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Arm reports 26% revenue growth driven by data center and smartphone royalty increases
Wednesday, February 4, 2026 at 09:45 PM
Arm reported a 26% year-over-year revenue increase to $1.24 billion for the December quarter. Royalty revenue grew 27% to $737 million, supported by increased chip volume and higher royalty rates per chip in smartphones and data centers. The company expects over 20% revenue growth for fiscal years 2026 and 2027.
Context
Arm Holdings reported a standout quarter ending December 2025, with revenue surging 26% year-over-year to reach $1.24 billion. This performance marks the company’s fourth consecutive billion-dollar quarter, underscored by record royalty revenue of $737 million, a 27% increase. Growth was largely driven by the rapid adoption of the v9 architecture, which commands higher fees per chip, and a triple-digit increase in data center royalties as hyperscalers increasingly pivot to custom silicon for AI workloads.
Looking ahead, Arm Holdings issued robust revenue guidance of $1.47 billion for the March 2026 quarter, supported by low-teens growth in royalties and high-teens growth in licensing. The company maintains a bullish long-term outlook, forecasting annual revenue growth of over 20% for both 2026 and 2027. This trajectory highlights a fundamental shift in the company’s business model as it leverages complex Compute Subsystems to capture a significantly larger share of the global semiconductor value chain.
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