0001667011-23-000030 | 10-Q | XBRL Viewer

REVENUE

9 Months Ended

Sep. 30, 2023

Revenue from Contract with Customer [Abstract]

Disaggregated Revenue

The following table shows revenue by product and services groups (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Licensing, support and maintenance	$	12,084	$	11,135	$	36,926	$	35,743
Variable royalties	1,068		695		4,058		2,266
Other	122		768		178		1,166
Total	$	13,274	$	12,598	$	41,162	$	39,175

Contract Balances

The following table provides information about accounts receivable, net, contract assets and deferred revenue (in thousands):


	As of
	September 30, 2023		December 31, 2022
Accounts receivable, net	$	10,370	$	7,143
Contract assets	$	1,192	$	1,180
Deferred revenue	$	52,545	$	50,679

The Company recognized revenue of $10.7 million and $9.4 million for the three months ended September 30, 2023 and 2022, respectively, and $23.7 million and $22.0 million for the nine months ended September 30, 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 unaudited condensed consolidated balance sheets.

As of September 30, 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 $61.3 million, of which $32.7 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
	September 30, 2023		December 31, 2022
Short-term commission capitalized in prepaid expenses and other current assets	$	2,436	$	2,636
Long-term commission capitalized in other assets	1,274		1,535
Total	$	3,710	$	4,171

Amortization of capitalized sales commissions was $0.9 million for both the three months ended September 30, 2023 and 2022, $2.8 million and $2.5 million for the nine months ended September 30, 2023 and 2022, respectively, and are included in sales and marketing expense in the unaudited condensed consolidated statements of loss.

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

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+ Details

BORROWINGS - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
BORROWINGS - Narrative (Details) - USD ($) $ in Millions	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Debt Instrument [Line Items]
Interest expense	$ 0.1	$ 0.1	$ 0.1	$ 0.1
Vendor Financing Arrangements
Debt Instrument [Line Items]
Interest rate, effective percentage	10.00%		10.00%

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

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+ Details

INVESTMENTS - Narrative (Details) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Investments, Debt and Equity Securities [Abstract]
Continue net unrealized loss position	$ 2.0	$ 0.0

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Accounts Receivable Concentration Risk (Details) - Accounts Receivable - Customer Concentration Risk	9 Months Ended	12 Months Ended
	Sep. 30, 2023	Dec. 31, 2022
Customer A
Concentration Risk [Line Items]
Concentration risk, percentage	24.00%	0.00%
Customer B
Concentration Risk [Line Items]
Concentration risk, percentage	14.00%	32.00%

INVESTMENTS

9 Months Ended

Sep. 30, 2023

Investments, Debt and Equity Securities [Abstract]

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 September 30, 2023
	Amortized Cost		Unrealized Losses		Aggregate Fair Value
Assets:
U.S. government agency securities	$	20,531	$	(80)	$	20,451
U.S. treasury securities	11,883		(4)		11,879
Money market funds	11,758		—		11,758
Certificate of deposit	5,000		—		5,000
Corporate bonds	3,700		(24)		3,676
Total financial assets	$	52,872	$	(108)	$	52,764


	As of December 31, 2022
	Amortized Cost		Unrealized Losses		Aggregate Fair Value
Assets:
Money market funds	$	30,428	$	—	$	30,428
U.S. government agency securities	18,508		(40)		18,468
U.S. treasury securities	8,379		(2)		8,377
Corporate bonds	5,717		(10)		5,707
Commercial paper	2,604		(1)		2,603
Total financial assets	$	65,636	$	(53)	$	65,583

The maturity dates of the Company’s investments are as follows (in thousands):


	September 30, 2023
Less than one year	$	42,477
1-2 years	10,287
Total	$	52,764

As of September 30, 2023 and December 31, 2022, securities with a fair value of $2.0 million and zero, respectively, were in a continuous net unrealized loss position for more than 12 months. As of September 30, 2023, the unrealized losses for available-for-sale investments were non-credit related and the Company does not intend to sell the investments that were in an unrealized loss position, nor does it foresee or project that it will be required to sell those investments before recovery of their amortized costs basis, which may be at maturity. Thus, as of September 30, 2023 no allowance for credit losses or impairment losses for the Company’s investments were recorded.

LEASES - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
LEASES - Narrative (Details) - USD ($) $ in Millions	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	May 31, 2023	Dec. 31, 2022
Leases [Abstract]
Weighted average remaining lease term, operating lease	4 years 1 month 6 days		4 years 1 month 6 days			3 years 1 month 6 days
Weighted average discount rate, operating lease	10.00%		10.00%			7.50%
Cash payments	$ 0.3	$ 0.3	$ 0.8	$ 0.8
Future operating lease					$ 2.6
Future operating lease, term of contract					5 years 4 months 24 days

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2023

Accounting Policies [Abstract]

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 and nine months ended September 30, 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.

Cash, Cash Equivalents and Restricted Cash

The Company considers all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash equivalents. The Company’s cash equivalents include deposits in money market accounts which were unrestricted as to withdrawal or use and are stated at fair value. As of September 30, 2023, cash and cash equivalents consisted primarily of checking, savings, money market accounts and highly liquid investments with original maturities of three months or less. Interest earned on cash and cash equivalents is included in other income (expense), net in the unaudited consolidated statements of loss.

As of September 30, 2023, the Company’s long-term restricted cash balance was $0.4 million, primarily related to a letter of credit for its facility lease agreement. Restricted cash, noncurrent is included in other assets on the unaudited condensed consolidated balance sheets.

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
	September 30, 2023		December 31, 2022
Customer A	24	%	—	%
Customer B	14	%	32	%

Revenue from the Company’s major customers representing 10% or more of total revenue was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023	2022
Customer B	13	%	24	%	*	26	%

* Customer accounted for less than 10% of total revenue at period end.

Nature of Products and Services

The Company’s revenue is primarily derived from licensing intellectual property, licensing software, support and maintenance services, professional services, training services, and royalties.

Design Solutions

Interconnect Solutions product arrangements provide customers the right to software licenses, services, and support and maintenance. The Company enters into licensing arrangements with customers that typically range from two to three years and generally consist of delivery of a design license that grants the customer the right to use the IP to design a contractually defined number of products, a right to access the benefits of its proprietary software tool (RTL), and support and maintenance services that provide the customer a significant benefit from ongoing access to Corporate Application Engineers (CAE) and Field Application Engineers (FAE) (collectively, Application Engineer Support Services) to perform certain verifications including benchmark performance, simulations and ultimately, through the RTL, instantiate designs into silicon over the design term.

Application Engineer Support Services are integral and fundamental to the customer’s ability to derive its intended benefit from the IP. CAEs are part of the product development team providing detailed requirements for engineering projects, working very closely with a customer’s chief technology officer and the marketing department, and performing quality assurance testing of customer products prior to shipment to their customers. FAEs provide assistance to the customer’s engineering team in translating their desired SoC architecture into inputs for NoC IP configuration, assistance in optimizing the NoC configuration, answer to customer questions by the online support system or phone, constructive reviews of the progress achieved by the customer’s development team and provision of advice on how to best use the licensed IP, performance of design reviews before customer project RTL freeze and tape-out to ensure the customer used the licensed IP configuration tooling as intended so that the RTL output meets customer requirements and expectations. FAE reviews of the customer’s design are mandatory and consist of an understanding of the customer requirements and analysis of the adequacy of the contemplated IP considering the customer’s desired architecture and design goals and objectives, taking into consideration bandwidth, coherence/non-coherence, latency, clock and timing, areas, and any and all constraints, as identified and specific to the design under review.

Besides Application Engineer Support Services, support and maintenance services also consist of a stand-ready obligation to provide technical support and software updates over the support term. Generally, the first-year of technical support and software updates are bundled with and into the license fee with a customer option to renew additional years of support throughout the license term. However, the Company continues to provide technical support and software updates throughout the license term even if the customer does not renew these services in subsequent years, making the license term and support and maintenance term co-terminus.

Considering the nature of the combined license and assisting the Company’s customers in applying its IP technology in its customers’ development environment and the relative significance thereof, the Company has concluded that its Interconnect Solutions IP licensing arrangements are not distinct from its obligation to provide the Application Engineer Support Services and benefits of the RTL. The Interconnect Solutions IP, RTL, and the application engineering support services serve to fulfill its commitment to the customer, as they represent inputs to a single, combined performance obligation that commences upon the later of the arrangement effective date or transfer of the software license. The design license and the regular two-way interaction between the design license tool, RTL, and the application engineering support services give the customer the intended benefit from the arrangement, which is the ability to commercialize their design. Customers cannot benefit from the design license on its own or together with other readily available resources as no other RTL or Application Engineer Support Services providers exist in the marketplace that a customer could use with the design license. Consequently, the RTL and Application Engineer Support Services cannot be used on their own or together with any other design license as the Company does not allow the use of the RTL or provide Application Engineer Support Services separately from the design license. Further, although technical support and software updates is a distinct performance obligation, it is accounted for as if it were part of a single performance obligation that includes the licenses, RTL and Application Engineer Support Services because the technical support and updates are provided in practice for the same period of time and have the same time-based pattern of transfer to the customer as the combined design license, RTL, and Application Engineer Support Services.

Revenues that are derived from the sale of a licensee’s products that incorporate the Company’s IP are classified as royalty revenues. Royalty revenues are recognized during the quarter in which the sale of the product incorporating the Company’s IP occurs. Royalties are calculated either as a percentage of the revenues received by a licensee’s sale of products incorporating the Company’s IP or on a per unit basis, as specified in the agreements with the licensees. For a majority of the Company’s royalty revenues, it receives the actual sales data from its customers after the quarter ends and accounts for it as unbilled receivables. When the Company does not receive actual sales data from the customer prior to the finalization of its financial statements, royalty revenues are recognized based on its estimation of the customer’s sales during the quarter.

SoC Integration Automation Software Solutions

SoC Integration Automation software (SIA) (formerly IP deployment) solutions product arrangements provide customers the right to software licenses, software updates and technical support. The software licenses are time-based licenses with terms generally ranging from one to three years. These arrangements generally have two distinct performance obligations that consist of transferring the licensed software and the support and maintenance service. Support and maintenance services consist of a stand-ready obligation to provide technical support and software updates over the support term. For the majority of these contracts, there are no termination rights and the transaction price is non-refundable. Revenue allocated to the software license is generally recognized at a point in time upon the later of the delivery date or the beginning of the license period, and revenue allocated to support services is recognized ratably over the support term. Certain SIA solutions contracts include termination rights that allow the customer to cancel and receive a pro-rata refund on support and maintenance services at the end of each month of the contract period, which results in a ratable recognition of the related license revenue over the contract term.

