The following is a summary of the ARM Holdings Plc (ARM) Q4 2024 Earnings Call Transcript:
Financial Performance:
ARM Holdings posted 47% YoY revenue growth for Q4 driven by the acceleration of v9 adoption and increased AI R&D investment.
Royalties were up 37% and licensing up 60%.
The company exceeded the high end of the guidance range, achieving record revenues for the quarter and for their first fiscal year as a public entity.
Fiscal year 2025 expectations stand between $3.8 billion and $4.1 billion, a 17% to 27% YoY increase.
ARM Holdings could see periodic variations in licensing revenue due to the timing of revenue recognition.
Business Progress:
The company witnessed significant royalty growth, particularly from v9 adoption.
Their diversification strategy bore fruit as Google announced their Axion processor (ARM-based) for data centers.
ARM made its entrance into the automotive sector, announcing their first autonomous solutions based on v9.
The company launched Ethos-U85, a highly energy-efficient transformer for IoT-based designs.
The company anticipates significant growth in the compute subsystems over time.
ARM has high revenue growth visibility, expecting at least 20% YoY for fiscal years ending in 2026 and 2027.
ARM has increased their Advanced Technology Access (ATA) partners from 27 to 31, targeting 80% customer base conversion in the future.
ARM expects royalties to contribute over 75% of their total revenue over the next few years as license deals convert into royalties.
They're working with automotive industry OEMs to provide solutions that balance customization with standardization, expecting strong demand for compute subsystems.
ARM foresees its anticipated royalty growth for next year at about 25%, driven by unit growth, v9 series' success, and market premium adjustments.
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