Q4 2025 Arm Holdings PLC Earnings Call
Speaker Change: Good day, and thank you for standing by. Welcome to the Arm 4th quarter in fiscal year and the 2025
Speaker Change: At this time, all participants are in a listen-only mode. After this speaker's presentation, there'll be a question and answer session. To ask a question during the session, you will need to press star 1 and 1 on your telephone. You will then hear an automated message advising your hand is raised.
Speaker Change: To destroy your question, please press star one and one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Ian Thornton, Vice President and Rest of Relations. Please go ahead sir.
Ian Thornton: Thank you very much indeed operator, and welcome everybody, I'll be standing in for Jeff Kvaal today.
Speaker Change: Welcome to our earnings conference called for the fourth quarter of fiscal year ended March 31st, 2025. On the call today, Rene Haas, Arms Chief Executive Officer, and Jason Child, Arms Chief Financial Officer.
Speaker Change: During the call, Armou discussed forecasts, targets, and other forward-looking information regarding the company and its financial results.
Speaker Change: While these statements represent our best current judgement about future results and performance, our actual results are subject to many risks and uncertainties that could cause actual results to different materially.
Speaker Change: In addition to any risks that we highlight during this call, important risk factors that may affect our future results and performance are described in our Registration Statements on Form 20F filed with the SEC.
We will refer to non-GAAP financial measures during the discussion.
Speaker Change: Reconciliation of certain of these non-GAAP financial measures to their most directly comparable GAAP financial measures
Speaker Change: As well as a discussion of certain projected non-GAAP financial measures that we are not able to reconcile without unreasonable efforts and supplementary financial information can be found in our shareholder letter.
Rene Haas: The Sheldon Letter and other earnings related materials are available on our website at investors.arm.com and with that I'll turn the call over to the next.
Thank you, Ian, and welcome everyone.
Rene Haas: Q4 marked a record breaking close to a strong year for arm, driven by strong demand for power
Rene Haas: We crossed a major milestone in Q4 revenue exceeding 1 billion for the first time ever in our history.
Rene Haas: For the full year, revenue top 4 billion, and royalty revenue surpassed 2 billion, also first.
Rene Haas: We delivered record royalty of $607 million to squatter, reflecting the growing value of every chip ship with arm inside.
Rene Haas: And licensing revenue hit an all-time high of $634 million, driven by new deals, including a multi-year AI partnership with the Malaysian government.
Rene Haas: Our royalty growth is broad-based, come from all major markets, data center, automotive, smartphones and IoT, showing the strength of our diversification strategy.
Rene Haas: Arm is now increasingly the first choice for AI Cloud deployments.
Rene Haas: Arm, NVIDIA's Grace Blackwell, Arm V9 is now in full production
Speaker Change: Google's Action, RMB-9, now deployed in 10 regions used by 40 other top 100 customers, offering up to 65% better price performance in current generation X86.
Speaker Change: Microsoft Cobalt-100 supports major workloads from Databricks, Siemens, Snowflake, and
Speaker Change: and over 50% of new AWS CPU capacity in the past two years is powered by arm-based graviton.
Speaker Change: We're also seeing strong momentum in custom silicon, with companies turning to arm for CPU, GPU, and NPU solutions.
This is driving both license and royalty growth.
Speaker Change: NVIDIA's AI Desktop, DGX Spark, powered by the Grace Blackwell Super Chip with Arm V9 CPUs is gaining traction.
Reinforcing Strong Demand for Arm-Based AI Infrastructure
Speaker Change: Our smartphone royalties jumped 30% year-on-year. Far outpacing the modest 2% growth in shipments.
Proof of Arising Value Per Device
Speaker Change: We launched the first ARM-V9 Edge AI platform, combining Cortex A320 and Ethos U85MPU to run William Parameter Models, adopted by leaders like Infinian, NXP, Renee Saas, Qualcomm, and
Speaker Change: GM and Nvidia announced a collaboration on ARM-based Rive AJX platforms for next generation vehicles.
