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    ARM
    Earnings call· Jun 2026(Q1 FY27)

    ARM HOLDINGS PLC /UK Q1 FY27 earnings call ARM

    Jul 29, 2026 Source

    Executive summary

    Arm Holdings Q1 FY27 — Record Revenue Driven by AI and AGI CPU Momentum

    Arm delivered a record first quarter for FY27, driven by strong demand for its compute platform as AI expands across cloud, edge, and physical applications. The company saw robust growth in both licensing and royalty revenue, with cloud AI being a significant driver. While the smartphone market faces headwinds, Arm's AGI CPU business shows increasing demand and confidence in supply, positioning the company at the center of the evolving AI computing landscape.

    Highlights

    5

    • Record Q1 revenue of $1.29 billion, up 22% year-over-year.

    • Record Q1 royalty revenue of $715 million, up 22% year-over-year, primarily driven by cloud AI.

    • Licensing revenue grew 23% to $574 million, also a Q1 record.

    • Non-GAAP EPS increased 29% to $0.45, exceeding the high end of guidance.

    • Arm AGI CPU demand now exceeds $2 billion, with increased confidence in securing supply beyond the initial $1 billion opportunity.

    Concerns

    2

    • Smartphone market softness due to higher memory prices, leading to a revised FY27 royalty growth expectation to high teens from 20%.

    • Supply chain for Arm AGI CPU remains very tight across wafers, substrates, test capacity, and memory.

    Guidance & targets

    10
    CategoryTargetConfidence
    Revenue
    $1.38 billion, plus or minus $50 million
    high materiality
    High
    License and other revenue growth
    up about 30% year-on-year
    medium materiality
    High
    Royalty revenue growth
    up in the low teens year-on-year
    medium materiality
    High
    Non-GAAP operating expense
    approximately $780 million
    medium materiality
    High
    Non-GAAP EPS
    $0.47, plus or minus $0.04
    high materiality
    High
    Arm AGI CPU opportunity
    more than $1 billion
    high materiality
    High
    Arm AGI CPU gross margin
    high 30% range, maybe low 40s percent
    medium materiality
    Medium
    Royalty growth
    high teens
    medium materiality
    Medium
    Royalty growth
    20% plus
    high materiality
    High
    Silicon revenue breakout
    broken out then in FY '28
    medium materiality
    High

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    Royalty Revenue
    Record Q1 royalty revenue, primarily driven by cloud AI, which more than doubled year-over-year. Edge AI and Physical AI also contributed to growth, offsetting softness in the smartphone market.
    Cloud AI royalty growth: >100% YoYEdge AI royalty growth: continued growthPhysical AI royalty contribution: strong
    		$715M22%——
    Licensing Revenue
    Record Q1 licensing revenue, driven by strong demand for next-generation architectures and strategic engagements. Includes a significant contribution from the SoftBank agreement.
    Annualized Contract Value (ACV) growth: 13% YoYSoftBank agreement contribution: $193M
    		$574M23%——

    Operational metrics

    7
    Non-GAAP EPS
    $0.45up 29% YoY
    Q1 FY27

    Above the high end of guidance.

    Non-GAAP operating expense
    $733Mup 18% YoY
    Q1 FY27

    About $27 million below guidance due to timing, with the spending plan for the year remaining largely unchanged. Driven by ongoing R&D investment.

    Non-GAAP operating margin
    41%up 200 bps YoY
    Q1 FY27

    Resulting from higher revenue and slightly lower OpEx than expected.

    Annualized Contract Value (ACV)
    13%YoY
    Q1 FY27

    Maintaining strong momentum, above long-term expectation for license revenue growth.

    Arm Neoverse core shipments
    1.5 billion500 million in last 9 months
    cumulative

    The first 1 billion cores took 6 years, indicating an accelerating pace of adoption.

    Developer count
    22 million
    current

    Worldwide, supported by Arm's software ecosystem.

    Arm MCP server Docker downloads
    10,000
    cumulative

    Surpassed, integrating Arm's expertise into leading AI developer environments.

    Industry KPIs

    4
    MetricValueDetails
    Ai data center revenue—
    Fab capacity utilization—
    Design wins socket pipelineMultiplewins
    Node platform ramp scheduleArmv9 and Compute Subsystems

    Orderbook & backlog

    2
    Arm AGI CPU opportunity$1 billionQ4 FY26

    Initial opportunity outlined for FY27 and FY28. Manufacturing capacity secured for this amount.

    Arm AGI CPU demand pipelineexceeds $2 billionQ1 FY27

    increased from $2 billion

    For FY27 and FY28. Confidence in achieving upside to the initial $1 billion opportunity has increased.

    Product announcements

    3
    ProductTypeDetails
    Arm AGI CPUmilestone
    Performixlaunch
    Arm MCP serverexpansion

    Deals & partnerships

    7
    NVIDIAVera CPU production

    NVIDIA has brought Vera, built on Arm, into production.

    GoogleAxion CPU for AI infrastructure

    Google has stated its Arm-based Axion CPU is a core component of its AI infrastructure strategy.

    AWSGraviton5 core deployment

    AWS announced plans to deploy tens of millions of Graviton5 cores.

