Arm (ARM) investor relations material

Executive summary

• Achieved record Q3 revenue of $1.24 billion, up 26% year-on-year, marking the fourth consecutive billion-dollar quarter.

• Royalties reached a record $737 million, up 27% year-on-year, driven by strong AI, data center demand, and Armv9 adoption.

• Data center royalty revenue more than doubled year-on-year, with expectations for data center to surpass mobile as the largest business in coming years.

• Arm's cumulative chip shipments surpassed 325 billion, with significant adoption in data centers and custom silicon development.

• The company is expanding its presence in long-term growth markets such as automotive, cloud, and IoT.

Financial highlights

• Total revenue: $1.24 billion, up 26% year-on-year.

• Royalty revenue: $737 million, up 27% year-on-year, with strong contributions from smartphones, data centers, and higher rates from Armv9 and Compute Subsystems.

• License and other revenue: $505 million, up 25% year-on-year.

• Non-GAAP gross margin was 98%, and non-GAAP operating margin was 41%.

• Non-GAAP net income for the quarter was $457 million.

• Trailing 12 months non-GAAP free cash flow was $893 million.

Outlook and guidance

• Q4 revenue expected at $1.47 billion (±$50 million), representing 18% year-on-year growth.

• Royalties projected to grow low teens percent year-on-year; licensing up high teens percent.

• Non-GAAP operating expense for Q4 expected at ~$745 million; non-GAAP EPS guidance $0.58 ± $0.04.

• Long-term growth outlook remains strong, with confidence in sustained growth due to robust customer demand and higher royalty rates.