Arm Holdings plc. - ADR

Record Revenue Growth: Arm posted a record revenue for Q4 of $1.24 billion, achieving over $4 billion for the fiscal year ending March 31, 2025. Notably, royalty revenue grew 18% YoY to $607 million, driven by strong demand in smartphones and AI compute across various markets. Licensing revenue surged more than 50% to a record $634 million, primarily due to new deals and the adoption of Armv9 technology.

AI Cloud Expansion: Arm is seeing significant momentum in AI-driven cloud deployments, with expectations that up to 50% of new server chips in hyperscalers will be Arm-based this year. Major collaborations with NVIDIA, Google, and Microsoft highlight increasing adoption in the data center segment due to Arm’s performance and efficiency, suggesting a robust pipeline for future revenue growth.

Guidance & Market Uncertainty: Despite the strong performance, Arm refrained from issuing full-year guidance for fiscal 2026 due to macroeconomic uncertainties and lower visibility into demand. Q1 guidance is set at $1.0 - $1.1 billion in revenue, reflecting 12% growth YoY. The company anticipates royalty growth of 25% to 30% in Q1, indicative of solid underlying demand.