Arm (ARM) investor relations material

Executive summary

• Achieved record Q1 revenue of $1.29 billion, up 22% year-over-year, driven by strong licensing and royalty growth, especially in data centers and AI.

• Non-GAAP EPS rose 29% to $0.45, with non-GAAP net income at $480 million and basic/diluted EPS at $0.25.

• Arm AGI CPU introduced for cloud and AI data centers, with demand exceeding $2 billion and initial products delivered to customers.

• Over 350 billion Arm-based chips shipped since 1990, reinforcing ecosystem leadership.

• Acquisition of DreamBig Semiconductor for $265 million in July 2026 enhances networking capabilities.

Financial highlights

• Royalty revenue: $715 million, up 22% year-over-year, highest ever for Q1; license and other revenue: $574 million, up 23% year-over-year.

• Non-GAAP gross margin: 98%; non-GAAP operating margin: 41%; gross profit: $1,253 million.

• Non-GAAP net income: $480 million; net income: $270 million; operating income: $91 million.

• Free cash flow: $665 million for the quarter, $1.4 billion over trailing 12 months.

• Cash and cash equivalents at quarter-end: $3,058 million; net cash from operating activities: $902 million.

Outlook and guidance

• Q2 revenue expected at $1.38 billion ±$50 million, representing 22% year-over-year growth at midpoint.

• License and other revenue projected up ~30% year-over-year; royalty revenue up low teens year-over-year.

• Non-GAAP operating expense for Q2 expected at ~$780 million; non-GAAP EPS guidance at $0.47 ±$0.04.

• Royalty revenue forecast to grow at a 20% CAGR from FYE26 to FYE31; AGI CPU revenue expected to reach ~$15B by FYE31.

• Long-term growth outlook remains strong, supported by expanding technology portfolio and strategic customer relationships.