Arm (ARM) investor relations material

Executive summary

• Achieved record Q4 revenue of $1.49 billion, up 20% year-over-year, and record annual revenue of $4.92 billion, up 23% year-over-year, driven by both licensing and royalty growth.

• Cumulative Arm-based chip shipments surpassed 350 billion since 1990, reinforcing ecosystem leadership.

• Arm AGI CPU launched for cloud and AI data centers, with customer demand exceeding $2 billion for fiscal 2027 and 2028, double the initial forecast.

• Expansion into silicon as a new growth vector, alongside IP and Compute Subsystems (CSS), with broad ecosystem support from over 50 leading companies.

• Compute Subsystem (CSS) gained traction with two new licenses signed for smartphone and tablet chips.

Financial highlights

• Q4 revenue: $1.49 billion, up 20% year-over-year; full-year revenue: $4.92 billion, up 23%.

• Q4 licensing revenue: $819 million, up 29% year-over-year; royalty revenue: $671 million, up 11%.

• Full-year royalty revenue: $2.61 billion, up 21%; licensing revenue: $2.31 billion, up 25%.

• Non-GAAP operating income: $731 million; non-GAAP operating margin: 49%; non-GAAP net income for Q4: $641 million.

• Full-year non-GAAP free cash flow was $882 million; annualized contract value increased 22% YoY in Q4 to $1.66 billion.

Outlook and guidance

• Q1 revenue guidance: $1.26 billion ±$50 million, representing ~20% year-over-year growth; non-GAAP operating expense: ~$760 million; non-GAAP EPS guidance: $0.40 ±$0.04.

• Expecting $15 billion in AGI CPU revenue and $10 billion in IP revenue by FY 2031, totaling $25 billion.

• Long-term EPS target of over $9 by FY 2031.

• Royalty revenue forecasted to grow at a 20% CAGR from FYE26 to FYE31, driven by end market growth, share gains, and higher royalty rates from advanced technology.

• Royalty and license revenue expected to grow around 20% year-over-year for FY 2027.