Arm earns record royalties but licensing revenue plummets

Chip designer Arm reported record revenue for its latest quarterly trading update as it continues to diversify its business beyond licensing.

For its second quarter ending Sept. 30 — Arm’s fiscal year 2022 ends in March 2023 somewhat counterintuitively — royalty revenue jumped to $463.2 million from $378.2 million. dollars the previous year. For the arithmetically challenged, that’s an increase of 22.47 percent.

Still, total revenue fell 16% to $655.85 million due to a 53% drop in licensing to $192.7 million, a company spokesperson said. The register.

This reflects the trickier nature of licensing and underlines why Arm is keen on generating royalties. “This spike was due to the timing of revenue recognition from two major licenses that were signed in prior periods,” Arm said.

All royalty market segments grew, Arm said, with new highs reached for both the automotive sector, ADAS adoption “continuing to drive more advanced computing in cars” and in the IoT. .

Adoption of Arm Neoverse was underway, he added. Nvidia’s Grace processor is expected to be among the first chips to feature the next Neoverse V2 processor cores due in 2023. There has also been an increase in device royalties despite declining smartphone shipments.

In the three months, Arm customers shipped 7.5 billion Arm-based chips, a 9% year-over-year increase. The total Arm ecosystem now has over 240 billion Arm-based chips.

Arm CEO Rene Haas, who took over from Simon Segars earlier this year following Nvidia’s failed purchase, said in a statement:

“Arm is defining the future of computing as adoption of our technology continues in all of the markets we serve, as evidenced by our strong licensing results and record royalty revenue this quarter.

“As we continue to diversify, our investments across all industries continue to pay off, with impressive growth in automotive and IoT in particular.”

Adjusted profit before income tax, depreciation and amortization (EBITDA) margin was 50%, compared to 59% a year earlier.

The UK-based chip designer was expected to go public this year, but given the turmoil in financial markets, parent company Softbank may decide to put the IPO on hold.

In related news today, Softbank’s Vision Fund reported a loss of $7.2 billion for the quarter due to depreciation of investments in technology stocks. ®

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