Arm Holdings reported fiscal second quarter revenue of 1.44 billion dollars on November 4, up 27 percent year over year and ahead of the 1.38 billion dollars analysts expected. Adjusted earnings were 0.52 dollars a share against 0.48 dollars expected. Net income fell to 130 million dollars from 238 million dollars a year earlier, when the quarter included a disposal gain. Shares slipped about 1.8 percent after hours despite the beat.
The mix did the work. Licensing and other revenue rose 50 percent to a record 773 million dollars, well above the roughly 625 million dollars expected, as customers signed larger commitments for AI related designs. Royalty revenue rose only 8 percent to 670 million dollars, below the roughly 707 million to 721 million dollars analysts had modeled, as higher memory prices hurt smartphone shipments. Data center royalties more than doubled.
Arm said partners shipped more than 10 billion Arm based chips in the quarter for the first time, and it pointed to an opportunity of up to 2 billion dollars from its AGI CPU across fiscal 2027 and 2028. For the fiscal third quarter it guided revenue of 1.54 billion dollars, plus or minus 50 million dollars, marginally above consensus.
Read together with Qualcomm’s print the same evening, Arm’s quarter shows the memory squeeze from both sides: it caps current royalty volume in phones while customers pay upfront for the next generation of AI designs.