Professional Services

The Company’s agreements may include service elements (other than maintenance and support services). These services include training, design assistance, and consulting. Services performed on a time and materials basis are recognized over the period the services are provided either using an output method such as labor hours, or a method that is otherwise consistent with the way in which value is delivered to the customer. Services performed on a fixed price basis are recognized over time, generally using costs incurred or hours expended to measure progress.

Multiple Performance Obligations

Most of the Company’s contracts with customers contain multiple performance obligations. For these contracts, the Company accounts for individual performance obligations separately, if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis, which are estimated considering multiple factors including observable industry pricing practices and internal pricing strategies and objectives. Standalone selling prices of software license are typically estimated using the residual approach. Standalone selling prices of professional services are typically estimated based on observable transactions when these services are sold on a standalone basis.

Transaction price

Revenue is recognized when, or as, control of a promised product or service transfers to a client, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring those products or services. If the consideration promised in a contract includes a variable amount, the Company estimates the amount to which it expects to be entitled using either the expected value or most likely amount method, to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur. Generally, the transaction price of the Company’s contracts is fixed at the inception of the contract, except for variable royalties. The Company’s contracts generally do not include terms that could cause variability in the transaction price.

The Company assesses the timing of the transfer of goods or services to the customer as compared to the timing of payments to determine whether a significant financing component exists. As a practical expedient, the Company does not assess the existence of a significant financing component when the difference between payment and transfer of deliverables is a year or less. If the difference in timing arises for reasons other than the provision of finance to either the customer or the Company, no financing component is deemed to exist. When contracts involve a significant financing component, the Company adjusts the promised amount of consideration for the effects of the time value of money if the timing of payments agreed to by the parties to the contract (either explicitly or implicitly) provide the customer with a significant benefit of financing.

The Company reports revenue net of any revenue-based taxes assessed by governmental authorities that are imposed on and concurrent with specific revenue-producing transactions.

In instances where foreign licensees withhold and remit taxes to local authorities in accordance with local laws and regulations, the Company recognizes and presents revenue on a gross basis, and includes the withholding tax in income tax expense.

Flexible Spending Accounts

Some customers enter into a non-cancelable flexible spending account agreements (FSA Agreements) whereby the customer commits to a fixed dollar amount over a specified period of time that can be used to purchase from a list of the Company’s products or services. These agreements do not meet the definition of a revenue contract until the customer executes a separate order to identify the required products and services that they are purchasing. The combination of the FSA agreement and the subsequent order creates enforceable rights and obligations, thus meeting the definition of a revenue contract. Each separate order under the agreement is treated as an individual contract and accounted for based on the respective performance obligations included within the FSA agreements.

Contract modifications

The Company’s contracts may be modified to add, remove or change existing performance obligations. The accounting for modifications to the Company’s contracts involves assessing whether the products and services added to an existing contract are distinct and whether the pricing is at the standalone selling price. Products and services added that are not distinct are accounted for on a cumulative catch-up basis, while those that are distinct are accounted for prospectively, either as a separate contract if the additional services are priced at the standalone selling price, or as a termination of the existing contract and creation of a new contract if not priced at the standalone selling price. The Company’s more significant contract modifications include extensions of the design license term and the purchase of additional years of support and maintenance.

Judgments

The Company’s contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together requires significant judgment. Judgment is also required to determine the standalone selling price for each distinct performance obligation.

Contract Balances

The timing of revenue recognition may differ from the timing of invoicing to customers, and these timing differences result in receivables (billed or unbilled), contract assets, or contract liabilities (deferred revenue) on the Company’s consolidated balance sheets. The Company records a contract asset when revenue is recognized prior to the right to invoice. The Company records deferred revenue when it invoices customers and revenue is not yet recognized. Customers are generally invoiced in single or annual amounts, although some customers are invoiced more frequently over time. The Company records an unbilled receivable when revenue is recognized and it has an unconditional right to invoice and receive payment.

The Company capitalizes sales commission as costs of obtaining a contract when they are incremental and, if they are expected to be recovered, amortized in a manner consistent with the pattern of transfer of the good or service to which the asset relates.

Significant Accounting Policies

There have been no significant changes to the Company’s significant accounting policies during the nine months ended September 30, 2023 from those disclosed in the annual consolidated financial statements for the year ended December 31, 2022, except for those disclosed in this document.

REVENUE - Disaggregation of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disaggregation of Revenue [Line Items]
Total revenue	$ 13,274	$ 12,598	$ 41,162	$ 39,175
Licensing, support and maintenance
Disaggregation of Revenue [Line Items]
Total revenue	12,084	11,135	36,926	35,743
Variable royalties
Disaggregation of Revenue [Line Items]
Total revenue	1,068	695	4,058	2,266
Other
Disaggregation of Revenue [Line Items]
Total revenue	$ 122	$ 768	$ 178	$ 1,166

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References + Details

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 924
-SubTopic 10
-Name Accounting Standards Codification
-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 11.L)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479941/924-10-S99-1

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 5
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-5

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 30
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-30

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 42
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-42

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-22

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 40
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-40

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 22
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-22

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 32
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-32

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Topic 280
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 41
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147482810/280-10-50-41

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 4
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147479806/606-10-50-4

+ Details

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)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon exercise of stock options (in shares)		1,022,050
Issuance of common stock upon exercise of stock options	617	$ 2	615
Issuance of common stock for settlement of restricted stock units (in shares)		1,008,620
Tax withholding on RSUs settlement (in shares)		(240,461)
Tax withholding on RSUs settlement	(2,053)		(2,053)
Stock-based compensation expense	9,082		9,082
Unrealized gains (losses) on available-for-sale securities, net of tax	(21)			(21)
Net loss	(20,172)				(20,172)
Balance at end of period (in shares) at Sep. 30, 2022		33,320,891
Balance at end of period at Sep. 30, 2022	40,357	$ 33	99,589	(102)	(59,163)
Balance at beginning of period (in shares) at Jun. 30, 2022		32,622,817
Balance at beginning of period at Jun. 30, 2022	45,710	$ 33	97,237	(81)	(51,479)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon exercise of stock options (in shares)		255,108
Issuance of common stock upon exercise of stock options	173		173
Issuance of common stock for settlement of restricted stock units (in shares)		614,184
Tax withholding on RSUs settlement (in shares)		(171,218)
Tax withholding on RSUs settlement	(1,210)		(1,210)
Stock-based compensation expense	3,389		3,389
Unrealized gains (losses) on available-for-sale securities, net of tax	(21)			(21)
Net loss	(7,684)				(7,684)
Balance at end of period (in shares) at Sep. 30, 2022		33,320,891
Balance at end of period at Sep. 30, 2022	$ 40,357	$ 33	99,589	(102)	(59,163)
Balance at beginning of period (in shares) at 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)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon exercise of stock options (in shares)	779,227	779,227
Issuance of common stock upon exercise of stock options	$ 460	$ 1	459
Issuance of common stock for settlement of restricted stock units (in shares)		1,503,925
Issuance of common stock for settlement of Restricted Stock Units (RSUs)	0	$ 2	(2)
Tax withholding on RSUs settlement (in shares)		(82,372)
Tax withholding on RSUs settlement	(564)		(564)
Stock-based compensation expense	10,981		10,981
Unrealized gains (losses) on available-for-sale securities, net of tax	(55)			(55)
Net loss	$ (26,328)				(26,328)
Balance at end of period (in shares) at Sep. 30, 2023	36,826,655	36,826,655
Balance at end of period at Sep. 30, 2023	$ 22,029	$ 37	114,652	46	(92,706)
Balance at beginning of period (in shares) at Jun. 30, 2023		36,033,361
Balance at beginning of period at Jun. 30, 2023	26,920	$ 36	111,403	34	(84,553)
Increase (Decrease) in Stockholders' Equity [Roll Forward]
Issuance of common stock upon exercise of stock options (in shares)		135,750
Issuance of common stock upon exercise of stock options	43		43
Issuance of common stock for settlement of restricted stock units (in shares)		728,362
Issuance of common stock for settlement of Restricted Stock Units (RSUs)	0	$ 1	(1)
Tax withholding on RSUs settlement (in shares)		(70,818)
Tax withholding on RSUs settlement	(507)		(507)
Stock-based compensation expense	3,714		3,714
Unrealized gains (losses) on available-for-sale securities, net of tax	12			12
Net loss	$ (8,153)				(8,153)
Balance at end of period (in shares) at Sep. 30, 2023	36,826,655	36,826,655
Balance at end of period at Sep. 30, 2023	$ 22,029	$ 37	$ 114,652	$ 46	$ (92,706)

STOCK-BASED COMPENSATION - Summary of Restricted Stock Units Activity (Details) - Restricted stock units	9 Months Ended
	Sep. 30, 2023 $ / shares shares
Number of Shares
Unvested, Balance at beginning of period (in shares) \| shares	5,619,013
Granted (in shares) \| shares	2,752,491
Vested (in shares) \| shares	(1,503,925)
Forfeited (in shares) \| shares	(633,405)
Unvested, Balance at end of period (in shares) \| shares	6,234,174
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	5.72
Vested (in dollars per share) \| $ / shares	7.20
Forfeited (in dollars per share) \| $ / shares	7.78
Unvested, Balance at end of period (in dollars per share) \| $ / shares	$ 6.52

LEASES - Operating Lease Costs (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Leases [Abstract]
Operating lease cost	$ 288	$ 263	$ 841	$ 802
Short-term lease cost	32	38	147	263
Total lease cost	$ 320	$ 301	$ 988	$ 1,065

NET LOSS PER SHARE

9 Months Ended

Sep. 30, 2023

Earnings Per Share [Abstract]

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 September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Numerator:
Net loss	$	(8,153)	$	(7,684)	$	(26,328)	$	(20,172)
Denominator:
Weighted-average shares outstanding - basic and diluted	36,010,106		32,836,014		35,291,207		32,228,429
Net loss per share, basic and diluted	$	(0.23)	$	(0.23)	$	(0.75)	$	(0.63)