Speaker Change: Our compute subsystems are now shipping volume, boosting both mobile and cloud royalty revenue.
Speaker Change: We also signed our first automotive CSS license with a global EV leader, enabling custom silicon for next-gen vehicles.
Speaker Change: Our common CPU architecture from Car to Cloud enables OEMs to deliver cloud features and vehicles.
Speaker Change: On the software front, we now support over 22 million developers, the largest such community in the world.
Speaker Change: Clyde AI, our core AI software layer, has now surpassed 8 billion cumulative installs across ARM-based devices.
Speaker Change: The AI revolution is accelerating and arm is at its heart.
And with that, I'll turn it over to Jason.
Jason Child: Thank you, Your Name. We closed a very strong fiscal year with another record quarter. Total revenue was $1.24 billion, which was in the upper end of our guided range.
Jason Child: Royalty Revenue grew 18% year-on-year to a record $607 million and was above our expectations.
Jason Child: This upside was driven primarily by several flagship smartphone launches across multiple vendors based on R&B 9 and CSS.
Jason Child: You're on your royalty revenue grow strongly across all of our end markets.
Jason Child: License in revenue increased more than 50% year-on-year to a record $634 million.
Jason Child: Much of the licensing strength is tied to demand for Arm B9, our most advanced CPU technology or AI more broadly.
Jason Child: In addition, we continue to diversify our customer base with a large multi-year agreement with the Malaysian government to accelerate the development of an armed-based AI ecosystem in the country.
Jason Child: License revenue varies quarter to quarter due to normal fluctuations in timing and size of multiple high value license agreements and contributions for backlog.
Jason Child: As always, we recommend that you look at annualized contract value or ACV to best understand the underlying licensing growth rate.
Jason Child: ACV in a Q4 was up 15% year on year, which was at the high end of our recent run rate of low teens and is above our long-term expectation of mid-to-high single-digit growth.
Jason Child: Remaining Performance Obligations for RPO was down sequentially as Arm Recognized Revenue Associated with licenses signed in prior quarters.
Jason Child: As you know, arms revenues today come from technology developed years or even decades ago and our cost today are investment for future revenue streams.
Jason Child: In the fourth quarter, R&D spending led our non-GAAP operating expenses to $566 million.
Jason Child: Operating expenses were slightly lower than expected at the timing that some expenses will fall into Keyland of fiscal 26.
Jason Child: This translated to a record $655 million of non-GAAP operating profit and non-GAAP EPS of 55 cents which was at the high end of our guidance range of 48 to 56 cents.
Let me spend a moment on tariffs and the macro uncertainty.
Jason Child: Based on our current visibility, we expect a limited direct impact on our royalty and licensing revenues.
Jason Child: We have less visibility into the indirect impact on end-demand.
Jason Child: In our royalty business, we estimate that 10 to 20% of our revenues stems from shipments into the US.
Jason Child: Finally, based on commentary from our partners, we believe the impact of coal and demand on our royalty business has been limited.
Turning out a guidance.
Jason Child: Our guidance reflects our current view of our end markets and our licensing pipeline.
For Q1, we expect revenue between 1.0 and 1.1 billion dollars.
At the midpoint, this represents revenue growth of 12% year-on-year
Jason Child: We expect to start the year with strong 25% to 30% royalty growth.
Jason Child: As a reminder, Q125 benefited from very strong licensing quarter, a very strong licensing quarter which presents a difficult comp for Q126.
Jason Child: As previously mentioned, revenue growth today enables us to increase investment in R&D essential for a long term success.
Jason Child: and we are accelerating investment in our next generation of technologies.
Jason Child: We expect our Q1 non-GAAP operative expense to be approximately $625 million.
Jason Child: This includes the impact of some Q4, Q4 expenses that will now fall into fiscal 26.
Jason Child: We expect non-GAAP EPS to be in the range of 30 to 38 cents.
