Arm Holdings Delivers Robust Quarterly Growth and Market Expansion

Double-digit revenue increase, record royalties, and strategic diversification drive momentum

Introduction: Structural Growth Drivers

Arm Holdings, a key player in the global semiconductor industry, reported a strong quarterly performance, underscoring broad-based momentum across core segments such as AI, automotive, and IoT. Total revenue reached $1.24 billion, up 34% year-over-year, while non-GAAP net income came in at $584 million, showcasing the company’s growing role as a foundational platform for next-generation computing.

Financial Results: Surge in Royalties and Operating Profitability

For the first quarter of fiscal year 2025 (Q4 FYE25), Arm posted total revenue of $1.241 billion, including $607 million from royalties — an 18% increase compared to the same quarter last year, driven by accelerated adoption of the Armv9 architecture and greater deployment of Arm-based chips in data centers.
License and other revenue came in at $634 million, up 53%, reflecting large-scale licensing deals and a strong contribution from the company’s backlog.

The company reported a 98% non-GAAP gross margin, with non-GAAP operating income of $655 million, translating into a 53% operating margin. Non-GAAP net income totaled $584 million, or $0.55 per diluted share.

AI, Automotive, and Cloud: Expanding Industry Footprint

Arm emphasized its growing footprint across new verticals, particularly in automotive, cloud, and IoT. The company signed its first license for a Compute Subsystem (CSS) with a global automaker and launched the first Armv9 compute platform designed for edge AI applications.
As of Q4, Arm has shipped over 310 billion chips globally since inception, underscoring its dominant presence in embedded computing.

Shifting Royalty Mix: The Rise of Armv9

Analysis of royalty contributions by architecture shows a growing share for Armv9 at the expense of legacy generations. This new architecture commands higher royalties per chip and is seeing increased deployment in smartphones and hyperscale computing environments.

Diversified Revenue Streams

Arm continues to reduce its reliance on mobile. In fiscal 2016, over 90% of royalties were mobile-related, while by fiscal 2024, that share dropped below 50%, as cloud, IoT, and automotive gained ground. Currently, 20% of royalties stem from IoT and 10% from cloud and networking.

Cost Optimization and Forward Guidance

Total non-GAAP operating expenses were trimmed to $566 million, reflecting broad operational efficiencies across R&D, sales, and general administration. The company’s guidance for Q1 FYE26 includes expected revenue in the range of $1.0 to $1.1 billion, with non-GAAP EPS of $0.30 to $0.38.

Market Outlook and Strategic Implications

Arm’s improved financial performance is not solely a function of industry tailwinds, but also the result of a strategic pivot toward higher-value offerings like Compute Subsystems and AI infrastructure. The company’s ability to deliver end-to-end platforms — integrating hardware, software, and design — positions it favorably in a market increasingly defined by complexity and customization.

Conclusion: High-Quality Growth on a Global Platform

With ongoing improvements in revenue mix, expanding presence in high-growth verticals, and strong operational discipline, Arm is establishing itself as a resilient and profitable technology leader, powering the modern computing revolution — from smart vehicles to the intelligent edge.