Arm tops $1bn revenue for second straight quarter as AI ecosystem makes history

CEO Rene Haas says royalties grew across all target end-markets, demonstrating the strength of Arm as the AI platform of choice. Haas said it was Arm's second best revenue quarter and a record Q1 at $1.05bn. Royalty revenue grew 25 per cent year-on-year to $585 million, also representing a record first quarter return.

Royalty revenue growth from all target end markets – including data centre, automotive, smartphones, and IoT – illustrated the momentum Arm is building across every corner of its business, Haas said.

The one slight blemish was that licensing revenue of $468 million was down slightly year-on year, as expected, but nothing could detract from an overall momentous start to the new fiscal year.

Haas said that Arm had exceeded the midpoint of its non-GAAP EPS guidance even while setting new records in R & D investment.

“Our financial performance is a testament to our disciplined execution and unwavering commitment to long-term innovation across a broad portfolio of compute technologies,” Haas said.

He repeated his resonant mantra that artificial intelligence was “the most significant transformation of our generation – and Arm is at the heart of it. From smart sensors in homes and factories to the world’s most advanced AI supercomputers, AI workloads are being deployed everywhere.

“This shift is driving unprecedented demand for compute that is not only performant, but also energy efficient. Arm is the only compute platform built to deliver AI performance across the full spectrum of power and performance – from milliwatts to megawatts.”

More than 70,000 enterprises now run AI workloads on Arm Neoverse data centre chips – a 40 per cent increase year-on-year and a 14x surge since 2021. Arm Neoverse CPUs also power some of the most important cloud AI infrastructure deployed today, including custom silicon such as NVIDIA Grace, AWS Graviton, Google Axion, and Microsoft Cobalt, among others.

“We expect this shift to drive the market share of Arm Neoverse-based chips shipped to top hyperscalers to nearly 50 per cent this year,” Haas said.

He added that these Neoverse CPUs are deployed for both general-purpose and AI training and inference workloads, reinforcing a growing influence in the data centre.

During the past quarter, NVIDIA announced that both Google and Microsoft are now deploying hundreds of thousands of NVIDIA’s Arm's Neoverse-based Grace Blackwell superchips across their data centres to boost performance and efficiency.

OpenAI, Microsoft, AWS, Google, Oracle and others are running production workloads on this infrastructure today.

Haas conceded that demand had exceeded Arm's expectations. To date, Arm has signed 16 CSS licenses with 10 companies – more than doubling its count from a year ago. Five of these companies are already shipping CSS-based chips, and all are market leaders. During the quarter, Arm signed three more CSS licences: two for data centres and one for PCs.

Haas said that as AI workloads migrated closer to users – on phones, wearables, and smart devices – the need for local, real-time intelligence at the edge was accelerating. Arm is enabling these AI experiences through a compute platform that improves critical factors such as acceleration, latency, privacy and energy efficiency, the CEO added.

Technology leaders – including Apple, Samsung, and MediaTek – are integrating AI acceleration capabilities for faster, more efficient on-device AI. Apple is powering Apple Intelligence; Samsung and MediaTek are improving responsiveness and efficiency of real-time AI applications such as translation, summarisation and personal assistants.

Google has also demonstrated its Gemma language model running 6x faster AI responses with significantly reduced reliance on the cloud for performance.

Arm has grown what is known as the largest developer ecosystem in history with more than 22 million developers at its core, representing more than 80 per cent of the global total and 30 per cent more than any other platform.

Haas said: “This vast ecosystem is a powerful flywheel – more developers means more software availability, which in turn fuels more demand for our platform across every market.”

He said AI was rewriting the rules of what’s possible. “From milliwatts at the edge to megawatts in hyperscale data centres, Arm is the only platform delivering the performance, efficiency, and scale AI demands.

“We are deeply committed to continuing our investments including in CSS, developer tools, and AI-specific acceleration to meet the enormous opportunities ahead. The AI era is just beginning — and Arm is the platform powering it with unmatched energy efficiency.”