Arteris (AIP) risk factors, 2025 10-K

Risks Related to Our Business and Industry

1. 01We face significant competition from larger companies and third-party providers that may deploy their resources so they can develop their IP solutions internally
2. 02We have a history of net losses, and we may not achieve or maintain profitability in the future
3. 03We depend on growth and economic stability in the end markets that use our products. Any slowdown in the growth and economic stability of these end markets could harm our business
4. 04Political and regulatory conditions that contribute to uncertainty and market volatility including legislative, regulatory, trade and policy changes associated with the new U.S. presidential administration could materially and adversely impact our business operations and financial results
5. 05We depend on market acceptance of third-party semiconductor IP
6. 06The success of our business depends on sustaining or growing our licensing revenue, and the failure to achieve such revenue would lead to a material decline in our results of operations
7. 07The nature of the design win process requires us to incur significant expenses without any guarantee that research and development and sales efforts will generate revenue, which could adversely affect our financial results
8. 08Even if we succeed in securing design wins for our IP interconnect and other solutions and our SIA solutions, we may not generate timely or sufficient margins or margins from those wins and our financial results could suffer
9. 09We continually pursue new IP interconnect, SoC integration automation, and other technology initiatives, and if we fail to successfully carry out these initiatives, our business could be harmed
10. 10Moreover, new technologies and products may not be profitable, and even if they are profitable, operating margins for new products and businesses may not be as high as the margins we have experienced historically or originally anticipated
11. 11We may have to invest more resources in research and development than anticipated, which could increase our operating expenses and negatively affect our operating results
12. 12Product errors or defects could expose us to liability and harm our reputation and we could lose market share
13. 13If we fail to offer high-quality support, our reputation could suffer
14. 14Our dependence on international customers and operations also subjects us to a range of other additional regulatory, operational, financial, and political risks that could adversely affect our financial results
15. 15Downturns or volatility in general economic conditions, including as a result of geopolitical and macroeconomic conditions in the countries in which we conduct business, could harm our business
16. 16The cyclical nature of the semiconductor industry, including significant supply chain disruption, may limit our ability to maintain or improve our revenue
17. 17A significant amount of our revenue is derived from a limited number of customers. We expect that a relatively small number of customers will continue to account for a substantial portion of our revenue for the foreseeable future
18. 18Failure to effectively expand our sales and marketing capabilities could harm our ability to increase our customer base and achieve broader market acceptance of our products
19. 19We typically experience a strong seasonality in sales in the fourth calendar quarter of the year. As a result, our results of operations are subject to substantial quarterly fluctuations, which may seriously harm our business
20. 20Each of these sectors is subject to specific market risks. The consumer sector, for example, is subject to changes in end consumer spending patterns, technology developments and general economic conditions
21. 21A significant portion of our revenue comes from licensing fees, which may vary period to period
22. 22Royalty rates could decrease for existing and future license agreements, which could materially adversely affect our operating results
23. 23Changing currency exchange rates could harm our business
24. 24We have made acquisitions and, in the future, expect to pursue acquisitions of and investments in new businesses, products or technologies, joint ventures and other strategic transactions that involve numerous risks and could disrupt and harm our business
25. 25Our ability to raise capital in the future may be limited and could prevent us from executing our growth strategy
26. 26We may not be able to effectively manage our growth, and we may need to incur significant expenditures to address the additional operational and control requirements of our growth, either of which could harm our business and operating results
27. 27We depend on key and highly skilled personnel to operate our business, and if we are unable to retain our current personnel and hire additional personnel, our ability to develop and market our products could be harmed, which in turn could adversely affect our financial results
28. 28Our management team has limited experience managing a public company
29. 29Catastrophic events may disrupt our business
30. 30If our counterparties are unable to fulfill their financial and other obligations to us, our business and results of operations may be affected adversely

Risks Related to Intellectual Property, Information Technology and Data Security and Privacy

