Why did ARM's Q3 2025 earnings exceed forecasts?

Arm Holdings' Q3 2025 earnings exceeded forecasts due to several key factors:

1. **Revenue Growth**: Arm reported a third-quarter revenue of $983 million, which is a 19% increase year-over-year. This growth was driven by record levels of royalty revenue and continued strength in license revenue. Royalty revenue grew by 23% year-over-year, primarily due to the adoption of Armv9 architecture and increased usage of Arm chips in data centers and IoT devices.
2. **Earnings Per Share (EPS) Improvement**: The company reported adjusted earnings of 39 cents per share, which is an increase from the analyst estimates of 34 cents per share. This beat on EPS can be attributed to the company's operational efficiency and market demand for its products.
3. **Sector Demand**: The semiconductor industry, in which Arm operates, is experiencing high demand, particularly in the areas of artificial intelligence and data centers. Arm's technology is crucial for these applications, and the company's performance reflects this sector-wide growth.

In summary, Arm's Q3 2025 earnings exceeded forecasts due to strong revenue growth, improved EPS, and high demand in the semiconductor industry, particularly in AI and data center segments.