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
	September 30, 2023	September 30, 2022
Stock options	2,997,359	4,037,721
Restricted stock units	6,234,174	5,104,347
Restricted common shares issued for business combination (see Note 12)	331,574	—
Total	9,563,107	9,142,068

FAIR VALUE MEASUREMENTS

9 Months Ended

Sep. 30, 2023

Fair Value Disclosures [Abstract]

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 $3.0 million and $1.7 million as of September 30, 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
	September 30, 2023
	Level 1		Level 2		Level 3		Fair Value
Assets:
Cash equivalents:
Money market funds	$	11,758	$	—	$	—	$	11,758
U.S. treasury securities	—		2,985		—		2,985
Total cash equivalents	11,758		2,985		—		14,743
Short-term investments:
Certificate of deposit	—		5,000		—		5,000
Corporate bonds	—		989		—		989
U.S. government agency securities	—		12,851		—		12,851
U.S. treasury securities	—		8,894		—		8,894
Total short-term investments	—		27,734		—		27,734
Long-term investments:
Corporate bonds	—		2,687		—		2,687
U.S. government agency securities	—		7,600		—		7,600
Total long-term investments	—		10,287		—		10,287
Total financial assets	$	11,758	$	41,006	$	—	$	52,764


	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 and nine months ended September 30, 2023.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details

INCOME TAXES (Details) - USD ($)	3 Months Ended		9 Months Ended
INCOME TAXES (Details) - USD ($)	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Income Tax Disclosure [Abstract]
Effective income tax rate			(1.80%)	(3.90%)
Income tax provision	$ (398,000)	$ 248,000	$ 453,000	$ 722,000
Unrecognized tax benefits	2,600,000	3,100,000	2,600,000	3,100,000
Income tax penalties and interest accrued related to unrecognized tax benefits	$ 0	$ 0	$ 0	$ 0

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Stockholders' equity:
Accounts receivable, allowance	$ 0	$ 250
Preferred stock, par or stated value per share (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, authorized (in shares)	10,000,000	10,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares 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)	36,826,655	34,625,875
Common stock, outstanding (in shares)	36,826,655	34,625,875

FAIR VALUE MEASUREMENTS (Tables)

9 Months Ended

Sep. 30, 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
	September 30, 2023
	Level 1		Level 2		Level 3		Fair Value
Assets:
Cash equivalents:
Money market funds	$	11,758	$	—	$	—	$	11,758
U.S. treasury securities	—		2,985		—		2,985
Total cash equivalents	11,758		2,985		—		14,743
Short-term investments:
Certificate of deposit	—		5,000		—		5,000
Corporate bonds	—		989		—		989
U.S. government agency securities	—		12,851		—		12,851
U.S. treasury securities	—		8,894		—		8,894
Total short-term investments	—		27,734		—		27,734
Long-term investments:
Corporate bonds	—		2,687		—		2,687
U.S. government agency securities	—		7,600		—		7,600
Total long-term investments	—		10,287		—		10,287
Total financial assets	$	11,758	$	41,006	$	—	$	52,764


	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

LEASES (Tables)

9 Months Ended

Sep. 30, 2023

Leases [Abstract]

Operating Lease Costs

Total operating lease related costs were as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Operating lease cost	$	288	$	263	$	841	$	802
Short-term lease cost	32		38		147		263
Total lease cost	$	320	$	301	$	988	$	1,065

Maturities of Operating Lease Liabilities

Maturities of operating lease liabilities as of September 30, 2023 were as follows (in thousands):


Fiscal year ending December 31,
Remainder of 2023	$	185
2024	603
2025	391
2026	265
2027	265
Thereafter	211
Total undiscounted cash flows	$	1,920
Less: imputed interest	(311)
Present value of lease liabilities	$	1,609

Operating lease liabilities, current	$	571
Operating lease liabilities, non-current	1,038
Total lease liabilities	$	1,609

RELATED PARTY TRANSACTIONS (Details) - USD ($)	3 Months Ended		9 Months Ended
RELATED PARTY TRANSACTIONS (Details) - USD ($)	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Related Party Transaction [Line Items]
Lease payment due to related party	$ 300,000	$ 300,000	$ 800,000	$ 800,000
Options outstanding (in shares)	2,997,359		2,997,359		3,542,836
Restricted stock units
Related Party Transaction [Line Items]
Granted unvested options (in shares)	6,234,174		6,234,174		5,619,013
Director
Related Party Transaction [Line Items]
Lease payment due to related party	$ 100,000	100,000	$ 100,000	100,000
Director \| Isabelle Geday \| Consulting Agreement
Related Party Transaction [Line Items]
Related party transaction, agreement term			3 years
Professional fees	100,000	$ 100,000	$ 200,000	$ 200,000
Director \| Isabelle Geday \| Consulting Agreement \| Related Party Transaction, Tranche One
Related Party Transaction [Line Items]
Related party transaction, agreement term			12 months
Due to related party, monthly amount	26,445		$ 26,445
Director \| Isabelle Geday \| Consulting Agreement \| Related Party Transaction, Tranche Two
Related Party Transaction [Line Items]
Related party transaction, agreement term			24 months
Due to related party, monthly amount	$ 19,445		$ 19,445
Director \| Isabelle Geday \| Consulting Agreement \| Restricted stock units
Related Party Transaction [Line Items]
Granted unvested options (in shares)	62,200		62,200
Director \| Isabelle Geday \| Consulting Agreement \| Convertible Preferred Stock
Related Party Transaction [Line Items]
Options outstanding (in shares)	455,000		455,000

Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss	$ (26,328)	$ (20,172)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	2,240	1,568
Stock-based compensation	10,981	9,082
Amortization of deferred income	(882)	(94)
Loss from equity method investment	2,487	0
Net accretion of discounts on available-for-sale securities	(698)	0
Gain on deconsolidation of subsidiary	0	(149)
Other, net	(3)	6
Changes in operating assets and liabilities:
Accounts receivable, net	(3,225)	4,234
Prepaid expenses and other assets	(495)	(1,799)
Accounts payable	(237)	408
Accrued expenses and other liabilities	1,544	23
Deferred revenue	1,866	517
Net cash used in operating activities	(12,750)	(6,376)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment	(1,075)	(655)
Purchases of available-for-sale securities and other	(35,373)	(6,399)
Proceeds from maturities of available-for-sale securities	33,150	0
Payments relating to investment in equity method investment	0	(520)
Proceeds from principal portion of related party loan	0	241
Other	(25)	0
Net cash used in investing activities	(3,323)	(7,333)
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of contingent consideration for business combination	(1,269)	(1,573)
Principal payments under vendor financing arrangements	(1,041)	(635)
Proceeds from exercise of stock options	460	601
Payments to tax authorities for shares withheld from employees	(564)	(2,053)
Payments of deferred offering costs	0	(256)
Other	79	0
Net cash used in financing activities	(2,335)	(3,916)
NET DECREASE IN CASH, CASH EQUIVALENTS AND RESTRICTED CASH	(18,408)	(17,625)
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, beginning of period	37,423	85,825
CASH, CASH EQUIVALENTS AND RESTRICTED CASH, end of period	19,015	68,200
Cash, cash equivalents and restricted cash at end of period:
Cash and cash equivalents	18,627	68,200
Restricted cash, noncurrent	388	0
Noncash investing and financing activities:
Purchase of property and equipment through vendor financing	2,592	1,809
Operating lease right-of-use assets, exchanged for lease obligations	480	63
Equity obtained in equity method investment in exchange for contribution of license agreement	$ 0	$ 11,563

LEASES

9 Months Ended

Sep. 30, 2023

Leases [Abstract]

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 September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Operating lease cost	$	288	$	263	$	841	$	802
Short-term lease cost	32		38		147		263
Total lease cost	$	320	$	301	$	988	$	1,065

The weighted-average remaining term of the Company’s operating leases was 4.1 years and 3.1 years as of September 30, 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 September 30, 2023 and December 31, 2022, respectively. Cash payments made related to operating lease liabilities were $0.3 million for both the three months ended September 30, 2023 and 2022, respectively and $0.8 million for both the nine months ended September 30, 2023 and 2022.

Maturities of operating lease liabilities as of September 30, 2023 were as follows (in thousands):


Fiscal year ending December 31,
Remainder of 2023	$	185
2024	603
2025	391
2026	265
2027	265
Thereafter	211
Total undiscounted cash flows	$	1,920
Less: imputed interest	(311)
Present value of lease liabilities	$	1,609

Operating lease liabilities, current	$	571
Operating lease liabilities, non-current	1,038
Total lease liabilities	$	1,609

In May 2023, the Company entered into an operating lease agreement for a new headquarter facility in Campbell, California with future lease payments of $2.6 million. The lease commenced in October 2023 with a lease term of approximately 5.4 years.

INTANGIBLE ASSETS AND GOODWILL (Tables)

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Intangible Assets

Intangible assets, net consisted of the following as of September 30, 2023 (in thousands):


	Gross Fair Value		Accumulated Amortization		Net Book Value
Developed technology	$	3,090	$	(1,112)	$	1,978
Customer relationships	1,830		(458)		1,372
IPR&D	500		—		500
Trade name and other	200		—		200
Total intangibles	$	5,620	$	(1,570)	$	4,050

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 September 30, 2023 is as follows (in thousands):


Fiscal year ending December 31,
Remainder of 2023	$	192
2024	767
2025	739
2026	427
2027	427
Thereafter	798
Total future amortization expense	$	3,350

BORROWINGS (Tables)

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

Schedule of Vendor Financing Arrangements

Vendor financing arrangements as of September 30, 2023 were as follows (in thousands):


Fiscal year ending December 31,	Amount
Remainder of 2023	$	322
2024	1,550
2025	994
2026	496
Total undiscounted cash flows	$	3,362
Less: Imputed interest	(361)
Present value of vendor financing arrangements	$	3,001

Vendor financing arrangements, current	$	1,623
Vendor financing arrangements, noncurrent	1,378
	$	3,001

Cover - shares	9 Months Ended
Cover - shares	Sep. 30, 2023	Oct. 31, 2023
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 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	900 E. Hamilton Ave.
Entity Address, Address Line Two	Suite 300
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		36,854,383
Entity Central Index Key	0001667011
Document Fiscal Year Focus	2023
Document Fiscal Period Focus	Q3
Amendment Flag	false
Current Fiscal Year End Date	--12-31

