Arm Holdings reported first-quarter revenue of $1.29 billion on Wednesday, a 22% increase from a year earlier, as demand for its chip designs in AI data centers drove record licensing and royalty figures.
The chip designer beat analyst estimates on revenue and earnings, but Arm stock dropped more than 8% after the results
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Arm Holdings reported first-quarter revenue of $1.29 billion on Wednesday, a 22% increase from a year earlier, as demand for its chip designs in AI data centers drove record licensing and royalty figures.
Adjusted earnings came in at 45 cents per share. Analysts had expected revenue of $1.26 billion and adjusted earnings of 40 cents per share, according to the Wall Street Journal.
Royalties climbed 22% to $715 million, buoyed by data center royalties that more than doubled, and licensing fees advanced 23% to $574 million. Net income reached $270 million, or 25 cents per share, up from $130 million, or 12 cents per share, in the year-earlier quarter.
Arm said its AGI CPU, an AI data center chip, has drawn stronger-than-anticipated interest, with cumulative customer demand topping $2 billion when measured across fiscal years 2027 and 2028. Arm noted that shipments to several customers are already underway and that it has locked in enough manufacturing capacity to back more than $1 billion worth of early deployments.
Looking to the second quarter, Arm's outlook calls for revenue of $1.33 billion to $1.43 billion and adjusted earnings of 43 to 51 cents per share, the company said. The Wall Street Journal reported that analysts had penciled in revenue of $1.34 billion and adjusted earnings of 44 cents per share for the period.
Arm stock fell more than 8% following the results.
The company pointed to broad adoption of its technology across major cloud and chip companies during the quarter. Nvidia $NVDA's Vera CPU, built on Arm architecture, entered full production, while AWS announced a multi-year agreement with Meta $META to deploy tens of millions of Arm-based Graviton5 cores for AI workloads, the company said. Shipments of its Neoverse data center processors have now surpassed 1.5 billion cores.
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