Arm Holdings (ARM) Earnings Date & Reports

Key Takeaways

• Arm delivered record first-quarter revenue of $1.29 billion, up 22% year over year, for the first quarter of fiscal year 2027.
• Non-GAAP earnings per share (EPS, or profit divided by shares outstanding) reached $0.45, above the $0.40 consensus estimate and the top of the company's guidance.
• Royalty revenue rose 22% to $715 million, while data center royalty revenue more than doubled year over year on AI infrastructure demand.
• Customer demand for the new Arm AGI CPU now exceeds $2 billion, up from the $1 billion opportunity outlined the prior quarter.
• Management guided second-quarter revenue to $1.38 billion and non-GAAP EPS to $0.47, both above analyst expectations.
• Shares slipped in after-hours trading despite the beat, as investors weighed softer smartphone royalty trends.

Earnings Context and Why It Matters

Arm Holdings (ARM) has established itself as the foundational compute platform for the artificial intelligence era, licensing its chip architecture to virtually every major technology company. The quarter ended June 30, 2026 — the first quarter of its fiscal year 2027 — marked the company's third consecutive fiscal year of strong double-digit revenue growth since going public. This report carried outsized significance because it offered the first detailed look at demand for the Arm AGI CPU, the company's first production silicon product for data centers. Investors were watching whether Arm could sustain momentum across cloud AI while navigating a softening smartphone market, where higher memory prices have pressured device sales and, in turn, royalty revenue.

Reported Results

Arm reported total revenue of $1.29 billion for the first quarter of fiscal year 2027, a 22% increase from the prior-year period and the highest first-quarter figure in company history. Royalty revenue grew 22% to $715 million, while license and other revenue increased 23% to $574 million — both record figures for a first quarter.

Non-GAAP EPS, which excludes items such as share-based compensation, came in at $0.45, up 29% year over year and ahead of the roughly $0.40 consensus estimate. Under generally accepted accounting principles (GAAP), net income was $270 million, with diluted EPS of $0.25. Non-GAAP operating margin expanded by about 200 basis points to roughly 41%.

Data center royalty revenue more than doubled year over year, driven by accelerating adoption of Arm Neoverse cores across cloud providers. Annualized contract value (ACV), a measure of normalized licensing commitments, grew 13% year over year. Free cash flow reached $665 million for the quarter.

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Market Reaction and Investor Sentiment

Despite results that beat both top-line and bottom-line expectations, Arm's shares declined in after-hours trading following the July 29, 2026 report. The muted response reflected a shift in investor focus away from the headline beat and toward the forward outlook. Management signaled that smartphone royalty revenue is likely to soften in the coming quarter as higher memory prices weigh on handset unit sales, trimming its full-year royalty growth expectation from roughly 20% toward the high teens. The announcement was partially offset by continued strength in cloud AI and a stronger-than-expected second-quarter guidance, which kept the broader narrative around Arm's AI positioning intact even as sentiment around consumer devices cooled.

Forward Outlook and Key Factors to Monitor

For the second quarter of fiscal 2027, Arm guided to revenue of $1.38 billion, plus or minus $50 million, representing about 22% year-over-year growth at the midpoint, and non-GAAP EPS of $0.47, plus or minus $0.04. Management expects licensing revenue to rise about 30% year over year while royalty revenue grows in the low teens.

The most closely watched item ahead is the Arm AGI CPU ramp. Management said it has secured manufacturing capacity to support the initial $1 billion opportunity and now reports customer demand exceeding $2 billion, with an update on revenue and margin expectations planned for the third-quarter results. Supply chain availability across wafers, memory, and test capacity remains the key constraint on how quickly this business can scale.

Investors should also monitor the trajectory of smartphone royalties. While the company expects the current memory-driven weakness to be cyclical, any prolonged softness could pressure near-term royalty growth. Offsetting this, data center momentum — including NVIDIA's Vera CPU and cloud provider deployments — continues to accelerate. The balance between consumer device demand and AI infrastructure growth will likely define Arm's results in the quarters ahead.

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