    MicrosoftAzure Cobalt 200 virtual machines

    Microsoft expanded Azure Cobalt 200 virtual machines built on Arm Neoverse CSS.

    QualcommDragonfly C1000 for AI data center CPU market

    Qualcomm has announced plans to enter the AI data center CPU market with Arm-based Dragonfly C1000.

    SoftBankTechnology licensing and design services agreement$193M

    Agreement for technology licensing and design services.

    Microsoft, MongoDB, Redis, SAPSupport for Performix

    Partners supporting Arm's Performix initiative to help developers optimize workloads on Arm-based infrastructure.

    Risks & headwinds

    2
    Smartphone market softnessFY27

    Royalty growth expectation revised to high teens for FY27 (from 20%)

    Mitigation: Benefit from higher royalty rates due to Armv9 and compute subsystems penetration; overperformance in cloud AI business helps offset.

    Supply chain tightness for Arm AGI CPUFY27 and FY28

    Very tight market across wafers, substrates, test capacity, and memory

    Mitigation: Working closely with manufacturing and supply chain partners to expand capacity; increased confidence in securing supply for demand exceeding $2 billion.

    What to watch in Q2 FY27

    4

    AGI CPU Revenue and Margin Update

    Q3 FY27 results
    CurrentDemand exceeds $2B; initial margin high 30s-low 40s%
    TargetDetailed update on revenue and margin profile

    Why it matters

    Provides clarity on the financial contribution and profitability of the new AGI CPU business, which is a key growth driver.

    We will provide an update at our Q3 results, which is when we will have better visibility of Q4 '27 and fiscal '28.

    Q&A highlights

    6

    What gives Arm increased confidence in securing supply for the AGI CPU beyond the initial $1 billion opportunity, given the demand now exceeds $2 billion?

    Confidence has increased across all aspects of the supply chain, including wafers, substrates, test capacity, and memory. While the market remains very tight, Arm is more optimistic about securing the necessary supply for the increased demand.

    “90 days later, the demand picture has even gotten better, as Jason mentioned, north of $2 billion. But our ability to secure that supply for the north of $1 billion, our confidence has increased in the last 90 days.”

    asked by Joseph Quatrochi · answered by Rene Haas

    2 min read6 chapters

    Detailed Narrative

    01

    AI-Driven Demand Across Markets

    Arm is experiencing growing demand for its compute platform as AI expands across cloud infrastructure, edge devices, and physical AI applications. This trend is driving demand for the Arm AGI CPU and Neoverse business, with data center royalties more than doubling year-over-year. The company highlights that efficient compute is becoming as important as model capability for deploying AI at scale, playing to Arm's historical differentiation.

    02

    Arm AGI CPU Momentum and Supply

    Initial product for the Arm AGI CPU has been delivered to multiple customers, and manufacturing capacity needed to support the initial $1 billion opportunity across FY27 and FY28 has been secured. Demand for the AGI CPU now exceeds $2 billion, and management's confidence in achieving upside to the initial $1 billion opportunity has increased due to progress in securing additional supply and optimizing customer mix. The supply chain remains very tight across all components.

    03

    Neoverse Expansion in AI Infrastructure

    Arm Neoverse shipments have surpassed 1.5 billion cores, with the most recent 500 million shipping in just the last 9 months, significantly accelerating from the 6 years it took to reach the first 1 billion. Hyperscalers like NVIDIA (Vera), Google (Axion), AWS (Graviton5), and Microsoft (Azure Cobalt 200) are increasingly adopting Arm-based CPUs as the foundation for their next-generation AI infrastructure. IDC reports that spending on Arm-based accelerated server platforms has nearly doubled in the past two quarters, surpassing x86 platforms.

    04

    AI Beyond the Data Center

    Arm's opportunity extends beyond the data center into AI PCs and physical AI applications. This includes efficient AI PCs designed for mobility (Snapdragon-powered AI PCs, Chromebooks) and more powerful agentic systems capable of running sophisticated models locally (NVIDIA RTX Spark). In the physical world, vehicles, robots, industrial systems, and autonomous machines (NVIDIA Isaac GROOT) increasingly rely on Arm-based compute for efficient, secure, and real-time AI.

    05

    Software Ecosystem and Developer Tools

    Arm's software ecosystem continues to expand, now supporting more than 22 million developers worldwide. New initiatives like Performix, introduced with support from Microsoft, MongoDB, Redis, and SAP, aim to help developers optimize workloads on Arm-based infrastructure. Expanded AI developer tools, including the Arm MCP server, have surpassed 10,000 Docker downloads, integrating Arm's expertise into leading AI developer environments.

    06

    Smartphone Market Headwinds and Royalty Outlook

    While cloud AI drives strong royalty growth, the smartphone market faces softness due to higher memory prices affecting unit demand and mix. This has led to a slight moderation in the overall royalty growth outlook for FY27 from 20% to high teens. However, Arm's V9 and compute subsystems penetration continues to provide some isolation from the broader market decline, and long-term royalty growth expectations (20%+) remain intact for FY28 and beyond.

    AI-generated summary of the company’s earnings call. Not investment advice.