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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
Revenue by Segment
Royalty Revenue
CapyFin.comLicense & other Revenue
CapyFin.com 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