Arm (ARM.US) Exceeds Q2 2026 Revenue and Profit Estimates

Arm (ARM.US) announced strong financial results for its second quarter of fiscal year 2026, which ended September 30, 2025. The company reported a total revenue of $1.135 billion, marking a significant 34% year-over-year increase. This figure surpassed analyst estimates of $1.061 billion and represented Arm's third consecutive quarter with revenue exceeding $1 billion.

Non-GAAP diluted earnings per share (EPS) for the quarter reached $0.39, outperforming the analyst estimate of $0.33. This robust profit growth, a 30% increase compared to $0.30 in the prior year period, highlights the company's strong financial performance driven by increased demand across various end markets.

Strong Segment Performance

Royalty revenue achieved a record $620 million, demonstrating a 21% year-over-year growth. This growth was fueled by strong adoption of Arm technology and higher royalty rates per chip across key end markets including smartphones, data centers, automotive, and IoT.

Licensing revenue also saw substantial growth, increasing 56% year-over-year to $515 million. This was attributed to fluctuations in the timing and size of high-value license agreements and contributions from backlog, as leading companies continued to sign licenses for next-generation technologies.

AI Platform Powering the Future

Arm emphasized its central role in the artificial intelligence revolution, delivering high-performance and energy-efficient compute across cloud AI, physical AI, and edge AI. The company's platform is designed to cater to the escalating demand for AI workloads, from milliwatts in small edge devices to megawatts in large data centers.

Key partnerships and product advancements highlight Arm's strategic positioning in the AI landscape. A collaboration with Meta, for instance, spans from AI-enabled wearables to AI data centers, while the new Lumex CSS platform delivers up to 5x faster AI performance on the CPU for advanced on-device AI experiences.

Management Outlook

For the third quarter of fiscal year 2026, Arm projects revenue to be approximately $1.225 billion (+/- $50 million) and non-GAAP fully diluted earnings per share to be approximately $0.41 (+/- $0.04). Management noted that the company's financial performance is a testament to its commitment to long-term innovation across its broad portfolio of compute technologies.

CEO Rene Haas commented on the record royalties and demand for the Arm compute platform, stating, “As workload complexity accelerates with every new model and every new agent, Arm is the compute platform for the AI era — delivering high performance, power-efficient AI everywhere.”