Arm Holdings plc. - ADR

**Strong Revenue Growth**: Arm reported total revenue of $844 million for Q2 FY25, exceeding expectations and reflecting a year-over-year increase of 15%. Royalty revenue reached a record $514 million, a 23% growth year-on-year, driven primarily by the adoption of the Armv9 architecture and increased value per chip.

**Licensing Revenue Challenges**: Licensing revenue declined by 15% year-over-year to $330 million, although this decline was less than anticipated. The reduction is attributed to the tough comparison against a strong prior year, but the annualized contract value (ACV) saw a 13% increase, indicating underlying demand.

**Future Guidance and Growth Projections**: For Q3, Arm expects revenue between $920 million and $970 million, maintaining an overall FY25 revenue guidance of $3.8 billion to $4.1 billion, suggesting a year-over-year increase of 18% to 27%. Royalty revenue from smartphones is expected to remain strong, particularly as Armv9 becomes a larger proportion of the mix.