ARM Holdings PLC · NASDAQ:ARM
ARM — Q2 FYE25 Earnings Presentation
28 slides from ARM's earnings presentation, Nov 6, 2024
Slide 1: Arm Holdings plc Q2 FYE25 Investor Presentation
Arm Holdings plc Q2 FYE25 Investor Presentation investor.relations@arm.com https://investors.arm.com AI-generated image November 6, 2024 © 2024 Arm
Slide 2: Forward-Looking Statements
Forward-Looking Statements This presentation contains forward-looking statements that reflect Arm Holdings plc’s (“Arm”) plans, beliefs, expectations and current views with respect to, among other things, future events and financial performance. These statements involve known and unknown risks, unce
Slide 3: Non-GAAP Financial Measures
Non-GAAP Financial Measures In addition to disclosing results determined in accordance with generally accepted accounting principles, or GAAP, Arm utilizes, and this presentation includes, certain non-GAAP financial measures that differ from measures calculated in accordance with GAAP. Arm’s non-GAA
Slide 4: Q2 FYE25: Highlights
Q2 FYE25: Highlights Operating Highlights Innovation Highlights +300bn Arm-based chips shipped $844m Cumulative number of Arm-based chips since 1990. Our volume has created a base for the largest ecosystem in Total revenue up 5% YoY the semiconductor industry $494m AI on Arm is going everywhere In Q
Slide 5: Royalty Growth from Rising Complexity, Volume Expansion
Royalty Growth from Rising Complexity, Volume Expansion More Complexity More Chips More Arm Per Chip More advanced workloads need The semiconductor industry The concept of AI everywhere is Arm’s latest Armv9 architecture revenue is forecasted to grow at a increasing demand for Arm’s highly CAGR of 8
Slide 6: AI on Arm: Energy Efficiency from the Data Center to the Edge
AI on Arm: Energy Efficiency from the Data Center to the Edge IoT & Mobile Cloud Compute Automotive Embedded Generative AI Optimized Autonomous Smart AI for all for AI Driving Home applications 6 © 2024 Arm
Slide 7: Unparalleled Software Ecosystem
Unparalleled Software Ecosystem 20M+ Developers on Arm, 10M+ Developer hours for Arm 1st decade of Armv8 1.5Bn Ecosystem hours 30M+ Developer hours 1st decade of Armv9 7 © 2024 Arm
Slide 8: Q2 FYE25: Highest ever revenue for Q2
Q2 FYE25: Highest ever revenue for Q2 Total revenue: $844m up 5% YoY Royalty revenue: $514m up 23% YoY led by increased Armv9 penetration in smartphones License and other revenue: $330m down 15% YoY due to normal fluctuation in timing and size of revenue recognition of multiple high-value license ag
Slide 9: Armv9 adoption driving royalty growth
Armv9 adoption driving royalty growth Royalty Revenue by Architecture 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% FYE16 FYE17 FYE18 FYE19 FYE20 FYE21 FYE22 FYE23 FYE24 Q1 FYE25* Q2 FYE25* Armv7 & older Armv8 Armv9 Armv9 commands a higher royalty per chip than prior architectures Armv9 adoption has s
Slide 10: Diversification in multiple long-term growth markets
Diversification in multiple long-term growth markets Royalties by End Market - FYE16 Royalties by End Market - FYE24 IoT / Embedded 20% Other Automotive 8% Smartphone AP 40% Mobile Cloud and networking 10% Other mobile 7% Consumer electronics 15% Arm is increasing revenue from markets beyond mobile
Slide 11: Royalty: Gaining Share in a Massive Market
Royalty: Gaining Share in a Massive Market Market Share1 Market Value1 FYE22 to FYE24 FYE22 to FYE24 MOBILE APPLICATIONS >99% >99% $30bn $33bn OTHER MOBILE Client 64% 67% $16bn $16bn CONSUMER ELECTRONICS 24% 30% $65bn $50bn CLOUD Infrastructure COMPUTE 9% 15% $16bn $21bn NETWORKING EQUIPMENT 23% 28%
Slide 12: Compute Subsystems: A better starting point for chip design
Compute Subsystems: A better starting point for chip design Rising design and manufacturing complexity is lifting cost, time-to-market and risk CSS helps partners solve cost CSS adopted across Growing ecosystem and time-to-market challenges many end markets accelerates deployment Longer manufacturin
