Arm extends global reach with a new record haul in Q1

Q1 revenues were a new record $939 million – up 39 per cent year-on-year, with record licence returns and strong growth in royalties.

Licence and other revenue of $472m – up 72 per cent – was due to multiple high-value licence agreements being signed as thought-leading companies made long-term commitments to deploy Arm-based technology in their future products.

Royalty revenue of $467m was 17 per cent ahead, driven by the rapidly increasing penetration of Armv9-based chips which typically command a higher royalty rate, and strong growth in premium smartphones.

Haas said that automotive saw growth driven by chips with higher royalty rates going into advanced applications such as advanced driver assistance systems and the digital cockpit.

“In cloud compute we continue to see the early benefits from the adoption of Armv9-based server chips. IoT/embedded declined year-over-year due to the continued inventory correction in the broader market,” he told shareholders.

During the quarter, Arm signed two additional Arm Total Access agreements, taking the total number of extant licenses to 33, which includes more than half its top 30 customers.

The Arm Flexible Access program now has 241 customers, with adoption benefiting from the introduction of the programme into China, where previously it was only available to the rest of the world.

Arm recently joined the Nasdaq 100 index – the top 100 largest and most actively traded companies on the Nasdaq stock exchange – with Arm among the fastest companies to be included in the index post-IPO.

Haas said Arm’s long-term strategy promotes multiple growth drivers.

Increasing chip complexity is driving royalty revenue growth. AI-enabled devices need significantly increased performance yet also require energy-efficiency and rapid time-to-market.

These market trends are driving the need for Arm compute platforms, based on Armv9, which enable more complex AI chips in smartphones, cloud servers, smart IoT, and networking devices.

Chips based on Armv9 technology now contribute around 25 per cent of Arm’s royalty revenue, which is up from around 20 per cent last quarter. Increased Armv9 adoption in the mobile market drove smartphone royalty revenue up 50 per cent in Q1.

Haas said Arm expects the migration of AI from the cloud to edge devices to drive even higher compute demand per device over time and Arm’s unprecedented share across all end markets means that the business is uniquely positioned to benefit from this migration, which will increase royalty revenue per chip.

Haas said AI everywhere was creating demand for more energy-efficient compute. AI's substantial energy requirements are driving growth in Arm's compute platform, which is the most power efficient solution available.

During the quarter, Microsoft announced its first generation of Copilot+ PCs on Arm with double the battery life of the closest PC competitor and on par

with its Arm-based MacOS counterpart. Every major software application and developer tool now runs natively on Windows on Arm, including Microsoft Office, Google Chrome, Slack, and GitHub runners, which results in a no compromises experience for the end user.

Google’s recently announced AI-capable Axion products for the data centre provide 50 per cent better performance and up to 60 per cent better energy-efficiency than legacy solutions.

Early in Q2 of FYE25, AWS – which has 50,000 customers – announced the general availability of the high-performance, energy-efficient Graviton4, which provides up to 30 per cent better compute performance than Graviton3.

During Q1, Arm also introduced the Arm Ethos-U85, which increases performance 4x for edge AI applications such as factory automation, object detection, and image classification.

The company has also started signing agreements for the Armv9-based CSS for Automotive, announced last quarter. Customers are planning to combine CSS with Arm’s unmatched ecosystem of automotive virtual platforms, software and tools to create a software-defined vehicle system for Level2+ and Level3 autonomous vehicles.

Tata Technologies is enabling its automotive software solutions to work seamlessly with CSS for Automotive to accelerate the development timelines of high-performance vehicle computing systems.

Haas said Arm’s ecosystem of software and design partners was unique. “Arm has the world’s largest compute ecosystem with more than 20 million software developers, which is up from 15 million one year ago. We continue to increase investment across all market segments to accelerate software development on Arm.

“More Arm software developers drives demand for new Arm compute platform solutions, which in turn drives an increase in software development and creates a virtuous cycle of demand.”

New companies are joining Arm’s ecosystem and existing customers are leveraging their knowledge and experience of Arm technology into additional end markets.

In the last few months, Google and Microsoft announced their first Arm-based chips for the data centre. During the quarter, Mediatek joined Arm Total Design, a fast-growing ecosystem that accelerates the development of data center chips to meet the performance and efficiency needs of AI applications.

This takes the total number of Arm Total Design partners to 25 since launch late last year. Also during the quarter, Google announced new AI capabilities for Android phones, including integration of its Gemini AI model directly into Android.

Already, 70 per cent of the AI-enabled apps on the Google Play Store run directly on the Arm CPU and the addition of Gemini will enable more apps to take advantage of the Arm compute platform.

“All combined, we expect Arm’s long-term strategy to provide sustainable growth for years and decades to come,” said Haas.