Arm Holdings’ Earnings Call: Record Revenue & Strategic Growth

ARM Holdings PLC ADR ((ARM)) has held its Q4 earnings call. Read on for the main highlights of the call.

Arm Holdings Reports Record Revenue Amid Strategic Advances and Challenges

Arm Holdings PLC recently held its earnings call, revealing a strong financial performance characterized by record revenues and significant growth in both royalty and licensing revenues. The company showcased strategic advancements in AI and data centers, although macroeconomic uncertainties and the decision to withhold full-year guidance due to limited visibility raised some concerns.

Record-Breaking Revenue and Growth

Arm Holdings achieved a milestone in Q4, with revenue exceeding $1 billion for the first time in its history. For the full year, revenue surpassed $4 billion, with royalty revenue topping $2 billion, marking a significant achievement for the company.

Strong Royalty Revenue Growth

The company reported record royalty revenue of $607 million in Q4, an 18% year-on-year increase. This growth was driven by strong demand across all major markets, with smartphone royalties experiencing a notable 30% year-on-year jump.

Significant Licensing Revenue

Licensing revenue reached an all-time high of $634 million in Q4, fueled by new deals and a remarkable 50% year-on-year increase. This includes a strategic multi-year AI partnership with the Malaysian government.

AI and Data Center Expansion

Arm is making significant strides in AI and data center markets, expecting up to 50% of new server chips at hyperscalers to be Arm-based. The company is experiencing strong momentum in custom silicon and AI infrastructure.

Macro Uncertainty and Tariffs

Despite the positive financial results, Arm expressed concerns over macroeconomic uncertainties and tariffs, which could indirectly impact royalty revenues. The company has limited visibility into the indirect effects on end demand.

Lack of Full Year Guidance

Arm chose not to issue full-year guidance for fiscal 2026, citing uncertainty in the global trade and economic landscape. The company noted less visibility from partners, which contributed to this decision.

Forward-Looking Guidance

During the earnings call, Arm provided guidance emphasizing its record-breaking financial performance, driven by strong demand for power-efficient AI compute across various sectors. The company expects up to 50% of new server chips at hyperscalers to be Arm-based in the current year. For Q1 fiscal 2026, Arm anticipates revenue between $1.0 billion and $1.1 billion, with a robust 25% to 30% projected royalty growth. While full-year guidance was not provided due to macroeconomic uncertainties, Arm remains confident in healthy growth, supported by visibility into customer design pipelines and rising demand for custom silicon and AI solutions.

In summary, Arm Holdings PLC’s earnings call highlighted a period of robust financial performance, with record revenues and strategic advancements in AI and data centers. Despite macroeconomic uncertainties and the absence of full-year guidance, the company remains optimistic about future growth, driven by strong demand and strategic partnerships.