ARM Holdings PLC · NASDAQ:ARM

ARM — Q4 FYE24 Earnings Presentation

43 slides from ARM's earnings presentation, May 8, 2024

  1. Slide 1: Arm Holdings plc Q4 FYE24 Results Presentation

    Arm Holdings plc Q4 FYE24 Results Presentation Ian Thornton, Head of Investor Relations [email protected] https://investors.arm.com AI-generated image May 8, 2024 © 2024 Arm

  2. Slide 2: Forward-Looking Statements

    Forward-Looking Statements This presentation may contain certain “forward-looking statements,” including statements regarding Arm’s and its management team's expectations, hopes, beliefs, intentions or strategies regarding the future. Forward-looking statements are generally identifiable by statemen

  3. Slide 3: Q4 FYE24 Results Summary

    Q4 FYE24 Results Summary © 2024 Arm

  4. Slide 4: Q4 FYE24: Highlights

    Q4 FYE24: Highlights $928m $391m (1) Total revenue up 47% yoy Non-GAAP Operating Income 42.1% Non-GAAP operating margin $414m $907m License and other revenue up 60% yoy Trailing 12 Months FCF up 50% yoy $514m 7.0bn Royalty revenue up 37% yoy Chips reported as shipped 287.4bn Cumulative chip shipment

  5. Slide 5: Full Year FYE24: Highlights

    Full Year FYE24: Highlights $3,233m $1,408m Total revenue up 21% yoy Non-GAAP Operating Income up 80% yoy 43.6% Non-GAAP operating margin $1,431m $907m License and other revenue up 43% yoy Trailing 12 Months FCF up 50% yoy $1,802m 28.6bn Royalty revenue up 8% yoy Chips reported as shipped 287.4bn Cu

  6. Slide 6: Q4 FYE24: From Revenues to Profits to Cash

    Q4 FYE24: From Revenues to Profits to Cash 97% 42% 69% Non-GAAP Non-GAAP Revenue Gross Margin Operating to Cash $928m $26m $902m $511m Margin Conversion License Revenue $637m $391m Royalty Revenue Revenue Non-GAAP Non-GAAP Non-GAAP Non-GAAP Non-GAAP Cost of Sales Gross Profit Operating Expenses Oper

  7. Slide 7: Q4 FYE24: Revenue

    Q4 FYE24: Revenue Total revenue: $928m up 47% yoy – Highest ever! License and other revenue: $414m up 60% yoy driven by multiple new ATA agreements and the increased demand for Arm's power-efficient and high-performance technology in applications from AI to datacenters to edge computer Royalty reven

  8. Slide 8: Q4 FYE24: Royalty Revenue

    Q4 FYE24: Royalty Revenue Record royalty revenue up 37% yoy and 9% sequentially Arm is benefitting from Armv9 adoption in smartphones and market share gains in automotive and cloud hyperscalers Semiconductor industry grew strongly in the second half of Calendar 2023, with some weakness expected in i

  9. Slide 9: Q4 FYE24: Annualized Contract Value

    Q4 FYE24: Annualized Contract Value Annualized contract value increased during Q4 driven by multiple high-value, long-term ATA agreements $1,400m $700m $1,160m $1,182m $1,200m $1,080m $1,108m $600m $1,030m $1,052m $1,009m $1,030m $1,048m $1,000m $500m $414m $388m $800m $400m $354m $299m $600m $259m

  10. Slide 10: Q4 FYE24: Remaining Performance Obligation (RPO)

    Q4 FYE24: Remaining Performance Obligation (RPO) Remaining performance obligations represent revenue that will be recognized in future periods RPO is up 45% year-over-year and up slightly sequentially driven by multiple high-value, long-term agreements $3,000m $700m $2,414m $2,433m $2,484m $600m $2,

