Arm Holdings plc American Depositary Shares Q2 FY2026 earnings call

• Strong momentum in fiscal year 2026 with accelerating demand for AI compute from edge to data centers. - AI is reshaping technology and Arm is the only compute platform delivering AI everywhere. - Announced strategic partnership with Meta. - Data center Neoverse royalties more than doubled, licensing revenue up 56%. - Invested heavily in R&D, e.g., Lumex Compute Subsystems for smartphones. - Signed new CSS licenses, expanded collaboration with Samsung. - Edge, automotive sectors also saw advancements with Arm - based products. - Software developer ecosystem over 22 million strong

Q2 revenue was $1.14 billion, up 34% y - o - y, marking third consecutive billion - dollar quarter. Royalty revenue reached a record $620 million, up 21% y - o - y, driven by growth in data center, smartphones, automotive and IoT; data center Neoverse royalties more than doubled y - o - y. Licensing revenue rose 56% to $515 million. Non - GAAP operating expenses were $648 million, up 31% y - o - y. Non - GAAP operating income was $467 million, up 43% y - o - y, non - GAAP EPS was $0.39

• Q3 revenue expected to be $1.225 billion, plus or minus $50 million. - Royalties expected up just over 20% y - o - y, licensing up 25% - 30% y - o - y. - Non - GAAP operating expense expected approximately $720 million, non - GAAP EPS expected $0.41, plus or minus $0.04

Q: How does Arm view its strategic positioning with respect to AI deals and the opportunity across the build - out?

A: Rene Haas said power is the bottleneck, Arm is 50% more efficient than competitive solutions, and there's unprecedented demand for compute with all incremental compute announced based on Arm.

Q: What's behind the acquisition of DreamBig Semiconductor?

A: DreamBig has intellectual property around Ethernet and controllers, helpful for broadening Arm's offering to end customers.

Q: Color on related party revenue and Stargate relationship?

A: Stargate provides huge opportunity for Arm to partner with SoftBank and its partners to provide technology in data center build - out.

Q: When will more color be given on exploration to return on investment for different go - to - market methodologies?

A: Rene Haas said when ready to announce, will let know; Jason Child added about milestones like tape - out, samples back, non - cancelable customer orders for full SoCs.

Q: SoftBank contribution in Q2, Q3, Q4 and cannibalization concern?

A: Q2 SoftBank contribution was about $178 million, run rate assumed going forward; not at liberty to say how long streams persist, and cannibalization possible if move to physical chips but also could have successive generations.

Q: Stargate revenue opportunity and Lumex CSS royalty?

A: Demand for compute in Stargate project stronger than announced 11 months ago; Lumex CSS royalty from licensee earlier than expected as teams had close partnership on first generation.

Q: Cloud and networking mix in royalty revenues?

A: Jason Child said trajectory in 15% - 20% range expected.

Q: Chip demand, token generation and Arm's implication?

A: Rene Haas said AI compute demand trends, more tokens mean more compute, Arm in good position for edge and scalable software between cloud and edge.

Q: China sales driving factors and licensing pipeline?

A: China sales did well, license more of overperformance this quarter; pipeline strong for remainder of year, detail on Q4 to be given next quarter