Given the uncertainty in the global trade and economic picture,
Jason Child: We have lower visibility than it's traditional to start the year.
Jason Child: As a result, we do not consider it prudent to issue for your guidance.
Jason Child: Nevertheless, we reiterate our competence and healthy growth in the coming year and years to come.
Jason Child: Our confidence stems from our visibility into customer design pipelines, contracted royalty rates, rising demand for custom silicon, and AI from the edge to the cloud.
Jason Child: Given this view, we expect to continue to invest in R&D aggressively to support our customers and partners.
Jason Child: This is a moment to press our advantages to ensure AI is everywhere and runs on arm.
Speaker Change: With that, I will turn the call back to the operator for the Q&A portion of the call.
Speaker Change: Thank you. To ask a question, you will need to press star one and one on your telephone and wait for your name to be announced. In the interest of time, please limit yourself to one question only and rejoin the queue for any follow-ups. To throw your question, please press star one and one again.
Who will now go to the first question?
One minute please.
Speaker Change: And your first question is the line of Mark Lipacis from Evercore. Please go ahead.
Great, thanks for taking my question. Jason just wanted him.
Speaker Change: And you talked about licensing issues not being kind of a big deal in your side, it would be just based on the COVID example.
Speaker Change: But on the role to decide it would just be, is it an impact that potentially hits you if the cost of the end devices go higher? Is that, is that all we're talking about here? If you could just, if you could just share that framework, spell that out. I'd appreciate it. Thank you.
Speaker Change: Mark, thanks for the question. So, yeah, you largely got it right. And that is, we don't have direct impact on tariffs. Since, you know, tariffs today are really applied to end products.
Speaker Change: and are not applied to services which is what we're providing. That said, we haven't seen any impact on tariffs from tariffs in Q4, haven't seen any impact and don't expect any impact in Q1.
Speaker Change: for the remainder of the year. As you said, it's really going to be on the indirect side. Is there going to be some sort of...
Speaker Change: Impact as supply chains may be affected as they react to...
Speaker Change: You know, whatever tariff impacts eventually work out to be. So as a result, you know, we don't have as much visibility from our partners as we may have had in the past.
but I think overall...
Speaker Change: The key thing to remember is, if you look at royalties right now, we grew 18% year-on-year in Q4, we're actually taking up our guidance in Q1 to 25% to 30%. So from our perspective, all the business fundamentals still look very strong, even with this uncertainty around whatever tariffs will be applied and exactly another will be executed.
Speaker Change: So it's a negative, just to be clear, it's a negative demand elasticity if it costs the end unit goes higher, that would be the indirect impact.
That would be the likely indirect impact. Uh, on, you know, kind of,
Speaker Change: 10% of our royalties that are in the US. So if it's a 10% or 20% impact on demand and it could be a couple percent impact on royalties, probably at most. But again, until we know exactly how they're going to apply, it's hard to know exactly.
Gotcha. Thank you. Very helpful. Thank you.
Thank you.
Speaker Change: Your next question comes from the line of Andrew Gardiner from City, please go ahead.
Thank you.
Andrew Gardner: Good afternoon. Thank you for taking the question. Just a quick clarification.
Speaker Change: You guys haven't quoted the V9 percentage in your release or in your prepared comments. It looks like from the presentation it did indeed step up.
Andrew Gardner: I think it's been steady for a few quarters at around 25 percent.
Speaker Change: Looks like from the slide it stepped up a bit to 30%, is that correct? And can you give us a bit of detail as to where you're seeing it? Is it indeed the smartphones or perhaps data centers contributing to that as well? Just a bit more detail, there will be helpful. Thank you.
Speaker Change: Yeah, so you're right, it did step up to north of 30%, so increase from the 25 who had been at for the previous few quarters.
Speaker Change: So where the band is coming from, yeah, I would say, first of all, you know, CSS, which is now starting to become a more meaningful part of our royalties. All the CSS's that we sell are all in V9.
