Core Viewpoint - The company's FY26Q1 performance met guidance, but FY26Q2 guidance appears weak, indicating potential challenges ahead in revenue growth and profitability [3]. Group 1: Financial Performance - FY26Q1 revenue was $1.053 billion, a year-over-year increase of 12% but a quarter-over-quarter decrease of 15%, aligning with the company's previous guidance of $1.0 to $1.1 billion [3]. - Non-GAAP EPS for FY26Q1 was $0.35, down 12.5% year-over-year, consistent with the company's guidance range of $0.30 to $0.38 [3]. - FY26Q2 revenue guidance is set at $1.01 to $1.11 billion, with a midpoint indicating a year-over-year increase of 25.6% and a quarter-over-quarter increase of 0.7%, but below market expectations [3]. Group 2: Revenue Breakdown - FY26Q1 licensing revenue was $468 million, a slight year-over-year decrease of 0.8%, affected by the timing of high-value licensing agreements [4]. - Royalty revenue for FY26Q1 reached $585 million, a year-over-year increase of 25%, driven by the increased adoption of the Armv9 architecture and growth in data center usage [5]. - The annual contract value (ACV) for FY26Q1 was $1.528 billion, reflecting a year-over-year increase of 28%, supported by new collaborations and high-value licensing agreements [4]. Group 3: Strategic Initiatives - The company plans to increase R&D investment focusing on CSS, AI computing, and chiplets, which may enhance future revenue streams [3]. - The company is considering expanding into self-designed chips based on the Arm IP ecosystem, which could increase average transaction value but also poses risks related to customer relationships and profit margins [6]. Group 4: Market Dynamics - Geopolitical factors have a limited direct impact on the company, with FY26Q1 revenue from China accounting for 21%, showing a quarter-over-quarter increase of 6 percentage points and a year-over-year increase of 7 percentage points [3]. - The company has seen significant growth in its data center market share, with over 70,000 enterprises running AI workloads on Arm Neoverse chips, a 14-fold increase since 2021 [5].

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].