Slide 13: Q2 FYE25: From Revenues to Profits
Q2 FYE25: From Revenues to Profits 97% 39% Non-GAAP Non-GAAP Gross Margin Operating Margin $844m $24m $820m License Revenue $330m $494m $326m $317m Royalty Revenue $514m Revenue Non-GAAP Non-GAAP Non-GAAP Non-GAAP Non-GAAP COS Gross Profit Operating Operating Net Income Expense Income Notes: 1. Depr
Slide 14: Near-Term Guidance
Near-Term Guidance Q3 FYE 25 FYE 25 Revenue ($m) $920m - $970m $3.80b - $4.10b Non-GAAP Operating Expense ($m)1 ~$525m ~$2.05b Non-GAAP fully diluted earnings per share ($)1 $0.32 - $0.36 $1.45 - $1.65 (1) For more information and definitions of the non-GAAP measures see the “Key Financial and Opera
Slide 15: Arm is Building the Future of Computing
Arm is Building the Future of Computing Arm is the world’s most pervasive CPU architecture 300+ Billion Arm-based chips shipped since inception Everything today is a computer – CPUs needed everywhere 28.6 Billion Arm-based chips shipped in FYE24 Ongoing innovation to support of customer needs – from
Slide 16: Appendix
arm Appendix 2024 Arm
Slide 17: Q2 FYE25: Annualized Contract Value
Q2 FYE25: Annualized Contract Value Annualized contract value increased 13% YoY in Q2 $1,400m $700m $1,253m $1,160m $1,182m $1,193m $1,200m $1,080m $1,108m $600m $1,030m $1,048m $1,009m $1,000m $472m $500m $414m $388m $800m $400m $354m $330m $299m $600m $275m $300m $259m $400m $188m $200m $200m $100
Slide 18: Q2 FYE25: Remaining Performance Obligation (RPO)
Q2 FYE25: Remaining Performance Obligation (RPO) Remaining performance obligations represent revenue that will be recognized in future periods RPO is down 1% YoY and up 10% QoQ $3,000m $800m $2,414m $2,484m $2,433m $2,385m $700m $2,500m $2,168m $600m $2,000m $1,773m $1,751m $1,758m $1,712m $1,681m $
Slide 19: Q2 FYE25: Non-Financial Metrics
Q2 FYE25: Non-Financial Metrics Arm Flexible Access Arm Total Access Arm Total Access (ATA) at 39 extant licenses, up 6 QoQ • Target markets for these licensees include smartphone, 269 39 AI accelerators, automotive applications, data centers 222 241 and embedded computing 33 203 31 • ATA licensees
Slide 20: Royalty Revenue: Arm is Gaining Share
Royalty Revenue: Arm is Gaining Share Market Share by Chip Value $250bn Arm x86 Other $200bn $150bn $100bn $50bn $0bn 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Calendar Years Notes: Based on Arm internal estimates. Other includes legacy and niche architectures such as: • Proprietary architec
Slide 21: Royalty Revenue Provides a Platform for Long-Term Growth
Royalty Revenue Provides a Platform for Long-Term Growth Royalty revenue can continue for many years or decades $2,000m $1,800m Royalty revenue from Arm products launched during Fiscal Year Ending $1,600m Still collecting $1,400m royalties on $1,200m products developed in the $1,000m early 1990s $80
Slide 22: Reconciliations: GAAP to Non-GAAP and Adjustments
Reconciliations: GAAP to Non-GAAP and Adjustments Includes retrospective change to Non-GAAP reporting 22 © 2024 Arm
Slide 23: Reconciliations: GAAP to Non-GAAP and Adjustments… cont’d
Reconciliations: GAAP to Non-GAAP and Adjustments… cont’d 23 © 2024 Arm
Slide 24: Reconciliations: GAAP to Non-GAAP and Adjustments… cont’d
Reconciliations: GAAP to Non-GAAP and Adjustments… cont’d 24 © 2024 Arm
Slide 25: Reconciliations: GAAP to Non-GAAP and Adjustments… cont’d
Reconciliations: GAAP to Non-GAAP and Adjustments… cont’d 25 © 2024 Arm
Slide 26: Reconciliations: GAAP to Non-GAAP and Adjustments… cont’d
Reconciliations: GAAP to Non-GAAP and Adjustments… cont’d 26 © 2024 Arm
Slide 27: Reconciliations: GAAP to Non-GAAP and Adjustments… cont’d
Reconciliations: GAAP to Non-GAAP and Adjustments… cont’d 27 © 2024 Arm
Slide 28: Reconciliations: GAAP to Non-GAAP and Adjustments… cont’d
Reconciliations: GAAP to Non-GAAP and Adjustments… cont’d 28 © 2024 Arm