Pay vs Performance Disclosure - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
Pay vs Performance Disclosure - USD ($) $ in Thousands	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Pay vs Performance Disclosure
Net loss	$ (8,153)	$ (7,684)	$ (26,328)	$ (20,172)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

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+ Details

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Revenue Concentration Risk (Details)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2022
Customer B \| Revenue from Contract with Customer Benchmark \| Customer Concentration Risk
Concentration Risk [Line Items]
Concentration risk, percentage	13.00%	24.00%	26.00%

STOCK-BASED COMPENSATION - Stock-Based Compensation Related to Stock-Based Awards to Employees (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation	$ 3,714	$ 3,389	$ 10,981	$ 9,082
Cost of revenue
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation	181	118	386	474
Research and development
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation	1,742	1,798	5,656	4,435
Sales and marketing
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation	666	679	2,088	1,678
General and administrative
Share-based Payment Arrangement, Expensed and Capitalized, Amount [Line Items]
Total stock-based compensation	$ 1,125	$ 794	$ 2,851	$ 2,495

BORROWINGS

9 Months Ended

Sep. 30, 2023

Debt Disclosure [Abstract]

BORROWINGS

Vendor financing arrangements—The Company has various vendor financing arrangements with extended payment 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 September 30, 2023 were as follows (in thousands):


Fiscal year ending December 31,	Amount
Remainder of 2023	$	322
2024	1,550
2025	994
2026	496
Total undiscounted cash flows	$	3,362
Less: Imputed interest	(361)
Present value of vendor financing arrangements	$	3,001

Vendor financing arrangements, current	$	1,623
Vendor financing arrangements, noncurrent	1,378
	$	3,001

Interest expense from vendor financing arrangements was $0.1 million and less than $0.1 million for the three months ended September 30, 2023 and 2022, respectively. Interest expense from vendor financing arrangements was $0.1 million for both the nine months ended September 30, 2023 and 2022.

- Definition

The entire disclosure for information about short-term and long-term debt arrangements, which includes amounts of borrowings under each line of credit, note payable, commercial paper issue, bonds indenture, debenture issue, own-share lending arrangements and any other contractual agreement to repay funds, and about the underlying arrangements, rationale for a classification as long-term, including repayment terms, interest rates, collateral provided, restrictions on use of assets and activities, whether or not in compliance with debt covenants, and other matters important to users of the financial statements, such as the effects of refinancing and noncompliance with debt covenants.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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-Section 50
-Paragraph 1E
-Subparagraph (b)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1E

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-Section 50
-Paragraph 1I
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Reference 12: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-Section 50
-Paragraph 1I
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-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

Reference 13: http://www.xbrl.org/2003/role/disclosureRef
-Topic 470
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-Name Accounting Standards Codification
-Section 50
-Paragraph 1I
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481139/470-20-50-1I

+ Details

STOCK-BASED COMPENSATION - Narrative (Details) - USD ($) $ in Thousands		3 Months Ended		9 Months Ended		12 Months Ended
	Dec. 27, 2022	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 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				$ 4,200	$ 9,800
Aggregate intrinsic value, vested				300	$ 300
Option, cost not yet recognized		$ 1,200		$ 1,200
Nonvested award, unrecognized, period for recognition				3 years 2 months 12 days
Granted (in shares)				420,000	0
Compensation expenses		3,714	$ 3,389	$ 10,981	$ 9,082
Semifore
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Compensation expenses		100		$ 300
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				2 years 9 months 18 days
Grants in period, vested, grant date fair value				$ 11,800	$ 6,300
Nonvested award, excluding options, unrecognized		$ 33,500		33,500
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				$ 1,000
Restricted Stock \| Semifore
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Granted (in shares)	331,574			331,574

STOCK-BASED COMPENSATION

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

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), with 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 September 30, 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
			September 30, 2023
Shares available for future grant under the 2021 Plan			3,265,292
Shares available for future grant under the 2021 ESPP			1,268,564
Shares available for future grant under the 2022 Inducement Plan			1,003,680

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 and 2021 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
Granted	420,000	$	6.54
Exercised	(779,227)	$	0.59
Canceled	(186,250)	$	3.50
BALANCE—September 30, 2023	2,997,359	$	1.82	6.20	$	14,070
Options vested and exercisable—September 30, 2023	2,398,597	$	1.16	5.65	$	12,822

The aggregate intrinsic value of the options exercised for the nine months ended September 30, 2023 and 2022 was $4.2 million and $9.8 million, respectively. The total grant-date fair value of options vested was $0.3 million for both the nine months ended September 30, 2023 and 2022, respectively.

As of September 30, 2023, there was $1.2 million of unamortized stock-based compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of 3.2 years.

The fair value of each stock option granted is estimated using the Black-Scholes option-pricing model. The Company determines valuation assumptions for Black-Scholes as follows:

Risk-Free Interest Rate—The Company bases the risk-free interest rate used in the Black-Scholes option-pricing model on the implied yield available on US Treasury zero coupon issues with an equivalent expected term of the options for each option group.

Expected Term—The expected term represents the period that the Company’s stock-based awards are expected to be outstanding. The expected term assumption is based on the simplified method. The Company expects to continue using the simplified method until sufficient information about the Company’s historical behavior is available.

Volatility—The Company determines the price volatility factor based on the historical volatilities of the Company’s peer group as the Company does not have sufficient trading history for its common stock.

Dividend Yield—The Company has never declared or paid any cash dividend and does not currently plan to pay a cash dividend in the foreseeable future. Consequently, the Company used an expected dividend yield of zero.

The following table summarizes the valuation assumptions:

Stock Options Valuation Assumptions


						Three and Nine Months Ended September 30,
						2023
Fair value of common stock						$6.54
Expected volatility						44.0%
Expected term (in years)						6.0
Risk-free interest rate						3.9%
Expected dividend yield						0%

The Company granted 420,000 stock options during the nine months ended September 30, 2023 and had no stock option grants during the nine months ended September 30, 2022.

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	2,752,491	$	5.72
Vested	(1,503,925)	$	7.20
Canceled	(633,405)	$	7.78
Unvested—September 30, 2023	6,234,174	$	6.52

The total grant-date fair value of restricted stock units vested was $11.8 million and $6.3 million during the nine months ended September 30, 2023 and 2022, respectively.

As of September 30, 2023, there was $33.5 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 2.8 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 September 30, 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 September 30, 2023, the total unamortized compensation cost was $1.0 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 unaudited condensed consolidated statements of loss (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Cost of revenue	$	181	$	118	$	386	$	474
Research and development	1,742		1,798		5,656		4,435
Sales and marketing	666		679		2,088		1,678
General and administrative	1,125		794		2,851		2,495
Total stock-based compensation	$	3,714	$	3,389	$	10,981	$	9,082

During the three and nine months ended September 30, 2023, the Company recognized $0.1 million and $0.3 million, respectively as stock-based compensation expense for common stock issued as part of the Semifore Acquisition.

ACQUISITION (Tables)

