Arm Holdings plc American Depositary Shares Q2 FY2026 Earnings Call

· Earnings call transcript and AI-powered summary

Arm Holdings Q2 FY2026 Earnings Summary

Overview: Arm reported strong Q2 FY2026 results driven by AI demand across edge devices to hyperscale data centers. Total revenue reached a record $1.14 billion (up 34% YoY from Q2 FY2025), marking the third consecutive quarter above $1 billion. Non-GAAP EPS of $0.39 exceeded the high end of guidance.

Key Financial Metrics (YoY Comparisons to Q2 FY2025)

  • Total Revenue: $1.14B, +34% (exceeded guidance midpoint by $75M).
  • Royalty Revenue: Record $620M, +21% (beat guidance of mid-teens growth); driven by smartphones (higher rates per chip, Armv9/CSS adoption) and data center (Neoverse royalties doubled).
  • Licensing & Other Revenue: $515M, +56%; fueled by next-gen architecture demand and strategic deals (e.g., SoftBank expansion, 4 ATA + 3 CSS licenses).
  • Non-GAAP Operating Expenses: $648M, +31% (slightly below guidance); reflects R&D investment in architectures, CSS, and potential chiplets/SoCs.
  • Non-GAAP Operating Income: $467M, +43%; margin 41.1% (vs. 38.6% prior year).
  • Non-GAAP EPS: $0.39 (+$0.06 above guidance midpoint).
  • Annualized Contract Value (ACV): +28% YoY (maintained strong momentum after Q1's +28%; above typical low-teens run rate).

Strategic & Operational Highlights

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Operator: Good day, and thank you for standing by. Welcome to the Arm Second Quarter Fiscal Year 2026 Webcast and Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to turn the conference over to your first speaker today, Jeff Kvaal, VP, Investor Relations. Please go ahead. Jeff Kvaal: Thank you, Sharon, and welcome, everyone, to our earnings conference call for the second quarter of fiscal '26. On the call are Rene Haas, Arm's Chief Executive Officer; and Jason Child, Arm's Chief Financial Officer. During the call, Arm will discuss forecasts, targets and other forward-looking information regarding the company and its financial results. While these statements represent our best current judgment about future results and performance, our actual results are subject to many risks and uncertainties that could cause results to differ materially. In addition to any risks that we highlight during this call, important risk factors that may affect our future results and performance are described in our registration statement on Form 20-F filed with the SEC. Arm assumes no obligation to update any forward-looking statements. We will refer to non-GAAP financial measures during the discussion. Reconciliations of certain of these non-GAAP financial measures to their most directly comparable GAAP financial measures can be found in our shareholder letter as can a discussion of projected non-GAAP financial measures that we ar
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