Arm Holdings posts Q1 revenue up 39% year-on-year
Chip design licensor Arm has enjoyed a bumper fiscal quarter – but still saw its share price fall as investors remain concerned about the firm's future prospects.
The results themselves were pretty impressive. Arm reported a record first quarter driven by strong licensing and royalty revenue, particularly in the AI applications and smartphone segments. The headline numbers were as follows:
- Q1 revenue up 39% year-on-year to USD 939 million, with licence revenue up by 70% and royalty revenue increasing by 17%
- Revenue guidance of USD 3.8 billion to USD 4.1 billion for fiscal year 2025.
- Expected growth in licensing and royalty revenue, driven by the adoption of Armv9
- Arm-based PCs are projected to reach a 50% market share in five years.
- Revenue guidance for fiscal year 2025 remains between USD 3.8 billion and USD 4.1 billion.
- Average annual growth rate is estimated at 14%.
Clearly the above numbers are robust, and Arm executives are optimistic about the future, citing strong demand for CPUs in chip designs and the increasing adoption of Armv9 as long-term growth drivers.
In a shareholder letter, CEO Rene Haas and CFO Jason Child wrote: “In Q1, we delivered record revenues and exceeded the high-end of our guidance range for both revenue and non-GAAP EPS. Licence revenue hit a record level as the proliferation of AI everywhere is driving more companies to make broad and long-term commitments to use Arm’s power-efficient technology in their future products.”
But analysts are doubtful. Shares of Arm Holdings were down in pre-market trading on Thursday morning. Reports said Arm expects to generate between USD 780 million and USD 830 million in revenue during the second quarter of fiscal 2025, compared to a consensus analyst estimate of USD 812.75 million.
