Arm reported 27% revenue growth Nov. 4 as licensing expanded faster than royalties, highlighting different growth rates in the chip technology company’s two main revenue streams.
Revenue reached $1.443 billion for its fiscal second quarter ended Sept. 30. License and other revenue rose 50% to $773 million, while royalty revenue increased 8% to $670 million.
Operating income rises, net income falls
Arm reported net income of $130 million under generally accepted accounting principles, down 45% from $238 million a year earlier. GAAP operating income, however, increased 23% to $201 million.
Its quarterly report attributed a decline in other nonoperating income primarily to prior-year gains from selling the Artisan foundation intellectual-property business and foreign-exchange gains. Non-GAAP net income was $566 million, up 36% from $417 million a year earlier.
Licensing growth and the outlook
Arm said license and other revenue reflected demand for its technology, the timing and size of high-value agreements and contributions from its backlog. Reuters reported that the company earns royalties on chips shipped using its technology, a different revenue mechanism from licensing access.
The company forecast fiscal third-quarter revenue of $1.54 billion, plus or minus $50 million. That is management’s projection, not a reported result.
Arm also said first commercial deliveries of its own AGI CPU remain on track for the fourth quarter of its 2027 fiscal year. Those deliveries remain a company projection, not a completed rollout.
Sources: Arm’s shareholder letter; quarterly financial report; Reuters reporting via CNA.