Speaker Change: So this last quarter, I think two quarters ago, we saw the very first instances.
the CSF, [inaudible]
Speaker Change: and now those are becoming more material. Those CSS's are we have one in client and we know we have one in infrastructure. We expect
Speaker Change: You know, royalties from more CSS's to come later this year. And so overall I would expect that that will become a, you know, a material driver of our growth.
Speaker Change: And that's because, as you've noticed, for the past couple quarters, it's gotten a bit noisy. The whole reason we wanted to give that metric was to try to make sure that you could have some correlation to what future royalty growth could be. We're now seeing that, I think, CSS adoption, which is still very, very early days. As CSS adoption and royalty start to flow through, you'll see growth probably be more tied to that.
Speaker Change: But overall, the fundamentals look to be very much in the early days on CSS but have confidence that we'll continue to see increasing penetration of CSS as a percentage of royalties along with B9 throughout this year.
Speaker Change: Thank you, Jason. And just quickly related to that. I mean, in terms of the new adeals you're signing with CSS.
Speaker Change: The pricing still holdings are roughly a double in terms of the rate relative to a more standard implementation of V9.
Speaker Change: The first generation is that, you know, a step change versus the nine.
Speaker Change: The second generation of CSS will be at an increase from the first version of CSS, so there's...
and really a kind of step change. [inaudible]
Speaker Change: When you first implement a CSS and then there's going to be continual increases as you get updated technologies and updated kind of optimized CSS's which are typically in the rolled out depends on the category of it at least annually or semi-annually or I'm sorry at least annually or at least every couple of years depending on the category. I'm sorry.
Thank you.
Thank you.
Speaker Change: As a reminder, please limit yourself to one question only and we join the queue for any follow-ups.
We will now go to the next question.
Speaker Change: And your next question comes from the line of Ross Seymore from Deutsche Bank. Please go ahead.
Speaker Change: Hi guys, thanks for asking a question. This one's for Rene in a longer-term question. It seems like your strategic progression has been from charging IP per chip and then as you go from D8 to B9, etc. like Jason just talked about the royalty rate goes up. Now you're moving into the CSS side of things, doing more subsystems.
Speaker Change: You also in your investor letter talked about moving to signing deals directly with some of your customers, I think in this instance you talked about an auto EV maker.
Speaker Change: I guess the question is, is the logical strategic conclusion of the direction you're heading that you're going to have those OEMs as your true end customers?
Speaker Change: Whether they be hyperscalers, auto companies, etc. And if that's true, what does that mean about how your existing customer base, the Pablo Semiconductor companies would feel about that, on the negative side, and the positive side, what would it mean for the TAM increase that you could possibly address as a company? And if that's true, what does that mean about the TAM increase that you could address as a company?
Yeah, thanks for the question.
Speaker Change: What we are seeing increasingly across the board, whether it's in the automotive sector, particularly in hyperscalers, but even broadly across other markets,
Speaker Change: is customization of silicon is a significant way for companies to not only differentiate from a performance standpoint but unlock some very unique features whether it's at a blade or a rack or a system level for example in a hyperscaler and or in an automotive application.
Speaker Change: Majority of these platforms are moving to arm, specifically regarding the software base.
and everything around the software ecosystem.
Speaker Change: So when you combine the fact that the majority of the software on the platform they're developing is arm.
Speaker Change: and the customization benefit that the NOEM is looking for, increasingly that is driving our relationship with these partners.
Speaker Change: in a much more accelerated fashion. I expect that trend to continue.
Speaker Change: I think particularly when you add AI workloads on top of the existing compute workloads that already need to run on these devices. You still need to run an operating system.
Speaker Change: You still need to run a hypervisor, you still need to run an IBI instrumentation panel. Then when you add on top of it an AI workload
Speaker Change: That increasingly will make the chip not only more complicated develop, but more time to develop, and as a result, having a relationship with us, to develop the product with them, is...
