Arm Holdings reports $1.2 billion in royalty revenue, misses analyst expectations

Arm Holdings, the chip design company that supplies core architecture to smartphones, cars and AI processors, reported royalty revenue growth that fell short of expectations in its fiscal second quarter ending March 31. The company posted $1.2 billion in royalties, a 12 % increase from the same period last year, but analysts had been looking for a double‑digit rise. The miss left the stock down 3 % on the day.

Arm’s model is based on licensing its intellectual property to other chip makers. The royalty stream is the company’s lifeblood, and it has been a key driver for investors since SoftBank bought it in 2016. The semiconductor industry is in a boom because of AI workloads, but the market is also tightening, and many firms are cutting back on new designs.

Revenue was $1.2 billion, versus the $1.3 billion analysts expected. The 12 % year‑over‑year jump was the slowest in Arm’s history. Some analysts