Arm Holdings plc American Depositary Shares Q1 FY2027 Earnings Call

· Earnings call transcript and AI-powered summary

Arm Holdings Q1 FY2027 Earnings Summary

  • Revenue: $1.29 billion, +22% YoY (vs. Q1 FY2026); record Q1 total.
  • Royalty Revenue: $715 million, +22% YoY; record Q1, driven by cloud AI (data center royalties more than doubled YoY) and Armv9/CSS penetration offsetting smartphone softness.
  • Licensing & Other Revenue: $574 million, +23% YoY; record Q1, including $193 million from SoftBank deal.
  • Non-GAAP EPS: $0.45, +29% YoY; above high end of guidance.
  • Non-GAAP Operating Income: $531 million; operating margin 41% (+200 bps YoY).
  • Free Cash Flow: $665 million (quarter); $1.4 billion TTM.
  • ACV: +13% YoY, above long-term licensing growth expectations.

Key Business Highlights

  • Arm AGI CPU: Demand now exceeds $2 billion (vs. $1B opportunity outlined last quarter for FY2027-FY2028); manufacturing capacity secured, with increased confidence in upside. Initial products delivered to multiple customers (U.S. and China); Q3 update expected on FY2028 visibility.
  • Neoverse: 1.5 billion cores shipped (500 million in last 9 months); NVIDIA Vera, Google Axion, AWS Graviton5, Microsoft Azure Cobalt, and Qualcomm Dragonfly announced or in production.
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Operator: Good day and thank you for standing by. Welcome to the Arm First Quarter Fiscal Year 2027 Webcast and Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Ian Thornton, Vice President of Investor Relations. Ian Thornton: Thank you, and welcome to our first quarter fiscal '27 earnings call. On the call are Rene Haas, Arm's Chief Executive Officer; and Jason Child, Arm's Chief Financial Officer. Today's call contains forward-looking information about the company and its financial results. While these statements represent our best current judgment, our business is subject to many risks and uncertainties that could cause actual results to differ materially. Important risk factors that may affect our business and future financial results are described in our annual report on Form 20-F filed with the SEC. Arm assumes no obligation to update any forward-looking statements. We will also refer to non-GAAP financial measures. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures can be found in our shareholder letter as can a discussion of certain projected non-GAAP financial measures that we are not able to reconcile without unreasonable efforts and supplemental financial information. Our earnings materials are available at investors.arm.com. And with that, I'll turn the call over to Rene. Rene Haas: Thank you, Ian, and welcome,
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