Arm Holdings

Signed two new CSS licenses for Edge AI tablets and smartphones, bringing total to 21 across 12 companies. Five customers now shipping CSS-based silicon. CSS now well into teens as percent of royalty mix, with every renewal customer signing up for next generation.

Agent-based inference workloads are persistent, always-on, and power-constrained, benefiting CPUs. All major hyperscalers increasing CPU core counts: AWS Graviton 5 at 192 cores, NVIDIA Vera at 88 cores, Microsoft Cobalt 200 at 132 cores. Google migrated over 30,000 applications to Arm.

SoftBank technology licensing and design services contributed $200 million, up from $178 million last quarter due to full-quarter impact. Expected to be durable run rate going forward. SoftBank acquisitions of Ampere and Graphcore broaden the engagement.

Non-GAAP OPEX grew 37% year-on-year to $716 million on heavy R&D investment. Non-GAAP operating income of $505 million grew only 14% year-on-year versus revenue growth of 26%. Non-GAAP operating margin approximately 41%, down from approximately 45% a year ago.

Memory shortages expected to reduce smartphone unit volumes by up to 15-20%, but impact on Arm royalties limited to 2-4% within smartphones and 1-2% on total royalties because constraints hit low-end v8 devices most while premium CSS and v9 are protected.