Arm (ARM) Q3 2025 earnings summary

Executive summary

• Total revenue reached $983 million in Q3 FY2025, up 19% year-over-year, with royalty revenue at $580 million (+23% YoY) and license revenue at $403 million (+14% YoY), both exceeding guidance.

• Arm's cumulative chip shipments surpassed 310 billion, with 28.6 billion shipped in FYE24, reinforcing its position as the most pervasive CPU architecture.

• Net income for the quarter rose to $252 million, with diluted EPS of $0.24, and non-GAAP net income at $417 million with non-GAAP diluted EPS of $0.39.

• Arm is expanding beyond mobile, gaining share in cloud, automotive, and IoT/embedded markets, with royalty revenue increasingly diversified.

• Major AI infrastructure projects (Stargate, Crystal Intelligence) and significant wins in data center and flagship smartphones position the company at the center of the AI ecosystem.

Financial highlights

• Q3 total revenue: $983 million (+19% YoY); royalty revenue: $580 million (+23% YoY); licensing revenue: $403 million (+14% YoY).

• Non-GAAP gross margin was 98% and non-GAAP operating margin was 45% for Q3 FY2025; GAAP gross margin was 97%.

• Non-GAAP operating profit near record at $442 million; non-GAAP net income was $417 million; operating income was $175 million.

• Non-GAAP operating expenses were $522 million, up 19% YoY, reflecting increased R&D and engineering headcount.

• Cash and cash equivalents at Q3 FY2025 end: $2,036 million, with short-term investments of $635 million.

Outlook and guidance

• Q4 FY2025 revenue expected between $1.175 and $1.275 billion, representing 32% YoY growth at midpoint; full-year FY2025 revenue guidance midpoint raised to ~$4 billion (+24% YoY).

• Q4 non-GAAP operating expense expected at ~$590 million; full-year non-GAAP EPS guided to $1.56–$1.64.

• Full-year royalty revenue growth expected in the high teens percent; license revenue to grow ~30% YoY.

• Management expects continued demand for advanced semiconductor products, with long-term growth driven by AI, cloud, and automotive markets.

• The company believes its liquidity position is sufficient to meet operational and strategic needs for at least the next 12 months.