Speaker Change: The Trend. So I expect that to continue. To your question regarding traditional fabless semiconductor companies, I think that market will still exist, but I think you're seeing a much more of a demand for customization, particularly at the OEMs largely because as I said, the chips are really complex to build.
Speaker Change: The software is really intense and most of that software runs on arm.
Thank you.
Thank you.
Speaker Change: Your next question comes from the line of Joe Kateraki from Wells Fargo. Please go ahead, your line is open.
Joe Katracki: Yeah, thanks for taking the question. I guess I just wanted to go back to just trying to understand, you know, the not giving as a fiscal 26 guide and just trying to understand the context of this seems like.
Joe Katracki: You know, obviously there's a lot of fluidity in the market in terms of outlooks for what could happen to indirect demand implications, but I guess how does that differ to some extent in terms of your visibility into normally giving a fiscal year guide at this time of the year?
Joe Katracki: I'll take that. This is Jason. So I would say the the difference is typically when we're putting a employer guide now, there's always going to be some questions and that's what we'll have a range.
Joe Katracki: In this case, if you look at all of our partners and customers and then see kind of what they're predicting and what they're projecting, almost none of them are providing for your guidance and so what's happening then is there is.
Joe Katracki: The amount of signal I'm getting from partners whether it's through guidance or from, you know, other reporting is just less than I've had in the past. And that's really all on the royalty side. And so, you know, overall, I, you know, we do have high confidence in growth. [inaudible]
Joe Katracki: The problem is if I provide a range, I'd have to give you an even wider range than I had last year.
Joe Katracki: because not only do I have big deal kind of timing differences that I have to try to account for, which is what our primary range, that's what our range was primarily adjusting for in the prior years.
Joe Katracki: I now have to have that. Plus, arrange on what may happen because of whatever macro impacts may occur, you know, due to...
Joe Katracki: just all the impacts from the tariff actions. So as a result, we chose to not give a full-year guide with a really large range that, you know, probably, I don't know if it would be that helpful. So that was the route we chose to go.
Thank you. Thank you.
Thank you.
Speaker Change: Your next question comes from the line of Srinivas Pajjuri from Raymond James. Please go ahead.
Rene Haas, Rene Haas, Rene Haas,
Speaker Change: Thank you. I have a question on the short term and also on the ear. In the June guidance, can you can you speak to the
Speaker Change: Royalty Growth by Enmarket, you know, were you seeing Screnton, were you seeing any sort of weakness?
Speaker Change: And then, I guess, you know, the cloud on networking, that's the market that's, you know, where I think you seem to be making a lot of progress. I know you said it's about 10% of your physical 24 sales. Where is it now and where do you see that going by the end of this year? Thank you.
Speaker Change: Sure, on the line of business, royalty, color, I'll handle that. In terms of the things that have been going strong in the last quarter, we expect to see more of the same, this quarter and really for the most part, likely for the year.
Speaker Change: So, if I look at this last quarter, you know, Renee mentioned, I think in the Cheryl letter, or we mentioned in the protégromarks, that we saw smartphones grow about 30% and that's, you know, that's...
Speaker Change: Certainly much, much faster than kind of what the market's growing. If you look across the entire client business, which also includes PCs and...
Speaker Change: any kind of divisible screens, works, you know, also seeing strong growth that's, you know, kind of in the zip code of that, similar to that smartphone growth in the 30% range.
Speaker Change: When you look at infrastructure, that has been accelerating as we have seen some of the custom kind of silicon, specifically with the hyperscalers.
Speaker Change: Start to get deployed, so that's been helping drive increasing growth, increasing growth now for the last few quarters and expect that to continue to increase throughout the year, kind of well into the high double digits.
Speaker Change: The other factor in infrastructure was helping us last year, we had really slow networking business.
Jeff Kvaal, Ian Thornton, Rene Haas, Jason Child
Speaker Change: All the portion of the Grace Blackwell is on arm. We have really strong demand there and expect that to continue this year.