  11. Slide 11: Q4 FYE24: Non-GAAP Cost of Sales and Operating Expenses

    Q4 FYE24: Non-GAAP Cost of Sales and Operating Expenses Q4 Total Non-GAAP Operating Expense was $511m, down 16% yoy Headcount increased 19% yoy, but this was more than offset by the change in mix of share-based compensation cost from liability settled to equity-settled and a favorable year-over-year

  12. Slide 12: Q4 FYE24: Non-GAAP gross and operating profit

    Q4 FYE24: Non-GAAP gross and operating profit Q4 gross profit and operating profit margins remaining over 95% and 40%, respectively Gross Profit Operating Profit $1,200m 100.0% $1,200m 60.0% 96.7% 96.8% 96.8% 97.2% 47.6% 96.2% 96.3% 96.1% 96.4% 42.9% 43.8% 42.1% 39.9% 40.2% 94.4% $1,000m 95.0% $1,00

  13. Slide 13: Q4 FYE24: Chips reported as shipped

    Q4 FYE24: Chips reported as shipped Chips Reported as Shipped Chip shipments relate to the October to December quarter 7.8bn 7.9bn 7.8bn 7.7bn Down 10% year-over-year and 9% sequentially 7.5bn 7.5bn 7.3bn 7.1bn mainly due to the impact of inventory correction in 6.9bn 7.0bn 7.0bn 6.8bn industrial Io

  14. Slide 14: Q4 FYE24: Non-Financial Metrics

    Q4 FYE24: Non-Financial Metrics Arm Total Access at 31, up 4 sequentially • Target markets for these licensees include AI- Arm Flexible Access Arm Total Access enabled smartphones, servers and embedded computing 222 31 203 211 212 218 • ATA licensees are typically long-term Arm partners 191 27 and i

  15. Slide 15: Royalty revenue by architecture

    Armv9 is expected to replace most Armv8-based chips Royalty revenue by architecture 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% FYE14 FYE15 FYE16 FYE17 FYE18 FYE19 FYE20 FYE21 FYE22 FYE23 Q1FYE24 Q2FYE24 Q3FYE24 Q4FYE24 Arm v7 & older Arm v8 Arm v9 Armv9 is expected to replace most of the Armv8-base

  16. Slide 16: Guidance

    Guidance Q1 FYE 25 FYE 25 Revenue ($m) $875m - $925m $3,800m - $4,100m Non-GAAP Operating Expense ($m)1 ~$475m ~$2,050m Non-GAAP fully diluted earnings per share ($)1 $0.32 - $0.36 $1.45 - $1.65 (1) For more information and definitions of the non-GAAP measures see the “Key Financial and Operating Me

  17. Slide 17: Q4 FYE24 Background on Arm

    Q4 FYE24 Background on Arm © 2024 Arm

  18. Slide 18: Arm is Building the Future of Computing

    Arm is Building the Future of Computing Arm is the world’s most pervasive CPU architecture 285+ Billion Arm-based chips shipped since inception Everything today is a computer 28.6 Billion – CPUs needed everywhere Arm-based chips reported as shipped in FYE24 Strong growth, highly profitable and cash

  19. Slide 19: The Foundation of the Semiconductor Industry

    The Foundation of the Semiconductor Industry Software Products Foundries EDA Chip Designers Arm CPU – The Brain of Everything 19 © 2024 Arm

  20. Slide 20: What Have We Done Since 2016?

    What Have We Done Since 2016? Then1 Now1 Auto MARKET Cloud & Networking SPECIFIC STRATEGY Mobile IoT General Purpose CPU Consumer Other Electronics Mobile AI Enabled Total Compute Neoverse Automotive IoT (Mobile) (Cloud) Enhanced Solutions Arm Platform Approach 20 © 2024 Arm 1 Reflects revenue as of

  21. Slide 21: CPU and subsystems for every target end-market

    CPU and subsystems for every target end-market Mobile – Total Compute Subsystem Infrastructure - Neoverse Compute Subsystem Up to 40% TOOLS TOOLS SOFTWARE SOFTWARE Price/Performance SUPPORT DSU-120 Neoverse-V2 CMN-700 32-192 CPUs SUPPORT Immortalis-G720 Cortex Cortex- Mali-G720 -X4 Cortex- A720 Mali

