697) | |
Canceled (in shares) | (69,687) | |
Balance at end of period (in shares) | 3,075,452 | 3,542,836 |
Number of Shares, Options vested and exercisable (in shares) | 2,503,254 | |
Weighted-Average Exercise Price | ||
Balance at beginning of period (in dollars per share) | $ 1.08 | |
Exercised (in dollars per share) | 0.66 | |
Canceled (in dollars per share) | 1.67 | |
Balance at end of period (in dollars per share) | 1.12 | $ 1.08 |
Weighted-Average Exercise Price, Options vested and exercisable (in dollars per share) | $ 1.01 | |
Stock Options Additional Disclosures | ||
Weighted-Average Remaining Contractual Term, Balance | 6 years 2 months 4 days | 6 years 2 months 1 day |
Weighted-Average Remaining Contractual Term, Options vested and exercisable | 5 years 11 months 4 days | |
Aggregate Intrinsic Value, Balance | $ 9,571 | $ 11,416 |
Aggregate Intrinsic Value, Options vested and exercisable | $ 8,066 |
STOCK-BASED COMPENSATION - Su_2
STOCK-BASED COMPENSATION - Summary of Restricted Stock Units Activity (Details) - Restricted stock units | 3 Months Ended |
Mar. 31, 2023 $ / shares shares | |
Number of Shares | |
Unvested, Balance at beginning of period (in shares) | shares | 5,619,013 |
Granted (in shares) | shares | 1,050,858 |
Vested (in shares) | shares | (277,149) |
Forfeited (in shares) | shares | (249,433) |
Unvested, Balance at end of period (in shares) | shares | 6,143,289 |
Weighted-Average Grant Date Fair Value | |
Unvested, Balance at beginning of period (in dollars per share) | $ / shares | $ 7.24 |
Granted (in dollars per share) | $ / shares | 5 |
Vested (in dollars per share) | $ / shares | 7.78 |
Forfeited (in dollars per share) | $ / shares | 6.54 |
Unvested, Balance at end of period (in dollars per share) | $ / shares | $ 6.86 |
STOCK-BASED COMPENSATION - Stoc
STOCK-BASED COMPENSATION - Stock-Based Compensation Related to Stock-Based Awards to Employees (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total stock-based compensation | $ 2,985 | $ 2,309 |
Semifore | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total stock-based compensation | 100 | |
Cost of revenue | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total stock-based compensation | 83 | 96 |
Research and development | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total stock-based compensation | 1,429 | 1,144 |
Sales and marketing | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total stock-based compensation | 685 | 271 |
General and administrative | ||
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | ||
Total stock-based compensation | $ 788 | $ 798 |
EQUITY METHOD INVESTMENT (Detai
EQUITY METHOD INVESTMENT (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2022 | Sep. 16, 2022 | |
Subsidiary or Equity Method Investee [Line Items] | ||||
Equity method investment | $ 11,063 | $ 11,897 | ||
Amortization of deferred income | 291 | $ 0 | ||
TransChip Technology | ||||
Subsidiary or Equity Method Investee [Line Items] | ||||
Equity method investment, transaction costs | 800 | |||
TransChip Technology | ||||
Subsidiary or Equity Method Investee [Line Items] | ||||
Equity method investment | 11,100 | |||
Ownership percentage | 35% | |||
The Investors | The Investors | ||||
Subsidiary or Equity Method Investee [Line Items] | ||||
Equity method investment | 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 | |||
Share purchase agreement, agreement term | 5 years | |||
Share purchase agreement, deferred income, recognition period | 10 years | |||
Amortization of deferred income | $ 300 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | ||
Effective income tax rate | (3.40%) | (1.80%) |
Income tax provision | $ 295,000 | $ 123,000 |
Unrecognized tax benefits | 2,600,000 | 3,100,000 |
Income tax penalties and interest accrued related to unrecognized tax benefits | $ 0 | $ 0 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2022 | |
Related Party Transaction [Line Items] | ||
Lease payment due to related party | $ 300,000 | $ 300,000 |
Granted (in shares) | 0 | |
Restricted stock units | ||
Related Party Transaction [Line Items] | ||
Granted (in shares) | 1,050,858 | |
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 | |
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 | |
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 | |
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] | ||
Granted (in shares) | 62,200 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Subsequent Event $ in Millions | 1 Months Ended |
Apr. 30, 2023 USD ($) ft² | |
Subsequent Event [Line Items] | |
Area of real estate property | ft² | 12,000 |
Lease cost | $ | $ 2.8 |
Renewal term | 5 years |