Core Viewpoint - Arm Holdings reported a cautious outlook for the upcoming fiscal year, citing global trade and economic uncertainties, which led to an 11% drop in its stock price after the earnings forecast fell short of Wall Street expectations [1][28]. Financial Performance - For Q4 of fiscal year 2025, Arm's revenue reached $1.24 billion, marking a 34% year-over-year increase and the first time quarterly revenue surpassed $1 billion [7][10]. - The company achieved an annual revenue of $4 billion for fiscal year 2025, a significant milestone, with a net profit of $792 million, reflecting a 158% increase year-over-year [12][27]. - Despite strong revenue growth, net income for Q4 decreased by 6% to $210 million, primarily due to a one-time $290 million loss from equity investments [11][12]. Revenue Breakdown - Arm's revenue is categorized into licensing and royalty fees, with licensing revenue growing by 53% to $634 million in Q4, surpassing royalty revenue for the first time [13][15]. - Royalty revenue for Q4 was $607 million, an 18% increase from the previous year, driven by the adoption of the Arm v9 architecture [17][19]. - The company noted that the smartphone market remains a significant driver for royalty revenue, with a 30% increase despite overall smartphone shipment growth being less than 2% [22]. Market Dynamics - Arm's business is influenced by global trade policies, with the CFO indicating that tariffs have had a limited impact on operations, as only 10% to 15% of shipments go to the U.S. [2][6]. - The company is also benefiting from the AI boom, as its architectures are utilized in many AI-driven systems, although it does not produce high-end AI accelerators itself [6][10]. Future Outlook - For Q1 of fiscal year 2026, Arm provided a revenue forecast of $1.05 billion, which is significantly lower than the previous year's growth rate of over 20% [27][28]. - The company did not provide annual guidance due to macroeconomic uncertainties, indicating a cautious approach moving forward [27][28].