Live: Will ARM (Nasdaq: ARM) Soar After Today’s Earnings Report?

• “We are looking deeply at the possibilities of moving beyond our current platform to additional subsystems, chiplets or possibly full solutions… Arm is in a unique space to provide solutions in a way no one else can.”
  – Rene Haas, CEO
  Sentiment: Strategic, signaling broader ambitions beyond IP licensing.

• “Neoverse share among top hyperscalers has jumped from under 20% last year to nearly 50% this year, driven by AI workloads needing both performance and efficiency.”
  – Rene Haas, CEO
  Sentiment: Market leadership, strong momentum in data center AI.

• “Our Compute Subsystems are delivering double the royalty of Armv9, and next-generation CSS platforms bring the highest royalty rates we have seen to date.”
  – Jason Child, CFO
  Sentiment: Positive, structural tailwinds to long-term royalty growth.

• “We expect healthy growth in the coming year and years to come, underpinned by design pipeline visibility, rising demand for custom silicon, and AI from cloud to edge.”
  – Jason Child, CFO
  Sentiment: Confident, forward-looking growth assurance.

• “Arm is the only compute platform built to deliver AI performance across the full spectrum of power and performance, from milliwatts to megawatts.”
  – Rene Haas, CEO
  Sentiment: Differentiation, reinforcing Arm’s unique position in AI compute infrastructure.

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It’s a tough after-hours for Arm Holdings. The company is still down 8% while most tech stocks are soaring after hours.

Microsoft and Meta just announced great news for most stocks in the AI trade. Microsoft said Azure is growing at a red-hot 39% while Meta guided to $107 billion in capex spend next year.

Yet, with weak guidance for next quarter Arm will be sitting out what should be a very good day for most of tech tomorrow. Another stock that issued weak earnings is Arm’s old rival Qualcomm.

ARM | Arm Holdings Q1’26 Earnings Highlights:

• Adj. EPS: $0.35 ✅; UP +13% YoY
• Revenue: $1.05B (Est. $1.01B – $1.11B) ✅; UP +12% YoY
• Royalty Revenue: $585M; UP +25% YoY
• License and Other Revenue: $468M; DOWN -1% YoY
• Adj. Gross Margin: 97.9% ✅; UP +50 bps YoY
• Net Income: $130M; DOWN -42% YoY
• Operating Cash Flow: $332M; UP +214% YoY
• Free Cash Flow: $150M; UP +143% YoY
• Effective Tax Rate: 11.0% (vs. 9.4% YoY)

Q1’26 Outlook:

• Revenue: $1.00B – $1.10B [✅]
  • Expectations are driven by continued growth in royalty revenue and the adoption of Arm’s technologies across various sectors.
  • Management anticipates strong demand for AI-related products and services, contributing to revenue growth.

Q1 Segment Performance:

• Royalty Revenue: $585M; UP +25% YoY
• License and Other Revenue: $468M; DOWN -1% YoY

Other Key Q1 Metrics:

• Adj. Operating Income: $412M; DOWN -8% YoY
• Adj. Operating Expenses: $619M; UP +33% YoY
• R&D Expenses: $650M; UP +34% YoY
• Cash and Cash Equivalents: $1.96B
• Annualized Contract Value (ACV): $1.53B; UP +28% YoY
• Remaining Performance Obligations (RPO): $2.23B
• Number of Total Access Licenses: 45; UP from 33 YoY
• Number of Flexible Access Licenses: 313; UP from 241 YoY

CEO Commentary:

• Rene Haas: “Arm is powering AI workloads everywhere with unmatched performance and energy efficiency. Our Q1 FYE26 results exceeded $1 billion in revenue for the second straight quarter as royalties grew across all target end markets, demonstrating the strength of Arm as the AI platform of choice – from the cloud to the smallest edge devices.”

CFO Commentary:

• Jason Child: “Our disciplined execution and commitment to innovation have allowed us to achieve record revenue while investing heavily in R&D. The growth in our royalty revenue reflects the increasing adoption of our technology across diverse markets.”

Strategic Updates:

• Arm has signed 16 Compute Subsystem (CSS) licenses with 10 companies, doubling the count from a year ago, indicating strong demand for CSS as a starting point for chip design.
• New compute subsystems like Zena CSS are being developed for AI-driven automotive workloads, enhancing Arm’s position in the automotive sector.

ARM earnings are out and shares are plummeting, down 6%.

• EPS of $.35 (matches expecations)
• Revenue of $1.05 billion (below expectations of $1.06 billion)
• Q2 EPS of $.29 to $.37 (midpoint either inline or below expecations)
• Q2 revenue: $1.05B at the midpoint (below consensus)

Arm shares are finishing the day largely flat. In fact, as of 3:50 p.m. ET, they’re exactly flat. 

That’s more or less in line with the broader market. The Nasdaq is up .03% while the S&P 500 is down .26%.

We’ll begin posting updates after Arm’s earnings hit newswires a little after 4 p.m. ET.