Arm (ARM.US) 2025 Q2 performance meeting: Still maintaining the growth forecast for Windows Arm, cloud market customers have started using related products.

In the second quarter of the 2025 fiscal year (ending September 30, 2024), Arm Holdings (ARM.US) achieved revenue of $8.44 billion, a 5% year-on-year increase. GAAP gross profit was $8.12 billion; non-GAAP gross profit was $8.20 billion, corresponding to a non-GAAP gross margin of 97.2%, which is roughly consistent with the same period of the previous fiscal year. ARM still maintains its forecast for 50% market share in the PC market and growth in Windows ARM. There is optimism about productization in the cloud computing market, and there has been significant progress in the mobile market this quarter (due to factors such as pricing and good performance in the Chinese Android market). ARM stated that in the medium to long term, market share and fees in the cloud computing market are important variables for ARM valuation, and customers in the cloud market have begun using related products this quarter. Q&A Q1: Have you actually canceled the license with Qualcomm? If not canceled, will the litigation with Qualcomm have an impact on expenses and licensing confirmation? A1: ARM has only issued a notice of cancellation of the architecture license with Qualcomm, but in reality, the license with Qualcomm has not been canceled, and the litigation between the two parties is ongoing, so we cannot disclose too much progress at the moment. Additionally, at present, ARM believes that the litigation with Qualcomm may not have any impact on its income and expenses, although the litigation is ongoing, in the short term, it may not affect ARM's performance, but in the long term, the progress of the litigation still needs to be monitored continuously. Q2: Can you provide an estimate of the backlog orders for this fiscal year? A2: ARM's Pass expression focuses on the present situation, mentioning that its products are in demand in various markets, especially in the mobile sector, which runs small language models at the terminal edge (such as PCs and smartphones) and has computing resource requirements. Jason directly replied that orders may not increase significantly, mainly due to milestone confirmation in the next quarter, which will consume some orders. Although there may be large transactions later on to drive order growth, this is not the primary driving factor, and attention should be focused on other aspects of growth. Furthermore, in the licensing business, there are currently 39 customers, and it seems that there is not much space left until the target of 50 customers is reached. But in reality, most customers can switch to ata, and customers using ata may develop more chips based on this, which will help improve performance in the future. Overall, ARM is guiding everyone to pay attention to its long-term development. Q3: What are the reasons for continuously lowering LTE growth expectations for two consecutive quarters and the stagnation of the share of v9 compared to the previous quarter? A3: For the situation of continuously lowering LTE growth expectations for two consecutive quarters and the stagnation of the share of v9 compared to the previous quarter, Has provided an explanation. Firstly, he is relatively satisfied with the adoption rate of v9 in 25, but believes that such a high-frequency indicator cannot be viewed on a quarterly basis. In the v9, v7, and v8 era, the patent fee rate was fixed, but in the v9 state, the patent fee rate would rise. The core reasons are that value-based pricing can be achieved, i.e., pricing is based on efficiency improvement rather than fixed usage, and the transition of css (computing subsystems) may double the price compared to v9. Q4: How do you view the adoption of CFS computing subsystems and smartphones? Can the future reach the 50% market share expectation? A4: ARM believes that it can capture 50% of the market share in CFS computing subsystems and smartphones without changing its long-term plans or guidance. Regarding the issue of the growth of the v9 combination, they look at the share perspective on an annual basis, and Jason added that the penetration rate of vivo has not increased due to shipment-related issues on the mobile side. This quarter, the smartphone growth is faster in the high-end and low-end terminal markets, which currently do not have v9. There may be a waterfall-style increase in the penetration rate of v9 in the future as high-end smartphones move towards terminal smartphones, driving the penetration rate of v9 to accelerate. Additionally, in the Chinese market, by next year, all Android versions will be upgraded to v9 and enter the terminal market. This is also the reason why ARM believes that the v9 target does not need to be adjusted, showing that ARM is quite confident in the long term in this regard. Q5: Is the target of 50% market share in the PC market still maintained? A5: ARM still maintains its forecast for growth in Windows ARM. There is a lot of productization progress in the cloud computing market and remains optimistic. Confidence in the PC market has been maintained in the long term. In the mobile market, there has been significant progress this quarter, especially in terms of pricing and performance in the Chinese Android market. In the medium to long term, ARM's market share and fees in the cloud computing market are two important variables. Fortunately, customers in the cloud market have begun using related products.