Q1 2025 Arm Holdings PLC Earnings Call Transcript
Key Points
- ARM Holdings PLC (ARM) reported its fourth straight quarter of record results, with a 39% year-on-year revenue increase.
- Record license revenue up 70% year on year, driven by strong demand for AI applications.
- Royalty revenue increased by 17% year on year, with smartphone royalty revenue up 50% year on year.
- Significant growth in the adoption of ARM's V9 architecture, contributing to higher royalty rates.
- Strong performance in the cloud and automotive sectors, with cloud compute market growth exceeding 75% year on year.
- Continued weakness in IoT and networking equipment markets due to ongoing inventory corrections.
- Q2 revenue is expected to be the low point of the year due to the timing of revenue recognition from licensing.
- Full-year royalty revenue growth guidance slightly reduced to the low 20% range from the mid-20% range previously expected.
- Non-GAAP operating expenses are expected to increase by 19% year over year, driven by continued investments in R&D.
- Challenges in the broader semiconductor industry could impact future licensing and royalty revenues.
Thank you, and welcome to our earnings conference call for the first quarter of the fiscal year ending March 31, 2025. On the call today are Rene Haas, Chief Executive Officer of Arm, and Jason Child, Arm's Chief Financial Officer.
During the call, Arm will discuss forecasts, targets, and other forward-looking information regarding the Company and its financial results. While these statements represent our best current judgment of future results and performance as of today, our actual results are subject to many risks and uncertainties that could cause actual results to differ materially. In addition to any risks that we highlight during the call, important risk factors that may affect our future results and performance are described in our registration statement on Form 20-F filed with the SEC on May 29, 2024.
Arm assumes no obligation to update any forward-looking statements, which speak only as of the date they are made. We will refer to non-GAAP financial measures during the discussion. Reconciliation of certain of these non-GAAP financial measures
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