Arm Earnings: Record $1.44B Revenue as Data-Centre Royalties Double

Arm Holdings, the chip designer led by chief executive Rene Haas and chief financial officer Jason Child, reported record second-quarter revenue on November 4, 2026. Revenue rose 27% to $1.443 billion for the three months to September 30, helped by a 50% jump in licensing income and a doubling of royalties from data-centre chips. Even so, the shares slipped in early trading the next day as investors judged the outlook for the coming quarter to offer little extra upside.

What did Arm report?

Arm’s fiscal year runs to the end of March, so the quarter that ended on September 30, 2026, is its fiscal second quarter of 2027. Revenue of $1.443 billion was a record for that quarter and beat an analyst consensus of about $1.38 billion. It was the fifth quarter in a row in which revenue grew by more than 20%.

Arm earns money in two main ways. Chip companies pay licence fees to use its designs, then pay royalties on each chip they ship.

• Licence and other revenue: $773 million, up 50%.
• Royalty revenue: $670 million, up 8%.

On profit, non-GAAP earnings per share were $0.52, up from $0.39 a year earlier and above the $0.47 analysts expected. GAAP earnings per share were $0.12, down from $0.22. Arm noted that the year-earlier figure included a $131 million gain from a divestiture. The non-GAAP operating margin was 44.2%.

Why is the data centre so important to Arm?

The fastest-growing part of Arm’s royalty business is chips for data centres. The company said those royalties doubled compared with a year earlier.

Arm also gave figures for its share of servers at the largest cloud providers, known as hyperscalers. It said that share rose from 15% in 2024 to more than 50% in 2025, and it expects it to exceed 60% by the end of 2026.

Royalties from the area Arm calls physical AI grew 50%. Annualized contract value, a measure of recurring licence commitments, rose 12% to $1.79 billion.

Chief executive Rene Haas summed up the company’s view in the results statement: “Arm is becoming the compute platform of choice as AI transforms every market.”

What is the Arm AGI CPU?

Arm is also moving into selling its own data-centre processor, called the Arm AGI CPU. The company said first deliveries are due in its fiscal fourth quarter of 2027, which runs from January to March 2027. Arm said it is now more confident that the chip could bring in up to $2 billion of revenue across fiscal 2027 and 2028.

What is Arm’s guidance?

For the fiscal third quarter of 2027, Arm expects:

• Revenue of $1.54 billion, plus or minus $50 million, against a consensus of about $1.53 billion.
• Non-GAAP earnings per share of $0.56, plus or minus $0.04, against a consensus of about $0.55.

The midpoints of both ranges were only slightly above what analysts had forecast. Yahoo Finance reported that Arm shares fell more than 3% in premarket trading on November 5, as the outlook offered limited upside despite the earnings beat. Chip stocks then fell sharply across the market later that day.

Why it matters

Arm’s results show how much the AI boom is changing its business. Rising data-centre royalties and the move into selling its own processor point to a company that is becoming more tied to AI spending by cloud providers.

That brings opportunity but also risk. If big technology companies slow their spending on AI infrastructure, Arm’s fastest-growing revenue streams could be affected.

What happens next?

The next milestones are the fiscal third-quarter results, due early in 2027, and the first deliveries of the Arm AGI CPU in the first quarter of calendar 2027. Investors will watch whether data-centre royalties keep growing at the current pace and whether the new processor wins large customers.