Arm started fiscal 2026 with its best-ever first quarter, reporting $1.05 billion in revenue, up 12% year-over-year. Royalty revenue grew 25% to $585 million, marking the second consecutive quarter above $1 billion in total revenue. Licensing revenue came in at $468 million, a 1% decline due to normal fluctuations in contract timing. Annualized contract value reached $1.53 billion, up 28% year-over-year.
AI infrastructure continues to reshape Arm’s growth trajectory. More than 70,000 enterprises now run AI workloads on Arm Neoverse processors, a 14x increase since 2021. Arm forecasts its Neoverse CPUs will power nearly 50% of hyperscaler shipments this year, with deployments at AWS, Google, Microsoft, Oracle, and others. NVIDIA’s Grace Blackwell superchips, based on Arm Neoverse, are rolling out across Google and Microsoft data centers, with OpenAI, AWS, and Oracle running production workloads. These systems deliver up to 25x greater energy efficiency than x86-based H100 platforms.
Arm’s Compute Subsystems (CSS) continue to gain traction as a faster, lower-risk design entry point. To date, 16 CSS licenses have been signed across 10 companies, with 5 already shipping products. The company also launched Zena CSS for software-defined vehicles, securing its first design win with global OEMs. At the edge, the new Ethos-U85 NPU delivers 4–8x performance gains and 20% better energy efficiency, while Arm’s GPUs and v9 CPUs integrate AI acceleration features for on-device intelligence.
- Revenue: $1.05 billion, up 12% year-over-year
- Royalty revenue: $585 million, up 25%
- Licensing revenue: $468 million, down 1%
- Annualized contract value: $1.53 billion, up 28%
- Remaining performance obligations: $2.23 billion
- Non-GAAP operating margin: 39.1%
- Cash and short-term investments: $2.9 billion
Industry Metrics
- Arm-based chip shipments have surpassed 325 billion cumulatively since 1990, including 31 billion in FYE25 alone.
- In data centers, high-end Arm-based chips expanded from 8 cores in 2016 to 192 cores in 2025, reflecting increasing complexity and higher royalty rates.
- Arm’s developer base now exceeds 22 million, representing 80% of the global total and a 30% lead over the next platform.
- Royalties are diversifying: in FYE25, smartphones accounted for 45% of royalties, IoT 18%, cloud 10%, automotive 7%, and consumer electronics 12%.
- Market share growth: cloud compute CPU share rose from 36% in FYE22 to 44% in FYE25; automotive from 23% to 30%; IoT from 44% to 50%.
- Roughly 50% of current royalty revenue still comes from products launched more than 10 years ago, providing long-term stability.
“Arm is powering AI workloads everywhere with unmatched performance and energy efficiency,” said Rene Haas, CEO. “Our Q1 results exceeded $1 billion in revenue for the second straight quarter as royalties grew across all target end markets, demonstrating the strength of Arm as the AI platform of choice – from the cloud to the smallest edge devices.”
🌐 Why it Matters: Arm’s results highlight structural shifts in the semiconductor industry—hyperscalers are driving custom silicon adoption, edge AI is accelerating, and royalty-based models are expanding as complexity rises. With AI workloads demanding both performance and efficiency, Arm’s architecture is becoming foundational across mobile, cloud, IoT, and automotive markets.
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