9 Months Ended

Sep. 30, 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

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 30, 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. The operating results for the three and nine months ended September 30, 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	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.
Cash, Cash Equivalents and Restricted Cash	Cash, Cash Equivalents and Restricted Cash The Company considers all highly liquid investments purchased with original maturities of three months or less from the purchase date to be cash equivalents. The Company’s cash equivalents include deposits in money market accounts which were unrestricted as to withdrawal or use and are stated at fair value. As of September 30, 2023, cash and cash equivalents consisted primarily of checking, savings, money market accounts and highly liquid investments with original maturities of three months or less. Interest earned on cash and cash equivalents is included in other income (expense), net in the unaudited consolidated statements of loss. As of September 30, 2023, the Company’s long-term restricted cash balance was $0.4 million, primarily related to a letter of credit for its facility lease agreement. Restricted cash, noncurrent is included in other assets on the unaudited condensed consolidated balance sheets.
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.
Natural of Products and Services	Nature of Products and Services The Company’s revenue is primarily derived from licensing intellectual property, licensing software, support and maintenance services, professional services, training services, and royalties. Design Solutions Interconnect Solutions product arrangements provide customers the right to software licenses, services, and support and maintenance. The Company enters into licensing arrangements with customers that typically range from two to three years and generally consist of delivery of a design license that grants the customer the right to use the IP to design a contractually defined number of products, a right to access the benefits of its proprietary software tool (RTL), and support and maintenance services that provide the customer a significant benefit from ongoing access to Corporate Application Engineers (CAE) and Field Application Engineers (FAE) (collectively, Application Engineer Support Services) to perform certain verifications including benchmark performance, simulations and ultimately, through the RTL, instantiate designs into silicon over the design term. Application Engineer Support Services are integral and fundamental to the customer’s ability to derive its intended benefit from the IP. CAEs are part of the product development team providing detailed requirements for engineering projects, working very closely with a customer’s chief technology officer and the marketing department, and performing quality assurance testing of customer products prior to shipment to their customers. FAEs provide assistance to the customer’s engineering team in translating their desired SoC architecture into inputs for NoC IP configuration, assistance in optimizing the NoC configuration, answer to customer questions by the online support system or phone, constructive reviews of the progress achieved by the customer’s development team and provision of advice on how to best use the licensed IP, performance of design reviews before customer project RTL freeze and tape-out to ensure the customer used the licensed IP configuration tooling as intended so that the RTL output meets customer requirements and expectations. FAE reviews of the customer’s design are mandatory and consist of an understanding of the customer requirements and analysis of the adequacy of the contemplated IP considering the customer’s desired architecture and design goals and objectives, taking into consideration bandwidth, coherence/non-coherence, latency, clock and timing, areas, and any and all constraints, as identified and specific to the design under review. Besides Application Engineer Support Services, support and maintenance services also consist of a stand-ready obligation to provide technical support and software updates over the support term. Generally, the first-year of technical support and software updates are bundled with and into the license fee with a customer option to renew additional years of support throughout the license term. However, the Company continues to provide technical support and software updates throughout the license term even if the customer does not renew these services in subsequent years, making the license term and support and maintenance term co-terminus. Considering the nature of the combined license and assisting the Company’s customers in applying its IP technology in its customers’ development environment and the relative significance thereof, the Company has concluded that its Interconnect Solutions IP licensing arrangements are not distinct from its obligation to provide the Application Engineer Support Services and benefits of the RTL. The Interconnect Solutions IP, RTL, and the application engineering support services serve to fulfill its commitment to the customer, as they represent inputs to a single, combined performance obligation that commences upon the later of the arrangement effective date or transfer of the software license. The design license and the regular two-way interaction between the design license tool, RTL, and the application engineering support services give the customer the intended benefit from the arrangement, which is the ability to commercialize their design. Customers cannot benefit from the design license on its own or together with other readily available resources as no other RTL or Application Engineer Support Services providers exist in the marketplace that a customer could use with the design license. Consequently, the RTL and Application Engineer Support Services cannot be used on their own or together with any other design license as the Company does not allow the use of the RTL or provide Application Engineer Support Services separately from the design license. Further, although technical support and software updates is a distinct performance obligation, it is accounted for as if it were part of a single performance obligation that includes the licenses, RTL and Application Engineer Support Services because the technical support and updates are provided in practice for the same period of time and have the same time-based pattern of transfer to the customer as the combined design license, RTL, and Application Engineer Support Services. Revenues that are derived from the sale of a licensee’s products that incorporate the Company’s IP are classified as royalty revenues. Royalty revenues are recognized during the quarter in which the sale of the product incorporating the Company’s IP occurs. Royalties are calculated either as a percentage of the revenues received by a licensee’s sale of products incorporating the Company’s IP or on a per unit basis, as specified in the agreements with the licensees. For a majority of the Company’s royalty revenues, it receives the actual sales data from its customers after the quarter ends and accounts for it as unbilled receivables. When the Company does not receive actual sales data from the customer prior to the finalization of its financial statements, royalty revenues are recognized based on its estimation of the customer’s sales during the quarter. SoC Integration Automation Software Solutions SoC Integration Automation software (SIA) (formerly IP deployment) solutions product arrangements provide customers the right to software licenses, software updates and technical support. The software licenses are time-based licenses with terms generally ranging from one to three years. These arrangements generally have two distinct performance obligations that consist of transferring the licensed software and the support and maintenance service. Support and maintenance services consist of a stand-ready obligation to provide technical support and software updates over the support term. For the majority of these contracts, there are no termination rights and the transaction price is non-refundable. Revenue allocated to the software license is generally recognized at a point in time upon the later of the delivery date or the beginning of the license period, and revenue allocated to support services is recognized ratably over the support term. Certain SIA solutions contracts include termination rights that allow the customer to cancel and receive a pro-rata refund on support and maintenance services at the end of each month of the contract period, which results in a ratable recognition of the related license revenue over the contract term. Professional Services The Company’s agreements may include service elements (other than maintenance and support services). These services include training, design assistance, and consulting. Services performed on a time and materials basis are recognized over the period the services are provided either using an output method such as labor hours, or a method that is otherwise consistent with the way in which value is delivered to the customer. Services performed on a fixed price basis are recognized over time, generally using costs incurred or hours expended to measure progress. Multiple Performance Obligations Most of the Company’s contracts with customers contain multiple performance obligations. For these contracts, the Company accounts for individual performance obligations separately, if they are distinct. The transaction price is allocated to the separate performance obligations on a relative standalone selling price basis, which are estimated considering multiple factors including observable industry pricing practices and internal pricing strategies and objectives. Standalone selling prices of software license are typically estimated using the residual approach. Standalone selling prices of professional services are typically estimated based on observable transactions when these services are sold on a standalone basis. Transaction price Revenue is recognized when, or as, control of a promised product or service transfers to a client, in an amount that reflects the consideration to which the Company expects to be entitled in exchange for transferring those products or services. If the consideration promised in a contract includes a variable amount, the Company estimates the amount to which it expects to be entitled using either the expected value or most likely amount method, to the extent it is probable that a significant reversal of cumulative revenue recognized will not occur. Generally, the transaction price of the Company’s contracts is fixed at the inception of the contract, except for variable royalties. The Company’s contracts generally do not include terms that could cause variability in the transaction price. The Company assesses the timing of the transfer of goods or services to the customer as compared to the timing of payments to determine whether a significant financing component exists. As a practical expedient, the Company does not assess the existence of a significant financing component when the difference between payment and transfer of deliverables is a year or less. If the difference in timing arises for reasons other than the provision of finance to either the customer or the Company, no financing component is deemed to exist. When contracts involve a significant financing component, the Company adjusts the promised amount of consideration for the effects of the time value of money if the timing of payments agreed to by the parties to the contract (either explicitly or implicitly) provide the customer with a significant benefit of financing. The Company reports revenue net of any revenue-based taxes assessed by governmental authorities that are imposed on and concurrent with specific revenue-producing transactions. In instances where foreign licensees withhold and remit taxes to local authorities in accordance with local laws and regulations, the Company recognizes and presents revenue on a gross basis, and includes the withholding tax in income tax expense. Flexible Spending Accounts Some customers enter into a non-cancelable flexible spending account agreements (FSA Agreements) whereby the customer commits to a fixed dollar amount over a specified period of time that can be used to purchase from a list of the Company’s products or services. These agreements do not meet the definition of a revenue contract until the customer executes a separate order to identify the required products and services that they are purchasing. The combination of the FSA agreement and the subsequent order creates enforceable rights and obligations, thus meeting the definition of a revenue contract. Each separate order under the agreement is treated as an individual contract and accounted for based on the respective performance obligations included within the FSA agreements. Contract modifications The Company’s contracts may be modified to add, remove or change existing performance obligations. The accounting for modifications to the Company’s contracts involves assessing whether the products and services added to an existing contract are distinct and whether the pricing is at the standalone selling price. Products and services added that are not distinct are accounted for on a cumulative catch-up basis, while those that are distinct are accounted for prospectively, either as a separate contract if the additional services are priced at the standalone selling price, or as a termination of the existing contract and creation of a new contract if not priced at the standalone selling price. The Company’s more significant contract modifications include extensions of the design license term and the purchase of additional years of support and maintenance. Judgments The Company’s contracts with customers often include promises to transfer multiple products and services to a customer. Determining whether products and services are considered distinct performance obligations that should be accounted for separately versus together requires significant judgment. Judgment is also required to determine the standalone selling price for each distinct performance obligation. Contract Balances The timing of revenue recognition may differ from the timing of invoicing to customers, and these timing differences result in receivables (billed or unbilled), contract assets, or contract liabilities (deferred revenue) on the Company’s consolidated balance sheets. The Company records a contract asset when revenue is recognized prior to the right to invoice. The Company records deferred revenue when it invoices customers and revenue is not yet recognized. Customers are generally invoiced in single or annual amounts, although some customers are invoiced more frequently over time. The Company records an unbilled receivable when revenue is recognized and it has an unconditional right to invoice and receive payment. The Company capitalizes sales commission as costs of obtaining a contract when they are incremental and, if they are expected to be recovered, amortized in a manner consistent with the pattern of transfer of the good or service to which the asset relates.
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 $3.0 million and $1.7 million as of September 30, 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. Money market funds are highly liquid investments and are actively traded. The fair value is based on quoted prices for identical assets in active markets and therefore classified as Level 1 of the fair value hierarchy. The Company’s other investments are considered Level 2 financial instruments as their fair values are determined using inputs that are directly or indirectly observable in active or less active markets. There were no transfers between levels during the three and nine months ended September 30, 2023
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.

- Definition

Disclosure of accounting policy for revenue from contract with customer.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 17
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Topic 606
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Reference 6: http://www.xbrl.org/2003/role/disclosureRef
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Reference 8: http://www.xbrl.org/2003/role/disclosureRef
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Reference 9: http://www.xbrl.org/2003/role/exampleRef
-Name Accounting Standards Codification
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Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Name Accounting Standards Codification
-Topic 606
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+ Details

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 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
	September 30, 2023		December 31, 2022
Customer A	24	%	—	%
Customer B	14	%	32	%

Revenue from the Company’s major customers representing 10% or more of total revenue was as follows:


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023	2022
Customer B	13	%	24	%	*	26	%

* Customer accounted for less than 10% of total revenue at period end.

ACQUISITION

9 Months Ended

Sep. 30, 2023

Business Combination and Asset Acquisition [Abstract]

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 SoC Integration Automation software (SIA) (formerly IP deployment (IPD)) 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 years.

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 and $1.0 million as compensation expense during the three and nine months ended September 30, 2023, respectively.

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.

DESCRIPTION OF BUSINESS	9 Months Ended
DESCRIPTION OF BUSINESS	Sep. 30, 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.

INTANGIBLE ASSETS AND GOODWILL - Narrative (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Goodwill and Intangible Assets Disclosure [Abstract]
Amortization expense	$ 200,000	$ 100,000	$ 600,000	$ 400,000
Goodwill	4,178,000		4,178,000		$ 4,218,000
Goodwill impairments	$ 0	$ 0	$ 0	$ 0

- Definition

Amount after accumulated impairment loss of an asset representing future economic benefits arising from other assets acquired in a business combination that are not individually identified and separately recognized.

+ References + Details

NET LOSS PER SHARE - Schedule of Net Loss Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Numerator:
Net loss	$ (8,153)	$ (7,684)	$ (26,328)	$ (20,172)
Denominator:
Weighted-average shares outstanding - basic (in shares)	36,010,106	32,836,014	35,291,207	32,228,429
Weighted-average shares outstanding - diluted (in shares)	36,010,106	32,836,014	35,291,207	32,228,429
Net loss per share, basic (in dollars per share)	$ (0.23)	$ (0.23)	$ (0.75)	$ (0.63)
Net loss per share, diluted (in dollars per share)	$ (0.23)	$ (0.23)	$ (0.75)	$ (0.63)

- Definition

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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- Definition

The amount of net income (loss) for the period available to each share of common stock or common unit outstanding during the reporting period and to each share or unit that would have been outstanding assuming the issuance of common shares or units for all dilutive potential common shares or units outstanding during the reporting period.

