Arm has been reporting its financials regularly since going public in the US, and last night it released its results for the past quarter, which it listed as the third quarter of fiscal 2024. The results beat market expectations and guidance for the current quarter further boosted Arm’s share price.
At the peak, as many foreign media noted, the Arm share price, based on the publication of quarterly statistics, soared by 41%, but at the time of preparing this material for publication, it increased during the additional session by 19.85%, and closed the main session with an increase of 5. 52% to $77.01 per share. The company’s quarterly revenue grew by 14% to a record $824 million, exceeding analysts’ expectations, and $470 million of this amount was provided by royalties – in this area, Arm’s revenue also set a new record, increasing by 11% year-on-year. Referring to WSTS data, Arm management notes that the semiconductor industry has been growing since February 2023, when a local minimum was reached, and therefore the company’s revenue is showing an upward trend.
Arm explains the growth in royalty revenue not only due to some recovery in the smartphone market, but also due to the expansion of the more modern Armv9 architecture, which implies higher royalty rates and a greater number of cores per device. At the same time, processors with the Arm architecture are gaining popularity in the server and automotive segments, which also increases the amount of funds from licensing revenues. Arm’s direct license revenue grew by $354 million last quarter, up 18% year-over-year. During the period, the company managed to conclude five new licensing agreements. In total, at the end of the quarter, Arm had 27 clients using the Arm Total Access licensing scheme, sequentially this number increased from 20. Under the Flexible Access scheme, the number of licensees has consistently increased from 212 to 218.
The company’s operating profit year-on-year increased by 17% to $338 million. The operating profit margin remained at 40%, with the overall profit margin exceeding 95%. In total, in the third calendar quarter of last year, Arm customers shipped 7.7 billion processors with the corresponding architecture. This is 3% less than a year earlier, but overstocking in the smartphone segment was partly offset by increased chip shipments in the automotive segment. Importantly, sequentially, the number of processors shipped to customers increased by 8% in the third quarter, indicating the beginning of a recovery in demand. Over the entire period of the company’s activity, the number of processors shipped to customers exceeded 280 billion units.
For the current quarter, Arm expects revenue of $850 million to $900 million, also exceeding analysts’ expectations. Operating expenses are planned to be kept within $490 million. For the entire fiscal year, which will end by April, Arm plans to earn between $3.15 and $3.2 billion, and keep operating expenses within $1.7 billion. For the previous fiscal year, Arm clients managed to ship 30.6 billion processors. Smartphone processors now account for no more than a third of Arm’s revenue, which shows the company’s success in diversifying its activities. The company continues to strengthen its position in the data center and automotive segments. The Chinese subsidiary contributed up to 25% of Arm’s revenue in the past quarter. As Arm CEO Rene Haas emphasized at the reporting event, all the strategies developed by the company over the previous several years have begun to bear fruit, and the successful results of the last two quarters are just the beginning of an upward trend.