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STOCK-BASED COMPENSATION | 3 Months Ended
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Mar. 31, 2025
Share-Based Payment Arrangement [Abstract] |
STOCK-BASED COMPENSATION | STOCK-BASED COMPENSATION 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 Arteris, Inc. 2016 Incentive Plan (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. Stock Options The following table summarizes the stock option activities under the Company’s 2016 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, 2024 | 2,197,604 |  |  | $ | 2.27 |  |  | 5.48 |  | $ | 17,404 |
Granted | 280,000 |  |  | $ | 9.28 |  |  |  |  |
Exercised | (145,959) |  |  | $ | 1.01 |  |  |  |  |
Canceled | — |  |  | $ | — |  |  |  |  |
BALANCE—March 31, 2025 | 2,331,645 |  |  | $ | 3.19 |  |  | 4.87 |  | $ | 9,910 |
Options vested and exercisable—March 31, 2025 | 1,781,766 |  |  | $ | 1.70 |  |  | 3.50 |  | $ | 9,780 |
The aggregate intrinsic value of the options exercised for the three months ended March 31, 2025 and 2024 was $1.3 million and $1.4 million, respectively. The total grant-date fair value of options vested was $0.1 million for both the three months ended March 31, 2025 and 2024. As of March 31, 2025, there was $2.3 million of unamortized stock-based compensation cost related to unvested stock options, which is expected to be recognized over a weighted-average period of 3.4 years. The fair value of each stock option granted is estimated using the Black-Scholes option-pricing model, which uses (i) a risk-free interest rate based on the U.S. Treasury zero coupon issues for an equivalent expected term of options; (ii) expected term based on the simplified method; (iii) volatility based on historical volatilities of the Company’s common stock and that of several peer companies, as the Company does not have sufficient trading history for its common stock; and (iv) an expected dividend yield of zero as the Company has never declared or paid any cash dividend and does not currently plan to pay a cash dividend in the foreseeable future. Restricted Stock Units and Awards The Company granted 440,166 restricted stock units during the three months ended March 31, 2025. As of March 31, 2025, there was $30.9 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 2.6 years. Stock-based Compensation Stock-based compensation expense is recorded on a departmental basis, based on the classification of the award holder. The following table presents the amount of stock-based compensation related to stock-based awards to employees on the Company’s unaudited condensed consolidated statements of operations (in thousands):
| Three Months Ended March 31, |  |
| 2025 |  | 2024 |  |  |  |
Cost of revenue | $ | 205 |  |  | $ | 189 |  |  |  |  |
Research and development | 1,973 |  |  | 1,608 |  |  |  |  |
Sales and marketing | 969 |  |  | 723 |  |  |  |  |
General and administrative | 1,166 |  |  | 1,137 |  |  |  |  |
Total stock-based compensation | $ | 4,313 |  |  | $ | 3,657 |  |  |  |  |

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