Core Insights - Arm Holdings has established itself as a leading AI stock with its share price tripling since its public debut, supported by partnerships with major tech companies [1] Financial Performance - Arm reported a 34% increase in overall revenue to $1.14 billion, exceeding expectations of $1.06 billion [5] - Royalty revenue rose by 21% to $620 million, driven by growth in smartphones, data centers, automotive, and IoT [5] - Licensing revenue surged 56% to $515 million, influenced by significant new deals, including one with a Chinese customer [6] - Adjusted operating income increased by 43% to $467 million, and adjusted EPS improved by 30% to $0.39, surpassing the consensus estimate of $0.33 [7] Market Position - Arm holds over 99% market share in smartphones and is expanding in data centers, where energy efficiency is crucial [2] - The company is uniquely positioned as it serves multiple end markets, from cloud to edge devices [6] Growth Drivers - The growth of Compute Subsystems (CSS), which integrates CPUs with other components like memory and GPUs, is a significant driver for Arm's expansion [8]

Financial Highlights - Total revenue reached $1053 million, a 12% year-over-year increase[11] - Royalty revenue grew to $585 million, up 25% year-over-year, driven by Armv9 architecture adoption and increased data center usage[25] - License and other revenue totaled $468 million, a 1% year-over-year decrease due to timing fluctuations[25] - Non-GAAP operating expenses were $619 million[11] - Trailing 12 months Non-GAAP free cash flow was $597 million[11] Market and Technology Trends - Arm forecasts its market share with top hyperscalers will approach 50% in 2025[13] - Over 70000 customers are using Arm-based chips in data centers[13] - The company has shipped over 325 billion Arm-based chips since 1990[12] - Arm's customers shipped 2x the number of chips in FYE25 than in FYE16[17] Future Outlook - Q2 FYE26 revenue is projected to be between $101 billion and $111 billion[47] - Q2 FYE26 Non-GAAP operating expense is expected to be approximately $655 million[47] - Q2 FYE26 Non-GAAP fully diluted earnings per share are projected to be between $029 and $037[47]