Arm's royalty-based revenue jumped 11% from a year earlier to $470 million, partly due to a recovery in smartphone sales and increased sales to automotive companies and cloud computing providers. The company's growth in the current quarter is also expected to be driven by increased royalty revenue. License and other revenue amounted to $354 million in the quarter, up 18% from a year earlier. The company is increasing its market share in the cloud server market and the automotive segment, with key players like Dell Technologies, Hewlett Packard Enterprise, Lenovo, Quanta, and Supermicro using the GH200 to tackle some of the world's most challenging problems.
Key takeaways:
- Shares of Arm Holdings Plc surged in after-hours trading, gaining more than 40% at one point, following a strong earnings report and bullish guidance for the current quarter.
- The company reported net income for the third quarter of $87 million and revenue of $824 million, beating Wall Street’s estimates.
- Arm is expecting fiscal 2023 fourth-quarter earnings of between 28 and 32 cents, with revenue of between $850 million to $900 million, significantly better than the Street’s forecast.
- Arm's growth is driven by the ongoing adoption of its compute platform, with more customers choosing to license its central processing unit designs to run artificial intelligence workloads.