Speaker Change: Moving into automotive, I think unlike some of the other folks in the automotive space, we've seen strong double-digit growth in half for a while. We continue to gain share in IDI and ADF. Don't see that changing.
And then lastly in IoT, we certainly have had some...
I'd say some slowness last year in IoT and embedded.
Speaker Change: That is, it looks to be like it's bottomed out, I don't know when we're going to see recovery there. We're still in solid positive growth territory, but it's certainly growing, I would say, not as fast as the other three lines of distance.
Speaker Change: One thing I might like to add to as far as the growth of arms market share in the data center. As Jason mentioned, now that NVIDIA has transitioned away from the hopper architecture to the Blackwell architecture, which uses arms CPUs, grace.
Speaker Change: That actually has an accelerant to our overall growth in the data center to general purpose compute.
Speaker Change: as the data center, AI data centers moved to Arm based silicon for the host node.
Speaker Change: The leverage from a software standpoint to General Purpose Compute is quite significant.
so we're already seeing very rapid adoption.
Speaker Change: of Arm and the Data Center, which we've talked about for multiple quarters.
Speaker Change: As I mentioned in the opening, the 50% of new server chip designs and hyperscalers to be arm-based is really driven by A. Grace Blackwell Acceleration and B. The leverage that it brings us in terms of general purpose compute. It just makes more sense for a hyperscaler to. [inaudible]
Speaker Change: Standardized Across Arm, so that's what's contributing to the growth there.
Thank you.
Thank you.
One moment please, for your next question.
Speaker Change: And your next question comes from the line of Sebastian, Nadji for William Blair, please go ahead.
Sebastien Nagy: Yeah, thanks for taking the question. It was interesting to see the licensing deal sign but the Malaysian government is quarter. I don't traditionally think of sovereign governments as a target licensing customer for arm. So could you help us maybe understand the structure of this deal and whether this was more of a one-off or whether we should expect more of these licensing wins at the sovereign level going forward, particularly as things like sovereign AI really start to take off. [inaudible]
Sebastien Nagy: Yeah, thank you. The licensing deal we did with the Malaysian government last month that we signed, or I think it was March, excuse me, was quite a milestone event.
Sebastien Nagy: Country's technology footprint and investing in startups particularly around AI and cloud.
Sebastien Nagy: So the arrangement between the government and arm allows startup companies to get access to arm technology at the CSS level to rapidly design chips and a very progressive agreement as I mentioned.
Sebastien Nagy: targeted at startups, broadly targeted to accelerate shift development in the sovereign country.
Sebastien Nagy: While I'm not going to forecast any new deals, I do think there's going to be a very nice potential knock-on effect of other governments looking at this and seeing potential benefits for them.
Sebastien Nagy: But we're super excited and pleased to have done this agreement with Malaysian government and as I said they showed great progressive vision and it's a fantastic outcome for everyone.
Thank you.
Speaker Change: Your next question comes from the line of Timm Schulze, Melanda from Redden Atlantic, please go ahead.
Yeah, hi there. Thanks for seeing my question.
Speaker Change: Just a bit more colour on the royalty progression through calendar 25s, if you could please.
You've talked about hyperscalers.
Speaker Change: I just wanted to ask, as we move from Grace to Vera, what would that or what might that change for Arm and then just...
Speaker Change: as I think about the sequential trends rather than the year on year trends.
Speaker Change: Would the June quarter be recently where we should expect it to be so the seasonally the weakest quarter of the year? I know you're not.
Providing...
Speaker Change: Full Year Guidance, but maybe just sort of some sequential direction colour would be really helpful. Thank you.
Jason Child: Yeah, this is Jason, I'll start on this question. So, first on in terms of the shaping of royalty
yeah
Jason Child: We're again, I'm just not ready to give full your guidance, but in terms of how I would expect it to sequentially...
Jason Child: Grot, pretty strong growth obviously as indicated by the year-on-year that we're forecasting.
