Arm Revenues Jump 14 Percent to a Record $761 Million in Quarter

Arm Holdings reported that it earned a net income of $87 million on revenues of $824 million in the quarter ending December 31, dramatically exceeding estimates. That and a surprisingly positive forecast for the current quarter sent the chipset designer’s stock price soaring 26 percent.

“Arm’s second quarter as a public company has produced another strong set of results as we continue to build upon the most popular CPU platform in computing history,” the company explained in a letter to shareholders. “We had an outstanding [quarter] delivering record revenues and exceeding the high end of our guidance ranges for both revenue and [earnings per share]. Growth was driven by both royalty revenue and license revenue … We believe these fundamental trends will continue going forward and as a result, we expect next quarter’s revenue to be another record and exceed the previously communicated annual guidance.”

As you may know, Arm Holdings designs the chipsets that other companies like Apple, Microsoft, Nvidia, Qualcomm, Samsung, and many others license to use as the basis for their own customized chipsets, and the Arm platform is a success story without rival. As Arm puts it, “Arm is the foundational compute platform for the world’s innovations. More chips with Arm CPUs have been delivered in the last decade than any alternative.”

Arm’s latest platform, Armv9, has been particularly successful, and it demands royalty rates that the firm says are “typically at least double the royalty rates for equivalent Armv8 products.” And thanks to a variety of factors—Arm’s rapid market share growth in the critical cloud servers and automotive markets, signs of recovery in the semiconductor market that serves smartphone, tablet, and PC makers, and the explosion in AI products and services—Arm expects further growth in royalty revenues going forward as more and more customers transition to Armv9.

Arm’s $824 million in revenues in the quarter represent a gain of 14 percent year-over-year (YOY). $470 million of that came from royalties, a record, with 11 percent YOY growth. And $354 million of it came from licensing, up 18 percent YOY. Arm’s margins were an incredible 96 percent. But here’s a final numbers to put its success in perspective: Arm’s customers reported that they shipped 7.7 billion Arm-based chipsets in the quarter. And while that was down 3 percent from the year-ago quarter, it sees nothing but growth ahead. These companies have shipped a cumulative 280.3 billion Arm chipsets shipped to end customers worldwide.