Arm (ARM) Q4 2025 earnings summary

Executive summary

• Achieved record Q4 revenue of $1.24 billion, up 34% year-over-year, with full-year revenue surpassing $4 billion and royalty revenue over $2 billion, driven by Armv9 adoption and Compute Subsystem traction.

• Strong demand for power-efficient AI compute across cloud, edge, and automotive, with Arm now a leading choice for AI cloud deployments and ecosystem leadership reinforced by over 310 billion cumulative chips shipped.

• Licensing revenue reached an all-time high, supported by a multi-year AI partnership with the Malaysian government and broad-based royalty growth across all major markets.

• Arm's technology is expanding across cloud, automotive, IoT, and edge AI, with the first automotive CSS license signed and NVIDIA's Grace Blackwell in full production.

• Cumulative Arm-based chips shipped surpassed 310 billion, with 30.6 billion shipped in FYE25.

Financial highlights

• Q4 total revenue was $1.24 billion, at the upper end of guidance, with royalty revenue at $607 million, up 18% year-on-year, and licensing revenue at $634 million, up over 50% year-on-year.

• Non-GAAP operating profit reached $655 million, non-GAAP EPS was $0.55, and non-GAAP net income was $584 million for Q4.

• Non-GAAP gross margin was 98%, with non-GAAP operating margin at 53%.

• Annualized contract value increased 15% year-on-year to $1,365 million in Q4.

• Non-GAAP free cash flow for the trailing twelve months was $99 million, impacted by a reversal of a prior year working capital benefit.

Outlook and guidance

• Q1 revenue expected between $1.0 billion and $1.1 billion, representing 12% year-on-year growth at the midpoint, with non-GAAP operating expense around $625 million and non-GAAP EPS guidance of $0.30–$0.38.

• Anticipates 25%-30% royalty growth to start the year.

• Not providing full-year guidance due to macroeconomic and trade uncertainties but maintains confidence in healthy growth.