Jason Child: in Q1, but sequentially from Q1 to the remaining quarters. I expect it to be somewhere in the kind of...
Jeff Kvaal, Ian Thornton, Rene Haas, Jason Child
Jason Child: Somewhere in that range, obviously we'll provide more specific guidance as we get later in the year.
Thank you.
Speaker Change: Your next question comes from the line of Vivek Arya from Bank of America. Please go ahead.
Vivek Arya: Thank you for taking my question. I actually had a few kind of related questions on the licensing side. Last year it was...
Vivek Arya: One of the upside drivers, but when we look at Q4, it was a modestly below expectation, I'm curious what caused that, is that a macro.
Vivek Arya: , Impact on All Licensing, and you know you did report a fairly strong mid-teens ACZ, I think you mentioned it's better than the mid-single digit to 10% you had caught before.
Speaker Change: So is that kind of ACV growth sort of representative of what you might see in licensing for this year? And if you would allow me anything related to China licensing activity that could change given you know all this tariff confusion.
Jason Child: Yeah, thanks for the question. I'll just take part of that as a macro statement, let Jason get into the details.
Jason Child: For the year, licensing revenue, as I mentioned, was an all-time high of over $600 million.
Jason Child: and that was driven by a number of different factors, but chiefly the fact that number one CSS demand continues to be extremely strong. Number two, arms growth across all platforms that drive huge software.
Jason Child: Leverage, but probably also around AI, because one of the things we've seen specifically around AI is that
the demand for more and more compute.
Jason Child: has only risen. That's causing customers to accelerate their product cycles to do more sooner. Probably the best anecdote I can give of that, again, is the kind of work that Amiddi is doing in the center with Grace Blackwell, seeing a...
Jason Child: Re-fresh of products into the data center at a rate that typically was multiple years, now at an annual basis.
Jason Child: And that's really being driven by the fact that these AI workloads require more and more compute, and more and more compute means more and more demand for new products.
Jason Child: and more and more demand from new products, means increased licensing growth, which is why broadly we had a record licensing year in the last year. On the specific detail, I'll let Jason go through that.
Jason Child: Yeah, in terms of the Q4 performance, you know, the 53% year-end year license growth, you know, that was very much kind of, you know, where we'd expected to come in. I'm not sure, I thought consensus was...
Jason Child: I actually slightly blow that number, but whatever. I think in general, we are very happy with the progress. I think if you look at full-year license grew 29%.
Jason Child: Now, that's pretty big and certainly well ahead of what we had.
Jason Child: Expected and kind of guided to maybe the beginning of the Earth. [inaudible]
Jason Child: Now, I would say for this next year, we've said in the past that we expect, and I think I said in the prepared remarks, we expect ACB.
Jason Child: to be kind of a better way to forecast what, you know, what maybe annual growth should look like because it kind of takes out some of the lumpiness.
We've said in the past that...
Jason Child: We're typically looking to mid to high single digit growth as being the right target. I think that's still the right target. ACB right now is running 15% because we've been overachieving very much to impart to AI. Thank you very much.
Jason Child: We'll see how this year progresses. We may be able to exceed that and stay in that double digit range that we've been in. But for now, I would still use that kind of mid-high single digit range as the right growth rate.
Thank you.
Thank you.
Thank you.
Speaker Change: Your next question comes from the line of Vijay Rakesh from Mizuo, please go ahead.
B.J. Rakesh: Hi, Rene and Jason. This is a quick question on the CSS side. On the 13 customers, what's the split of data center versus mobile? I saw you had the first auto CSS in there as well.
B.J. Rakesh: Yeah, the breakout, we've said it's roughly, you know, this last quarter we had the first CSS, so we had 13 now, we had, you know, 12 hours of last quarter, I think we said last quarter that it's roughly half client.
B.J. Rakesh: which is mostly mobile. There is some PC in there, but then also the remainder is all infrastructure. So think of it as six client, six infrastructure, one auto.
Basically as we're right right now.
