Arm Holdings plc American Depositary Shares (ARM) 6 Nov 24 2025 Q2 Earnings call transcript

The Arm Holdings plc earnings call for the second quarter of fiscal year 2025, held in October 2024, provided insightful updates on the company's financial performance and strategic outlook. With a focus on key themes and trends, this article analyzes the significant milestones, investor concerns, and future growth prospects highlighted during the call.

Strong Performance and Strategic Growth

Arm's CEO, Rene Haas, emphasized the company's exceptional performance since its IPO, exceeding all expectations. With over 300 billion Arm chips shipped since the last update, the demand for Arm's Compute platform has been robust. The company reported record royalty revenue, up 23% year-on-year, indicating a strong adoption of Arm's Compute platform, particularly its latest version 9 (v9). This growth is attributed to the increased value per chip and the widespread adoption of v9 in various sectors, including smartphones, data centers, and automotive markets.

Investor Concerns and Questions

During the call, analysts raised concerns about the company's relationship with key partners, such as Qualcomm, and the potential impact on revenue and operating expenses due to ongoing legal disputes. Rene Haas addressed these concerns, stating that contractual consent was required for Nuvia's license and was not obtained, leading to a notification for license cancellation. However, he assured investors that Arm is taking a cautious approach to ensure fairness and protect the Arm ecosystem.

Future Outlook and Growth Opportunities

Arm's outlook remains optimistic, with a focus on continued growth in the AI-driven world. The company expects to see significant royalty revenue growth in the high teens, driven by the adoption of v9 and the increasing use of Arm's Compute System-on-Chips (CSS) in various sectors. In the data center market, Arm's Graviton processors have shown promising results, with Microsoft Azure Cobalt and Google GCPx now in general availability. The automotive sector also presents a strong pipeline for CSS, particularly for Advanced Driver-Assistance Systems (ADAS) and In-Vehicle Infotainment (IVI) applications.

Conclusion

Arm's earnings call for the second quarter of fiscal year 2025 underscores the company's strong performance and strategic growth in the AI-driven world. The company's focus on expanding its software ecosystem and the adoption of v9 across various sectors, including smartphones, data centers, and automotive markets, signals a promising future. Despite challenges and ongoing legal disputes, Arm's outlook remains optimistic, with a focus on continued innovation and growth. Investors and analysts will closely watch the company's progress in the coming quarters, particularly its ability to navigate the competitive landscape and capitalize on emerging opportunities in the AI and technology markets.