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+ Details

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

REVENUE - Contract Balances on Condensed Consolidated Balance Sheet (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Revenue from Contract with Customer [Abstract]
Accounts receivable, net	$ 10,370	$ 7,143
Contract assets	1,192	1,180
Deferred revenue	$ 52,545	$ 50,679

FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Millions	Sep. 30, 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	$ 3.0	$ 1.7

FAIR VALUE MEASUREMENTS - Fair Value, Assets Measured on Recurring Basis (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total cash equivalents	$ 14,743	$ 30,428
Total short-term investments	27,734	30,728
Total long-term investments	10,287	4,427
Total financial assets	52,764	65,583
Level 1
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total cash equivalents	11,758	30,428
Total short-term investments	0	0
Total long-term investments	0	0
Total financial assets	11,758	30,428
Level 2
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total cash equivalents	2,985	0
Total short-term investments	27,734	30,728
Total long-term investments	10,287	4,427
Total financial assets	41,006	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	11,758	30,428
Money market funds \| Level 1
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total cash equivalents	11,758	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
U.S. treasury securities
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total cash equivalents	2,985
Total short-term investments	8,894	8,377
U.S. treasury securities \| Level 1
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total cash equivalents	0
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 cash equivalents	2,985
Total short-term investments	8,894	8,377
U.S. treasury securities \| Level 3
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total cash equivalents	0
Total short-term investments	0	0
Certificate of deposit
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total short-term investments	5,000
Certificate of deposit \| Level 1
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total short-term investments	0
Certificate of deposit \| Level 2
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total short-term investments	5,000
Certificate of deposit \| Level 3
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total short-term investments	0
Commercial paper
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total short-term investments		2,603
Commercial paper \| Level 1
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total short-term investments		0
Commercial paper \| Level 2
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total short-term investments		2,603
Commercial paper \| Level 3
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total short-term investments		0
Corporate bonds
Fair Value Disclosure, Asset and Liability, Not Measured at Fair Value [Line Items]
Total short-term investments	989	3,971
Total long-term investments	2,687	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	989	3,971
Total long-term investments	2,687	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	12,851	15,777
Total long-term investments	7,600	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	12,851	15,777
Total long-term investments	7,600	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

Condensed Consolidated Balance Sheets - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Current assets:
Cash and cash equivalents	$ 18,627	$ 37,423
Short-term investments	27,734	30,728
Accounts receivable, net of allowance of $0 and $250 as of September 30, 2023 and December 31, 2022, respectively	10,370	7,143
Prepaid expenses and other current assets	5,249	5,818
Total current assets	61,980	81,112
Property and equipment, net	5,430	3,617
Long-term investments	10,287	4,427
Equity method investment	9,410	11,897
Operating lease right-of-use assets	1,598	1,883
Intangibles, net	4,050	4,575
Goodwill	4,178	4,218
Other assets	5,238	3,787
TOTAL ASSETS	102,171	115,516
Current liabilities:
Accounts payable	445	572
Accrued expenses and other current liabilities	11,983	12,095
Operating lease liabilities, current	571	899
Deferred revenue, current	29,898	28,839
Vendor financing arrangements, current	1,623	1,264
Total current liabilities	44,520	43,669
Deferred revenue, noncurrent	22,647	21,840
Operating lease liabilities, noncurrent	1,038	1,009
Vendor financing arrangements, noncurrent	1,378	448
Deferred income, noncurrent	9,108	9,993
Other liabilities	1,451	1,022
Total liabilities	80,142	77,981
Commitments and contingencies (Note 11)
Stockholders' equity:
Preferred stock, par value of $0.001 - 10,000,000 shares authorized and no shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively	0	0
Common stock, par value of $0.001 - 300,000,000 shares authorized as of September 30, 2023 and December 31, 2022; 36,826,655 and 34,625,875 shares issued and outstanding as of September 30, 2023 and December 31, 2022, respectively	37	34
Additional paid-in capital	114,652	103,778
Accumulated other comprehensive income	46	101
Accumulated deficit	(92,706)	(66,378)
Total stockholders' equity	22,029	37,535
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$ 102,171	$ 115,516

REVENUE - Capitalized Direct Commission Costs (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Revenue from Contract with Customer [Abstract]
Short-term commission capitalized in prepaid expenses and other current assets	$ 2,436	$ 2,636
Long-term commission capitalized in other assets	1,274	1,535
Total	$ 3,710	$ 4,171

INCOME TAXES	9 Months Ended
INCOME TAXES	Sep. 30, 2023
Income Tax Disclosure [Abstract]
INCOME TAXES	INCOME TAXES The Company’s effective tax rate was (1.8)% and (3.9)% for the nine months ended September 30, 2023 and 2022, respectively. The Company’s income tax provision was $0.5 million and $0.7 million for the nine months ended September 30, 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 a decrease in the income tax provision for the period ended September 30, 2023 compared to the period ended September 30, 2022. The Company’s management continuously evaluates the need for a valuation allowance and, as of September 30, 2023, concluded that a full valuation allowance on its federal, state, and certain foreign jurisdictions deferred tax assets was still appropriate. As of September 30, 2023 and 2022, the Company’s gross liability for unrecognized tax benefits was $2.6 million and $3.1 million, respectively. The Company’s practice is to recognize interest and/or penalties related to income tax matters in income tax expense. As of September 30, 2023 and 2022, the Company had no accrued interest or penalties related to its unrecognized tax benefits. If any unrecognized tax benefits are realized, it would not result in any income tax benefit as the Company currently has a full valuation allowance against the deferred tax assets in which there is currently an uncertain tax benefit.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References

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+ Details

STOCK-BASED COMPENSATION - Summary of Stock Options Activity (Details) - USD ($) $ / shares in Units, $ in Thousands	9 Months Ended		12 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Number of Shares
Balance at beginning of period (in shares)	3,542,836
Granted (in shares)	420,000	0
Exercised (in shares)	(779,227)
Canceled (in shares)	(186,250)
Balance at end of period (in shares)	2,997,359		3,542,836
Number of Shares, Options vested and exercisable (in shares)	2,398,597
Weighted-Average Exercise Price
Balance at beginning of period (in dollars per share)	$ 1.08
Granted (in dollars per share)	6.54
Exercised (in dollars per share)	0.59
Canceled (in dollars per share)	3.50
Balance at end of period (in dollars per share)	1.82		$ 1.08
Weighted-Average Exercise Price, Options vested and exercisable (in dollars per share)	$ 1.16
Stock Options Additional Disclosures
Weighted-Average Remaining Contractual Term, Balance	6 years 2 months 12 days		6 years 2 months 1 day
Weighted-Average Remaining Contractual Term, Options vested and exercisable	5 years 7 months 24 days
Aggregate Intrinsic Value, Balance	$ 14,070		$ 11,416
Aggregate Intrinsic Value, Options vested and exercisable	$ 12,822

Condensed Consolidated Statements of Comprehensive Loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Statement of Comprehensive Income [Abstract]
Net loss	$ (8,153)	$ (7,684)	$ (26,328)	$ (20,172)
Other comprehensive loss:
Unrealized gains (losses) on available-for-sale securities, net of tax	12	(21)	(55)	(21)
Comprehensive loss	$ (8,141)	$ (7,705)	$ (26,383)	$ (20,193)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

+ References

+ Details

EQUITY METHOD INVESTMENT	9 Months Ended
EQUITY METHOD INVESTMENT	Sep. 30, 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-year technology license and services agreement which can be extended automatically for another five-year term, and the remaining was paid in cash. The license agreement provides Transchip the right to software licenses, services, software updates and technical support. On the closing date, the license agreement including the support and maintenance services to be provided to Transchip was valued to be $11.6 million, which was recorded as deferred income and will be recognized as other income (expense), net over a period of ten years on a straight line basis after delivery of the license. The license was delivered to Transchip on September 2, 2022. For the three and nine months ended September 30, 2023, the Company recognized income of $0.3 million and $0.9 million, respectively, for the license agreement. Deconsolidation of Transchip as a subsidiary Prior to closing of the Transchip transaction, Transchip was a wholly-owned subsidiary of the Company with limited operations. Upon closing of the Transchip transaction, the Company no longer has control, and therefore deconsolidated Transchip. Accordingly, the Company derecognized all the assets and liabilities of Transchip and recognized a disposal gain of $0.1 million, included in other income (expense), net in the unaudited condensed consolidated statements of loss and comprehensive loss, for the nine months ended September 30, 2022. The Company’s ownership interest of Transchip’s common stock was 35.0% on a fully diluted basis as of September 30, 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 September 30, 2023, the carrying value of the investment in Transchip was $9.4 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. The Company’s loss from its proportionate share of its equity method investment in Transchip was $0.9 million and $2.5 million for the three and nine months ended September 30, 2023, respectively. The Company concluded that there were no indicators of impairment related to the Company’s equity method investment in Transchip as of September 30, 2023.

STOCK-BASED COMPENSATION - Shares Available for Future Grant (Details)	Sep. 30, 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)	3,265,292
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)	1,003,680

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

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+ Details

INTANGIBLE ASSETS AND GOODWILL - Schedule of Intangible Assets (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Finite-Lived Intangible Assets [Line Items]
Intangible assets, gross	$ 5,620	$ 5,570
Finite-lived intangible assets, accumulated amortization	(1,570)	(995)
Total future amortization expense	3,350
Intangible assets, net	4,050	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	200	150
Developed technology
Finite-Lived Intangible Assets [Line Items]
Finite-lived intangible assets, gross	3,090	3,090
Finite-lived intangible assets, accumulated amortization	(1,112)	(708)
Total future amortization expense	1,978	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	(458)	(287)
Total future amortization expense	$ 1,372	$ 1,543

RELATED PARTY TRANSACTIONS	9 Months Ended
RELATED PARTY TRANSACTIONS	Sep. 30, 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 September 30, 2023 and 2022 and $0.1 million for both the nine months ended September 30, 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 September 30, 2023 and 2022, the Company paid Ms. Geday $0.1 million for consulting services. For the nine months ended September 30, 2023 and 2022, the Company paid Ms. Geday $0.2 million for consulting services. Lastly, the 455,000 stock options and 62,200 RSUs granted in connection with Ms. Geday’s prior employment continue to vest. In December 2022, the Company entered into a no-fee non-exclusive evaluation license agreement of Magillem products with Transchip. The evaluation was extended and is ongoing as of September 30, 2023. Commencing August 2023, Transchip is carrying out a no-fee evaluation of additional Company products. See Note 13 Equity Method Investment, to our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report on Form 10-Q for additional discussion of the Company’s transactions with Transchip.