1. 31If we are unable to protect our proprietary technology and inventions through patents and other intellectual property rights, our ability to compete successfully and our financial results could be adversely impacted
2. 32If we are unable to protect our proprietary technology and inventions through trade secrets, our competitive position and financial results could be adversely affected
3. 33Our ability to compete successfully depends in part on our ability to commercialize our IP solutions without infringing the patent, trade secret or other intellectual property rights of others
4. 34Claims by other companies that we infringe their intellectual property rights or that patents on which we rely are invalid could adversely affect our business
5. 35We may not be able to continue to obtain licenses to third-party software and intellectual property on reasonable terms or at all, which may disrupt our business and harm our financial results
6. 36Any dispute regarding our intellectual property may require us to indemnify certain customers, the cost of which could severely harm our business
7. 37We are subject to data protection, privacy and security laws, regulations, standards and other requirements across different markets where we conduct our business. Our actual or perceived failure to comply with such obligations could harm our business

Risks Related to Legal, Regulatory, Accounting and Tax Matters

1. 38Our failure to comply with the large body of laws and regulations to which we are subject could materially harm our business
2. 39Our failure to comply with the Foreign Corrupt Practices Act, other applicable anti-corruption and anti-bribery laws, and applicable anti-money laundering laws could subject us to penalties and other adverse consequences
3. 40We are subject to government regulations, including import, export and economic sanctions laws and artificial intelligence regulations that may expose us to liability and increase our costs
4. 41We will lose sales if we are unable to obtain government authorization to export certain of our products and services, and we will be subject to legal and regulatory consequences if we do not comply with applicable export control laws and regulations or if such laws and regulations were to change
5. 42We face risks associated with doing business in China
6. 43Joint ventures or similar investments are subject to a number of risks, the occurrence of which could adversely impact any of our current or future joint ventures or similar investments, which in turn could harm our business
7. 44Social and environmental responsibility regulations, policies and provisions, as well as customer and investor demands, may make our supply chain more complex and may adversely affect our relationships with customers and investors
8. 45We could be subject to changes in tax rates or the adoption of new tax legislation, whether in or out of the United States, or could otherwise have exposure to additional tax liabilities, which could harm our business
9. 46Our ability to use net operating losses to offset future taxable income may be subject to certain limitations
10. 47The requirements of being a public company require significant resources and management attention and affect our ability to attract and retain executive management and qualified board members
11. 48If we fail to maintain an effective system of disclosure controls and internal control over financial reporting, our ability to produce timely and accurate financial statements or comply with applicable regulations could be impaired
12. 49We are an “emerging growth company,” and we cannot be certain if the reduced disclosure requirements applicable to emerging growth companies will make our common stock less attractive to investors

Risks Related to Ownership of Our Common Stock

1. 50An active and liquid trading market for our common stock may not be sustained
2. 51Our stock price may be volatile, and investors in our common stock may not be able to resell shares of our common stock at or above the price paid, or at all
3. 52We may fail to meet our publicly announced guidance or other expectations about our business, which could cause our stock price to decline
4. 53If equity research analysts or industry analysts do not publish research or reports about our business, or if they change their recommendations regarding our stock adversely, our stock price and trading volume could decline
5. 54If our existing stockholders, including current or former employees sell, or indicate an intention to sell, substantial amounts of our common stock in the public market, the market price of our common stock could decline. As of December 31, 2024, we had approximately 40.7 million shares of common stock outstanding
6. 55K. Charles Janac, our President, Chief Executive Officer and Chairman, beneficially owns a significant percentage of our stock and will be able to exert significant control over matters subject to stockholder approval
7. 56Our issuance of additional capital stock in connection with financings, acquisitions, investments, our stock incentive plans or otherwise could dilute the ownership and voting power of our other stockholders
8. 57We do not expect to declare or pay any dividends on our common stock for the foreseeable future
9. 58Management may apply our net proceeds from our initial public offering to uses that do not increase our market value or improve our operating results
10. 59Provisions in our Certificate of Incorporation and Bylaws and under the DGCL contain antitakeover provisions that could prevent or discourage a takeover
11. 60Actions of stockholders could cause us to incur substantial costs, divert management’s attention and resources and have an adverse effect on our business
12. 61Litigation, including securities class action litigation, may impair our reputation and lead us to incur significant costs. For example, we are currently involved in ongoing litigation related to patent infringement claims