  22. Slide 22: Infrastructure – Progressing our Strategy

    Infrastructure – Progressing our Strategy Arm continues to gain market share within the cloud compute market as our customers increasingly adopt and deploy Arm CPUs into cloud server chips driven by the need for power efficient computing. Recent announcements Two new CPUs and platforms for Google an

  23. Slide 23: Automotive – Progressing our Strategy

    Automotive – Progressing our Strategy The automotive semiconductor market is one of Arm's fastest growing opportunities and where we have been rapidly gaining market share Recent announcements Arm announces next generation Arm partnership reducing Level 4 autonomous driving of automotive technologie

  24. Slide 24: IoT/Embedded – Progressing our Strategy

    IoT/Embedded – Progressing our Strategy Arm is already the leading CPU architecture for IoT devices and embedded computers. Billions of IoT and embedded devices are in use today gathering and analyzing vast new sources of data. Billions more will be deployed to help us solve complex issues, such as

  25. Slide 25: Client – Progressing our Strategy

    Client – Progressing our Strategy Our strategy is to develop and license more advanced technology such as CPUs based on its Armv9 architecture, and platforms that deliver additional functionality, higher performance, and higher energy efficiency in mobile and consumer computing devices. Arm’s custom

  26. Slide 26: AI on Arm is Everywhere

    AI on Arm is Everywhere IoT & Mobile Cloud Compute Automotive Embedded AI for all Generative AI Optimized Autonomous Smart applications for AI Driving Home 26 © 2024 Arm

  27. Slide 27: Unparalleled Software Ecosystem

    Unparalleled Software Ecosystem 18M Developers on Arm, 10M+ Developer hours for Arm 1st decade of Armv8 1.5Bn Ecosystem hours 30M+ Developer hours 1st decade of Armv9 27 © 2024 Arm

  28. Slide 28: Arm is the Ubiquitous Choice

    Arm is the Ubiquitous Choice X86 RISC-V Ability to license Energy efficiency Compute performance Software ecosystem Standardization End-market solutions All PC / Server Low-end embedded 28 © 2024 Arm

  29. Slide 29: Why Arm Continues to Grow

    Why Arm Continues to Grow More Complexity More Chips More Arm Per Chip Auto 8 1.7x Cloud & Networking FYE16 More Mobile IoT Increase in number of Arm-based chips shipped 192 FYE24 Number of cores per “high end” Arm-based chip Consumer Electronics 29 © 2024 Arm

  30. Slide 30: Royalty: Gaining Share in a Massive and Growing Market

    Royalty: Gaining Share in a Massive and Growing Market Market Value1 (2020 to 2022) Market Share1 (2020 to 2022) MOBILE $22bn $30bn >99% >99% APPLICATIONS Client OTHER MOBILE 69% $14bn $18bn 69% 64% CONSUMER ELECTRONICS $46bn $47bn 25% 32% CLOUD Auto Infrastructure COMPUTE $18bn 10% $14bn 7% NETWORK

  31. Slide 31: Royalty Revenue: Arm is Gaining Share

    Royalty Revenue: Arm is Gaining Share Market Share by Chip Value $250m Arm x86 Other $200m $150m $100m 2023: 51% 2020: 42% $50m 2014: 39% $0m 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Calendar Years Note: As Arm receives royalty reports one quarter in arrears, market share data for FYE24 wil

  32. Slide 32: Royalty Revenue Provides a Platform for Long-Term Growth

    CONFIDENTIAL Royalty Revenue Provides a Platform for Long-Term Growth Royalty revenue can continue for many years or decades $1,800m Royalty revenue from Arm products launched during Fiscal Year Ending 1990-2008 2009-2013 2014-2018 2019-2023 $1,600m Still collecting $1,400m royalties on products $1,