- Definition

The entire disclosure for related party transactions. Examples of related party transactions include transactions between (a) a parent company and its subsidiary; (b) subsidiaries of a common parent; (c) and entity and its principal owners; and (d) affiliates.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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+ Details

INVESTMENTS (Tables)

9 Months Ended

Sep. 30, 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 September 30, 2023
	Amortized Cost		Unrealized Losses		Aggregate Fair Value
Assets:
U.S. government agency securities	$	20,531	$	(80)	$	20,451
U.S. treasury securities	11,883		(4)		11,879
Money market funds	11,758		—		11,758
Certificate of deposit	5,000		—		5,000
Corporate bonds	3,700		(24)		3,676
Total financial assets	$	52,872	$	(108)	$	52,764


	As of December 31, 2022
	Amortized Cost		Unrealized Losses		Aggregate Fair Value
Assets:
Money market funds	$	30,428	$	—	$	30,428
U.S. government agency securities	18,508		(40)		18,468
U.S. treasury securities	8,379		(2)		8,377
Corporate bonds	5,717		(10)		5,707
Commercial paper	2,604		(1)		2,603
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):


	September 30, 2023
Less than one year	$	42,477
1-2 years	10,287
Total	$	52,764

- Definition

Tabular disclosure of investment in debt security measured at fair value with change in fair value recognized in other comprehensive income (available-for-sale).

+ References

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Reference 4: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (c)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-2

Reference 5: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
-Subparagraph (a)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-2

Reference 6: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 2
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-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-2

Reference 7: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
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Reference 8: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
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-URI https://asc.fasb.org//1943274/2147481800/320-10-50-2

Reference 9: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
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-Name Accounting Standards Codification
-Section 50
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Reference 10: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
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-Name Accounting Standards Codification
-Section 50
-Paragraph 3
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-URI https://asc.fasb.org//1943274/2147481800/320-10-50-3

Reference 11: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
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-Paragraph 3
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-URI https://asc.fasb.org//1943274/2147481800/320-10-50-3

Reference 12: http://www.xbrl.org/2009/role/commonPracticeRef
-Topic 320
-SubTopic 10
-Name Accounting Standards Codification
-Section 50
-Paragraph 3
-Subparagraph (d)
-Publisher FASB
-URI https://asc.fasb.org//1943274/2147481800/320-10-50-3

+ Details

BORROWINGS - Schedule of Vendor Financing Arrangements (Details) - Vendor Financing Arrangements $ in Thousands	Sep. 30, 2023 USD ($)
Debt Instrument [Line Items]
Remainder of 2023	$ 322
2024	1,550
2025	994
2026	496
Total undiscounted cash flows	3,362
Less: Imputed interest	(361)
Present value of vendor financing arrangements	3,001
Vendor financing arrangements, current	1,623
Vendor financing arrangements, noncurrent	$ 1,378

LEASES - Maturities of Operating Lease Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Leases [Abstract]
Remainder of 2023	$ 185
2024	603
2025	391
2026	265
2027	265
Thereafter	211
Total undiscounted cash flows	1,920
Less: imputed interest	(311)
Present value of lease liabilities	1,609
Operating lease liabilities, current	571	$ 899
Operating lease liabilities, non-current	$ 1,038	$ 1,009

COMMITMENTS AND CONTINGENCIES	9 Months Ended
COMMITMENTS AND CONTINGENCIES	Sep. 30, 2023
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	COMMITMENTS AND CONTINGENCIESLetter of Credit—In conjunction with the execution of the operating lease for the Company’s new headquarter facility, a letter of credit in the amount of $0.4 million was issued and outstanding as of September 30, 2023. No draws have been made under such letter of credit. There was no letter of credit issued and outstanding as of December 31, 2022. Indemnifications—The Company often enters into limited indemnification provisions in license agreements in the ordinary course of the Company’s licensing business. Pursuant to these provisions, which are often inserted into license agreements in the semiconductor IP and software licensing industries, the Company agrees to indemnify, hold harmless, and reimburse the indemnified parties up to a capped amount for losses suffered or incurred by such indemnified parties due to third party claims if such claims are determined to be caused by the Company. The term of these indemnification provisions is generally either for a term of years or perpetual, in each case beginning on the execution date of the agreement. The Company has also agreed to indemnify under indemnity agreements with its directors and officers, to the extent legally permissible, against liabilities incurred in connection with any action in which such individual may be involved by reason of such individual being or having been a director or officer, other than certain liabilities arising from willful misconduct of the individual. The Company has incurred no actual payment obligations from these above-noted indemnification provisions and director and officer indemnity agreements for three and nine months ended September 30, 2023 and 2022 and the unaudited condensed consolidated financial statements do not include liabilities for any potential indemnity-related obligations as of September 30, 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 another defendant in the semiconductor industry, by Network System Technologies, LLC in the United States District Court for the Western District of Texas, and 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 seeking damages and injunctive relief. On July 21, 2023, the District Court for the Western District of Texas issued its ruling on the Company Motion to Dismiss by granting the motion in part and denying the motion in part with the leave to amend. The plaintiff filed a First Amended Complaint (FAC) on August 7, 2023, and Arteris filed a Motion to Dismiss the pre-suit indirect and willful infringement claims on September 5, 2023. Network System Technologies, LLC’s opposition was filed on October 10, 2023, and Arteris filed a reply on October 17, 2023. The Company continues 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. The Company has no other material contractual noncancelable commitments as of September 30, 2023 and December 31, 2022.

REVENUE (Tables)

9 Months Ended

Sep. 30, 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 September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Licensing, support and maintenance	$	12,084	$	11,135	$	36,926	$	35,743
Variable royalties	1,068		695		4,058		2,266
Other	122		768		178		1,166
Total	$	13,274	$	12,598	$	41,162	$	39,175

Contract Balances on Condensed Consolidated Balance Sheet

The following table provides information about accounts receivable, net, contract assets and deferred revenue (in thousands):


	As of
	September 30, 2023		December 31, 2022
Accounts receivable, net	$	10,370	$	7,143
Contract assets	$	1,192	$	1,180
Deferred revenue	$	52,545	$	50,679

Capitalized Direct Commission Costs

Total capitalized direct commission costs were as follows (in thousands):


	As of
	September 30, 2023		December 31, 2022
Short-term commission capitalized in prepaid expenses and other current assets	$	2,436	$	2,636
Long-term commission capitalized in other assets	1,274		1,535
Total	$	3,710	$	4,171

INVESTMENTS - Debt Securities, Available-for-sale (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Dec. 31, 2022
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	$ 52,872	$ 65,636
Unrealized Losses	(108)	(53)
Aggregate Fair Value	52,764	65,583
U.S. government agency securities
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	20,531	18,508
Unrealized Losses	(80)	(40)
Aggregate Fair Value	20,451	18,468
U.S. treasury securities
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	11,883	8,379
Unrealized Losses	(4)	(2)
Aggregate Fair Value	11,879	8,377
Money market funds
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	11,758	30,428
Unrealized Losses	0	0
Aggregate Fair Value	11,758	30,428
Certificate of deposit
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	5,000
Unrealized Losses	0
Aggregate Fair Value	5,000
Corporate bonds
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost	3,700	5,717
Unrealized Losses	(24)	(10)
Aggregate Fair Value	$ 3,676	5,707
Commercial paper
Schedule of Held-to-maturity Securities [Line Items]
Amortized Cost		2,604
Unrealized Losses		(1)
Aggregate Fair Value		$ 2,603

NET LOSS PER SHARE (Tables)

9 Months Ended

Sep. 30, 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 September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Numerator:
Net loss	$	(8,153)	$	(7,684)	$	(26,328)	$	(20,172)
Denominator:
Weighted-average shares outstanding - basic and diluted	36,010,106		32,836,014		35,291,207		32,228,429
Net loss per share, basic and diluted	$	(0.23)	$	(0.23)	$	(0.75)	$	(0.63)

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
	September 30, 2023	September 30, 2022
Stock options	2,997,359	4,037,721
Restricted stock units	6,234,174	5,104,347
Restricted common shares issued for business combination (see Note 12)	331,574	—
Total	9,563,107	9,142,068

ACQUISITION - Narrative (Details) - USD ($) $ in Thousands		3 Months Ended	9 Months Ended		12 Months Ended
ACQUISITION - Narrative (Details) - USD ($) $ in Thousands	Dec. 27, 2022	Sep. 30, 2023	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Business Acquisition [Line Items]
Options, grants in period, gross (in shares)			420,000	0
Goodwill		$ 4,178	$ 4,178		$ 4,218
Restricted stock units
Business Acquisition [Line Items]
Equity instrument other than options, grants in period (in shares)			2,752,491
Equity instruments other than options, vested in period (in shares)			1,503,925
Semifore
Business Acquisition [Line Items]
Percentage of voting interests acquired	100.00%
Total purchase price	$ 3,083
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	$ 1,000
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		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

BASIS OF PRESENTATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Narrative (Details) - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Property, Plant and Equipment [Line Items]
Restricted cash	$ 388	$ 0
Minimum
Property, Plant and Equipment [Line Items]
Licensing arrangement, period	2 years
Software licensing arrangement, period	1 year
Maximum
Property, Plant and Equipment [Line Items]
Licensing arrangement, period	3 years
Software licensing arrangement, period	3 years

COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Millions	Sep. 30, 2023	Dec. 31, 2022
Commitments and Contingencies Disclosure [Abstract]
Letters of credit outstanding, amount	$ 0.4	$ 0.0

ACQUISITION - Schedule of Recognized Identified Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	Dec. 27, 2022	Sep. 30, 2023	Dec. 31, 2022
Business Acquisition [Line Items]
Goodwill		$ 4,178	$ 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

NET LOSS PER SHARE - Schedule of Potentially Dilutive Securities Excluded from the Calculation of Diluted Earnings Per Share (Details) - shares	9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	9,563,107	9,142,068
Stock options
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items]
Antidilutive securities excluded from computation of earnings per share (in shares)	2,997,359	4,037,721
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)	6,234,174	5,104,347
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

