Arm Revenues Up 5 Percent to $844 Million

Arm Holdings reported that it earned a net income of $107 million on revenues of $844 million for the quarter ending September 30. Those figures represent a decline of 2.7 percent and a gain of 5 percent year-over-year (YOY), and shares in the firm fell 6 percent in after-hours trading.

“As we have passed the one-year mark following our IPO, we are very proud of the tremendous progress we have made further building momentum across the world’s most popular compute platform,” an Arm Holdings letter to shareholders reads. “Demand for AI everywhere is increasing the need for more compute and in turn driving our partners to make long-term commitments to more, and more powerful, energy-efficient Arm technology. The cumulative number of chips shipped by the Arm ecosystem has now exceeded 300 billion.”

Revenues from royalties were a record $514 million, up 23 percent YOY; the company noted that 25 percent of its royalty revenue comes from its latest Armv9 architecture design, which earns higher rates. But licensing and other revenue declined 15 percent to $330 million, which Arm says was “as expected due to normal fluctuation in timing and size of multiple high-value license agreements and contributions from backlog.”

According to Arm Holdings, 47 percent of its royalty revenues come from smartphone and mobile, with 20 percent from IoT/embedded, 15 percent from consumer electronics, 10 percent from cloud and networking, and 8 percent from automotive.

Arm doesn’t address its historical legal battle with Qualcomm in the earnings report. But analysts did ask the company about Qualcomm in its after-earnings conference call.

“There isn’t a great deal I can say on it,” Arm Holdings CEO Rene Haas said. “But at a base level, contractual consent was required by Qualcomm to sign a Nuvia license, and that consent was not obtained. As a result of not obtaining that consent, they are in breach. And what we did was send a notification letter regarding the cancellation of the architectural license. To be clear, we have not canceled the license, but we have sent a notification to them … Our [financial] forecast and guidance has always taken into consideration that we may not prevail in this case, so we have essentially taken that forward look.”