Arm said more complex AI chips are driving license revenue as its second quarter was better-than-expected with and in-line third quarter outlook.
For the third quarter Arm said it expects non-GAAP earnings between 32 cents a share and 36 cents a share with revenue between $920 million to $970 million. Wall Street was expecting third quarter non-GAAP earnings of 34 cents a share on revenue of $951 million.
Arm reported fiscal second quarter earnings of $107 million, or 10 cents a share, on revenue of $844 million, up 5% from a year ago. Non-GAAP earnings were 30 cents a share. Analysts were expecting earnings of 26 cents a share on revenue of $810.9 million.
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Arm CEO Rene Haas said:
"Demand for our high-performance Armv9 and CSS compute platforms continues to exceed expectations, and to accelerate our licensing and royalty revenue growth. AI everywhere is generating new opportunities for the Arm compute platform from the cloud to the edge."
In a shareholder letter, Arm executives said the company is benefiting from "AI everything" and the need for more energy-efficient chips.
"Demand for Compute Subsystems (CSS) has been higher than expected and is also contributing to licensing growth. Our royalty revenue growth has also been very positive. Royalty revenue is benefiting from higher revenue per device as more customers deploy our latest high performance Armv9 to address AI demand and as our CSS royalty revenue ramps. The cumulative number of chips shipped by the Arm ecosystem has now exceeded 300 billion."