Insider Trading Arrangements	3 Months Ended	9 Months Ended
Insider Trading Arrangements	Sep. 30, 2023 shares	Sep. 30, 2023 shares
Trading Arrangements, by Individual
Non-Rule 10b5-1 Arrangement Adopted	false
Non-Rule 10b5-1 Arrangement Terminated	false
August 2023 Terminated Plan [Member] \| Atig Raza [Member]
Trading Arrangements, by Individual
Material Terms of Trading Arrangement		On August 10, 2023, Atiq Raza, Director, terminated a Rule 10b5-1 trading arrangement intended to satisfy the affirmative defense of Rule 10b5-1(c) and originally adopted on December 07, 2022 for the sale of up to 765,414 shares of the Company’s common stock until May 31, 2024.
Name	Atiq Raza
Title	Director
Rule 10b5-1 Arrangement Terminated	true
Termination Date	August 10, 2023
Arrangement Duration	295 days
Aggregate Available	765,414	765,414
August 2023 Terminated Plan [Member] \| Paul Alpern [Member]
Trading Arrangements, by Individual
Material Terms of Trading Arrangement		On August 15, 2023, Paul Alpern, Vice President and General Counsel, terminated a Rule 10b5-1 trading arrangement intended to satisfy the affirmative defense of Rule 10b5-1(c) and originally adopted on March 10, 2023 for the sale of up to 126,700 shares of the Company’s common stock until June 30, 2024.
Name	Paul Alpern
Title	Vice President and General Counsel
Rule 10b5-1 Arrangement Terminated	true
Termination Date	August 15, 2023
Arrangement Duration	320 days
Aggregate Available	126,700	126,700
August 2023 Adopted Plan [Member] \| Atig Raza [Member]
Trading Arrangements, by Individual
Material Terms of Trading Arrangement		On August 15, 2023, Atiq Raza, Director, adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense of Rule 10b5-1(c) for the sale of up to 841,095 shares of the Company’s common stock until October 31, 2024.
Name	Atiq Raza
Title	Director
Rule 10b5-1 Arrangement Adopted	true
Adoption Date	August 15, 2023
Arrangement Duration	443 days
Aggregate Available	841,095	841,095
August 2023 Adopted Plan [Member] \| Paul Alpern [Member]
Trading Arrangements, by Individual
Material Terms of Trading Arrangement		On August 16, 2023, Paul Alpern, Vice President and General Counsel, adopted a Rule 10b5-1 trading arrangement that is intended to satisfy the affirmative defense of Rule 10b5-1(c) for the sale of up to 131,885 shares of the Company’s common stock until August 31, 2024.
Name	Paul Alpern
Title	Vice President and General Counsel
Rule 10b5-1 Arrangement Adopted	true
Adoption Date	August 16, 2023
Arrangement Duration	381 days

INVESTMENTS - Debt Securities, Held-to-maturity, Nonaccrual (Details) $ in Thousands	Sep. 30, 2023 USD ($)
Investments, Debt and Equity Securities [Abstract]
Less than one year	$ 42,477
1-2 years	10,287
Total	$ 52,764

Condensed Consolidated Statements of Loss - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Revenue
Total revenue	$ 13,274	$ 12,598	$ 41,162	$ 39,175
Cost of revenue	1,280	928	3,629	3,196
Gross profit	11,994	11,670	37,533	35,979
Operating expenses:
Research and development	10,997	11,022	34,465	30,849
Sales and marketing	5,024	4,411	15,630	12,788
General and administrative	4,426	3,991	13,331	12,138
Total operating expenses	20,447	19,424	63,426	55,775
Loss from operations	(8,453)	(7,754)	(25,893)	(19,796)
Interest expense	(77)	(22)	(136)	(60)
Other income (expense), net	898	340	2,641	406
Loss before income taxes and loss from equity method investment	(7,632)	(7,436)	(23,388)	(19,450)
Loss from equity method investment	919	0	2,487	0
Provision for (benefit from) income taxes	(398)	248	453	722
Net loss	$ (8,153)	$ (7,684)	$ (26,328)	$ (20,172)
Net loss per share attributable to common stockholders
Net loss per share attributable to common stockholders, basic (in dollars per share)	$ (0.23)	$ (0.23)	$ (0.75)	$ (0.63)
Net loss per share attributable to common stockholders, diluted (in dollars per share)	$ (0.23)	$ (0.23)	$ (0.75)	$ (0.63)
Weighted average shares used in computing per share amounts
Weighted average shares used in computing per share amounts, basic (in shares)	36,010,106	32,836,014	35,291,207	32,228,429
Weighted average shares used in computing per share amounts, basic (in shares)	36,010,106	32,836,014	35,291,207	32,228,429
Licensing, support and maintenance
Revenue
Total revenue	$ 12,084	$ 11,135	$ 36,926	$ 35,743
Variable royalties and other
Revenue
Total revenue	$ 1,190	$ 1,463	$ 4,236	$ 3,432

REVENUE - Narrative (Details) - USD ($) $ in Millions	3 Months Ended		9 Months Ended
REVENUE - Narrative (Details) - USD ($) $ in Millions	Sep. 30, 2023	Sep. 30, 2022	Sep. 30, 2023	Sep. 30, 2022
Disaggregation of Revenue [Line Items]
Deferred revenue, revenue recognized	$ 10.7	$ 9.4	$ 23.7	$ 22.0
Unsatisfied performance obligations	61.3		61.3
Amortization of capitalized sales commissions	0.9	$ 0.9	2.8	$ 2.5
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2023-10-01
Disaggregation of Revenue [Line Items]
Unsatisfied performance obligations, excluding flexible spending account commitment	$ 32.7		$ 32.7
Remaining performance obligation, expected timing of satisfaction	12 months		12 months

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References + Details

INTANGIBLE ASSETS AND GOODWILL

9 Months Ended

Sep. 30, 2023

Goodwill and Intangible Assets Disclosure [Abstract]

INTANGIBLE ASSETS AND GOODWILL

Intangible assets, net

Intangible assets, net consisted of the following as of September 30, 2023 (in thousands):


	Gross Fair Value		Accumulated Amortization		Net Book Value
Developed technology	$	3,090	$	(1,112)	$	1,978
Customer relationships	1,830		(458)		1,372
IPR&D	500		—		500
Trade name and other	200		—		200
Total intangibles	$	5,620	$	(1,570)	$	4,050

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 September 30, 2023 and 2022, respectively, and $0.6 million and $0.4 million for the nine months ended September 30, 2023 and 2022, respectively.

The expected future amortization expense of these intangible assets as of September 30, 2023 is as follows (in thousands):


Fiscal year ending December 31,
Remainder of 2023	$	192
2024	767
2025	739
2026	427
2027	427
Thereafter	798
Total future amortization expense	$	3,350

Goodwill

As of September 30, 2023 and December 31, 2022, goodwill was $4.2 million. No goodwill impairments were recorded during the three and nine months ended September 30, 2023 and 2022.

STOCK-BASED COMPENSATION (Tables)

9 Months Ended

Sep. 30, 2023

Share-Based Payment Arrangement [Abstract]

Shares Available for Future Grant

Shares available for future grant consisted of the following:


			As of
			September 30, 2023
Shares available for future grant under the 2021 Plan			3,265,292
Shares available for future grant under the 2021 ESPP			1,268,564
Shares available for future grant under the 2022 Inducement Plan			1,003,680

Summary of Stock Options Activity

The following table summarizes the stock option activities under the Company’s 2016 Plan and 2021 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
Granted	420,000	$	6.54
Exercised	(779,227)	$	0.59
Canceled	(186,250)	$	3.50
BALANCE—September 30, 2023	2,997,359	$	1.82	6.20	$	14,070
Options vested and exercisable—September 30, 2023	2,398,597	$	1.16	5.65	$	12,822

Stock Options Valuations Assumptions

The following table summarizes the valuation assumptions:

Stock Options Valuation Assumptions


						Three and Nine Months Ended September 30,
						2023
Fair value of common stock						$6.54
Expected volatility						44.0%
Expected term (in years)						6.0
Risk-free interest rate						3.9%
Expected dividend yield						0%

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	2,752,491	$	5.72
Vested	(1,503,925)	$	7.20
Canceled	(633,405)	$	7.78
Unvested—September 30, 2023	6,234,174	$	6.52

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 unaudited condensed consolidated statements of loss (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2023		2022		2023		2022
Cost of revenue	$	181	$	118	$	386	$	474
Research and development	1,742		1,798		5,656		4,435
Sales and marketing	666		679		2,088		1,678
General and administrative	1,125		794		2,851		2,495
Total stock-based compensation	$	3,714	$	3,389	$	10,981	$	9,082

STOCK-BASED COMPENSATION - Stock Options Valuations Assumptions (Details) - Stock options	3 Months Ended	9 Months Ended
	Sep. 30, 2023 $ / shares	Sep. 30, 2023 $ / shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Fair value of common stock (in dollars per share)	$ 6.54	$ 6.54
Expected volatility	44.00%	44.00%
Expected term (in years)	6 years	6 years
Risk-free interest rate	3.90%	3.90%
Expected dividend yield	0.00%	0.00%

- Definition

Line items represent financial concepts included in a table. These concepts are used to disclose reportable information associated with domain members defined in one or many axes to the table.

+ References

+ Details

EQUITY METHOD INVESTMENT (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
EQUITY METHOD INVESTMENT (Details) - USD ($) $ in Thousands	Sep. 30, 2023	Sep. 30, 2023	Sep. 30, 2022	Dec. 31, 2022
Subsidiary or Equity Method Investee [Line Items]
Equity method investment	$ 9,410	$ 9,410		$ 11,897
Amortization of deferred income		882	$ 94
Gain on deconsolidation of subsidiary		0	$ 149
TransChip Technology
Subsidiary or Equity Method Investee [Line Items]
Equity method investment, transaction costs	900	2,500
TransChip Technology
Subsidiary or Equity Method Investee [Line Items]
Equity method investment	$ 9,400	$ 9,400
Ownership percentage	35.00%	35.00%
The Investors \| The Investors
Subsidiary or Equity Method Investee [Line Items]
Equity method investment	$ 11,600	$ 11,600
The Investors \| Arteris IP (Hong Kong) Ltd.
Subsidiary or Equity Method Investee [Line Items]
Share purchase agreement, registered capital		29,400
Amount of shares subscribed	11,900	$ 11,900
Share purchase agreement, agreement term		5 years
Share purchase agreement, deferred income, recognition period		10 years
Amortization of deferred income	$ 300	$ 900

INTANGIBLE ASSETS AND GOODWILL - Schedule of Future Amortization Expense (Details) $ in Thousands	Sep. 30, 2023 USD ($)
Finite-Lived Intangible Assets, Net, Amortization Expense, Fiscal Year Maturity [Abstract]
Remainder of 2023	$ 192
2024	767
2025	739
2026	427
2027	427
Thereafter	798
Total future amortization expense	$ 3,350