  33. Slide 33: Royalty-led Subscription Business Model

    Royalty-led Subscription Business Model Arm Total Access Long term subscription-based access to an extensive portfolio of more than 300 CPUs, GPUs and other IP including Arm’s latest products SUBSCRIPTION FEE Access Select, Evaluate, Develop Tape Out & Partner Ship Package IP Experiment, Design SoC

  34. Slide 34: Arm's Financial Opportunity

    Arm’s Financial Opportunity $928m $633m Revenues: 47% growth Strong revenue growth opportunity Q4 FYE23 Q4 FYE24 $391m Non-GAAP operating profit Balancing investing for long term growth 42% and margin ($1m) with best-in-class margins Q4 Q4 FYE23 FYE24 $637m Non-GAAP FCF and Robust cash generation $4

  35. Slide 35: Appendix

    Appendix © 2024 Arm

  36. Slide 36: Environmental, Social and Governance

    Environmental, Social and Governance Using the power of technology to build a better world for everyone Decarbonising compute Arm’s high performance, energy-efficient technology has the potential to help reduce emissions from billions of devices from sensors to servers Arm is committed to achieving

  37. Slide 37: Reconciliations: GAAP to Non-GAAP and Adjustments

    Reconciliations: GAAP to Non-GAAP and Adjustments Includes retrospective change to Non-GAAP reporting Arm Holdings plc As of May 8, 2024 Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY FY FY 31-Mar 30-Jun 30-Sep 31-Dec 31-Mar 30-Jun 3

  38. Slide 38: Reconciliations: GAAP to Non-GAAP and Adjustments… cont'd

    Reconciliations: GAAP to Non-GAAP and Adjustments… cont’d Arm Holdings plc As of May 8, 2024 Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY FY FY 31-Mar 30-Jun 30-Sep 31-Dec 31-Mar 30-Jun 30-Sep 31-Dec 31-Mar 31-Mar 31-Mar 31-Mar (in

  39. Slide 39: Reconciliations: GAAP to Non-GAAP and Adjustments… cont'd

    Reconciliations: GAAP to Non-GAAP and Adjustments… cont’d Arm Holdings plc As of May 8, 2024 Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY FY FY 31-Mar 30-Jun 30-Sep 31-Dec 31-Mar 30-Jun 30-Sep 31-Dec 31-Mar 31-Mar 31-Mar 31-Mar (in

  40. Slide 40: Reconciliations: GAAP to Non-GAAP and Adjustments… cont'd

    Reconciliations: GAAP to Non-GAAP and Adjustments… cont’d Arm Holdings plc As of May 8, 2024 Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY FY FY 31-Mar 30-Jun 30-Sep 31-Dec 31-Mar 30-Jun 30-Sep 31-Dec 31-Mar 31-Mar 31-Mar 31-Mar (in

  41. Slide 41: Reconciliations: GAAP to Non-GAAP and Adjustments… cont'd

    Reconciliations: GAAP to Non-GAAP and Adjustments… cont’d Arm Holdings plc As of May 8, 2024 Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY FY FY 31-Mar 30-Jun 30-Sep 31-Dec 31-Mar 30-Jun 30-Sep 31-Dec 31-Mar 31-Mar 31-Mar 31-Mar (in

  42. Slide 42: Reconciliations: Condensed Cash Flow Statement

    Reconciliations: GAAP to Non-GAAP and Adjustments… cont’d Arm Holdings plc As of May 8, 2024 Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY FY FY 31-Mar 30-Jun 30-Sep 31-Dec 31-Mar 30-Jun 30-Sep 31-Dec 31-Mar 31-Mar 31-Mar 31-Mar (in

  43. Slide 43: Reconciliations: Condensed Cash Flow Statement cont'd

    Reconciliations: GAAP to Non-GAAP and Adjustments… cont’d Arm Holdings plc As of May 8, 2024 Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Actual Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 FY FY FY 31-Mar 30-Jun 30-Sep 31-Dec 31-Mar 30-Jun 30-Sep 31-Dec 31-Mar 31-Mar 31-Mar 31-Mar (in

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