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Dec 31, 2024
ARM Q3 2025 Earnings Report
Key Takeaways
Arm Holdings reported strong Q3 FYE25 results with total revenue of $983 million, a 19% YoY increase. Royalty revenue grew by 23% to $580 million, driven by the adoption of Armv9 and increased cloud and IoT demand. Non-GAAP operating margin stood at 45%, and free cash flow declined 21% YoY. The company continues to gain market share in AI, automotive, and cloud computing.
ARM
ARM
ARM Revenue by Segment
Forward Guidance
Arm expects continued growth, with Q4 FYE25 revenue projected between $1.175 billion and $1.275 billion. The company anticipates further royalty growth from Armv9 adoption and expanding cloud and AI market opportunities.
Positive Outlook
- Strong revenue growth expected, projected at $1.175B - $1.275B for Q4.
- Continued royalty revenue growth from Armv9 adoption.
- Expansion into AI, automotive, and cloud computing markets.
- Increasing adoption of Compute Subsystems (CSS) enhancing royalties.
- Strong cash generation with a robust pipeline of new licensing deals.
Challenges Ahead
- Free cash flow declined 21% YoY.
- RPO declined 3% QoQ, indicating potential slowing future revenue recognition.
- Increased costs related to research and development.
- Potential macroeconomic headwinds affecting semiconductor demand.
- Competitive pressures in cloud and AI chip markets.
Revenue & Expenses
Visualization of income flow from segment revenue to net income