Speaker Change: and then just longer term when you look at the
Stargate, and Crystal Intelligence, I mean, where you guys work with...
Speaker Change: Open AI and Nvidia and others. Can you talk to what the opportunity is on the license side or the royalty side? What holds that road map looking? Are you guys doing a chip and an ASIC? Can you kind of color that a little bit? Thanks.
Speaker Change: Yeah, the Stargate project, which was announced in January , is going incredibly well. I think just given all the advances you've seen through OpenAI's technology with CHET GPT and the reasoning models, the need for more and more compute is quite evident.
Speaker Change: We were announced that day as a technology partner, which was primarily around Grace Blackwell, which would be the initial chips involved.
Speaker Change: So right now, that's all we're saying publicly, Vijay, around our technology [inaudible]
Speaker Change: Deployment there, but we're very, very excited about the opportunity because...
Speaker Change: It's obvious from just what you see with the benefits of these algorithms.
Speaker Change: It's very, very early days and to get more and more benefit you need more and more compute of which we're happy to provide and lastly I would say Thank you very much.
Speaker Change: Even though Stargate is a lot of power and it's a lot of compute, energy efficiency really really matters, which is why arm is the only CPU provider inside of Stargate.
Pardon, thanks.
Speaker Change: Thank you. We will now take our final question for today, and your final question comes from the line of at Lee Simpson from Morgan Stanley , please go ahead.
Leigh Simpson: Great, thanks for squeezing in here. I just want to ask Rene, maybe a more broad question on the Chiplet space. It does seem, according to reports that, you know, Arm has been associated with making acquisitions.
Speaker Change: in the Chipplet space, you know, as to have some of the key licensees of the arm architecture, I think when you look at the Chipplet system architecture, the Amba fabric that you have,
Speaker Change: It does look as though this is an increasingly important space for you. So I'm trying to understand, you know, why is that? Is it a waypoint, perhaps, to the eventual on-chip making an arm? Or is there something else that we're missing here as a big value play? Thanks.
Speaker Change: Yeah, so regarding unannounced products, I'm not going to announce anything here, but what I can't say regarding...
Speaker Change: These very, very large SOCs that use multiple chips, aka chieplets.
for Interfaces,
On and Off the Die is Table Stakes.
Speaker Change: Amba is the the fact of standard for interfacing into the arm's CPU at the chip level. So it's only natural that you're going to see those standards provide themselves as default as you get into the chiplet space.
Speaker Change: Shipplets are also, frankly, one of the large value propositions around doing CSS.
If you can imagine some of the...
The Chiplets that are being built. [inaudible]
Speaker Change: that use CSS, the vast majority of the silicon area and transistors that are on the shiplet are actually using R-M-I-T.
Speaker Change: which is why the earlier question regarding custom chips that were being done by OEMs, what's really driving that? The Shippled Approaches is a component of it.
Speaker Change: and the CSS is a big component of it, so it's your point about having ambabust and conactivity. It all hangs together.
Thank you.
Speaker Change: Thank you. That concludes the Q&A for today. I will hand back to the room for closing remarks.
Speaker Change: Thank you, and thank you for all the questions they were very, very spot on. Just in summary, we are so thrilled to have completed our fiscal year with records of a billion dollar plus quarter.
4 billion dollars plus in revenue.
Speaker Change: and Record License in Recurialty. I think what you're seeing is continued manifestation of the strategy we've talked about for the last number of quarters and years.
Speaker Change: That is arm is everywhere, increasingly demand for the arm architecture is requiring us to deliver more, we're seeing that with our compute subsystems, and with the advent of AI workloads running in the data center, running on a PC, running on a smartphone.
Speaker Change: Running your automobile, or even running an ear buds, the demand for arm technology has never been greater, so we are incredibly excited about the future, AI is changing everything, and you can't run AI without arm.
Thank you.
Speaker Change: Thank you, this concludes today's conference call. Thank you for participating. You may now disconnect.