Arm plc(US:ARM)2025-11-05 21:06Financial Performance - Total revenue for the three months ended September 30, 2025, was $1,135 million, a 34.4% increase from $844 million in the same period of 2024[13]. - Net income for the three months ended September 30, 2025, was $238 million, compared to $107 million for the same period in 2024, representing a 122.4% increase[13]. - Operating income for the three months ended September 30, 2025, was $163 million, compared to $64 million in the same period of 2024, a 154.7% increase[13]. - The company reported a total comprehensive income of $220 million for the three months ended September 30, 2025, compared to $146 million for the same period in 2024, a 50.7% increase[16]. - Net income for the six months ended September 30, 2025, was $368 million, compared to $330 million for the same period in 2024, representing an increase of approximately 11.5%[31]. - The company's net income for the six months ended September 30, 2025, was $368 million, compared to $330 million for the same period in 2024, reflecting an increase of 11.5%[168]. - The basic net income per share for the three months ended September 30, 2025, was $0.22, up from $0.10 in 2024, indicating a 120% increase[12]. Revenue Breakdown - License and Other Revenue for the three months ended September 30, 2025, was $515 million, compared to $330 million in 2024, reflecting a year-over-year increase of 56.1%[62]. - Royalty Revenue for the three months ended September 30, 2025, reached $620 million, up from $514 million in 2024, marking a growth of 20.6%[62]. - Revenue from the United States for the three months ended September 30, 2025, was $374 million, compared to $292 million in 2024, indicating a growth of 28.1%[62]. - Revenue from the People's Republic of China (PRC) for the three months ended September 30, 2025, was $250 million, an increase from $193 million in 2024, representing a growth of 29.5%[62]. - Revenue recognized from previously satisfied performance obligations for the three months ended September 30, 2025, was $620.9 million, compared to $516.5 million for the same period in 2024[67]. - Revenue from the intellectual property license agreement with Arm China for the three months ended September 30, 2025, was $243.1 million, compared to $147.7 million in 2024, reflecting a 64.6% increase[151]. - For the six months ended September 30, 2025, the company recognized revenue of $444.1 million from Arm China, up from $270.3 million in 2024, a 64.3% increase[151]. - Revenue from licensing and servicing arrangements with an affiliate of SoftBank Group for the three months ended September 30, 2025, was $177.9 million, compared to $43.2 million in 2024, a significant increase of 311%[156]. Expenses and Costs - Research and development expenses for the six months ended September 30, 2025, were $1,341 million, up from $999 million in the same period of 2024, indicating a 34.3% increase[13]. - The company reported a significant increase in staff costs, with salaries, bonuses, and benefits rising to $409 million for the three months ended September 30, 2025, compared to $327 million in 2024[168]. - The company's operating costs and expenses for the three months ended September 30, 2025, totaled $972 million, compared to $780 million in the same period of 2024[168]. - Share-based compensation costs increased to $506 million for the six months ended September 30, 2025, compared to $400 million for the same period in 2024, reflecting a rise of 26.5%[31]. - For the three months ended September 30, 2025, the pre-tax share-based compensation cost was $265 million, an increase from $218 million in the same period of 2024[140]. Cash and Assets - Cash and cash equivalents as of September 30, 2025, were $2,518 million, an increase from $2,085 million as of March 31, 2025[19]. - Total assets increased to $9,710 million as of September 30, 2025, compared to $8,932 million as of March 31, 2025, reflecting a growth of 8.7%[19]. - Total shareholders' equity rose to $7,407 million as of September 30, 2025, compared to $6,839 million as of March 31, 2025, marking an increase of 8.3%[22]. - Cash provided by operating activities for the six months ended September 30, 2025, was $899 million, a significant improvement compared to a cash outflow of $284 million in the same period of 2024[31]. - Cash and cash equivalents at the end of the period on September 30, 2025, were $2,518 million, compared to $1,498 million at the end of September 30, 2024, marking a year-over-year increase of 68.1%[31]. Investments and Acquisitions - The company entered into an agreement to acquire DreamBig Semiconductor, Inc. for approximately $265 million in cash, expected to close by the end of Q4 FY 2026[169]. - The company recognized a pre-tax gain of $131.0 million from the divestiture of its Artisan foundation IP business[74]. - The company expects to receive approximately $140 million in gross proceeds from its equity interest in Ampere, following SoftBank Group's acquisition[82]. - The company continues to evaluate opportunities for investments and technical partnerships to develop new technologies and advanced products, particularly in AI[194]. - The company plans to allocate greater financial resources towards technology development and explore investment or acquisition opportunities[195]. Market and Strategic Focus - The company is focused on maintaining and growing its market share in high-growth areas such as AI, which is driving demand for advanced processor designs[181]. - The Bureau of Industry and Security (BIS) extended U.S. export controls on the semiconductor industry, which may impact the company's ability to license products to certain countries[185]. - The "Affiliates Rule" published by BIS on September 29, 2025, expands export-related restrictions to foreign entities owned 50% or more by entities on the Entity List[187]. - The company relies on Arm China for a significant portion of its revenue, with payments determined by financial information provided by Arm China[184]. Financial Instruments and Risks - The company experienced a foreign currency translation adjustment loss of $4 million for the three months ended September 30, 2025, compared to a gain of $25 million in the same period of 2024[16]. - The company reported a net loss of $9 million on cash flow hedge derivatives for the three months ended September 30, 2025, compared to a gain of $29 million for the same period in 2024[104]. - The allowance for current expected credit losses decreased from $20 million as of March 31, 2025, to $3 million as of September 30, 2025[92]. - The notional value of outstanding foreign currency forward contracts designated as cash flow hedges was £315 million as of September 30, 2025, with a fair value of $7.2 million[100]. Accounting and Compliance - The company is currently evaluating the impact of several recently issued accounting standards, including ASU 2023-09, which will require additional disclosures in the financial statements for the fiscal year ending March 31, 2026[45]. - Adjustments to revenue are made in subsequent periods to reflect changes in estimates based on actual amounts reported by licensees[207]. - The company uses judgment for key attributes including the percentage of markets using its products and average selling price[207].