ARM reports royalties but royalties plummet • The Register

Chip designer Arm reported record earnings for its latest quarterly trading update as it continues to diversify its business beyond licensing.

For the second quarter ending Sept. 30 — Arm’s fiscal 2022 ends somewhat counterintuitively in March 2023 — royalty revenue increased to $463.2 million from $378.2 million in the prior-year period. For the math disabled, that’s an increase of 22.47 percent.

Still, total revenue fell 16 percent to $655.85 million, driven by a 53 percent drop in licensing to $192.7 million, a company spokesman said The registry.

This reflects the more volatile nature of licensing and underscores why Arm is interested in earning royalties. “This spike was due to the timing of revenue recognition from two major licenses that were signed in prior periods,” said Arm.

All royalty market segments grew, Arm said, with new highs being set for both automotive as ADAS adoption “continues to drive more advanced computing in cars” and IoT.

There is an ongoing launch of Arm Neoverse, he added. Nvidia’s Grace processor is expected to be one of the first chips to integrate upcoming Neoverse V2 CPU cores, due 2023. Despite the decline in smartphone shipments, there has also been an increase in device licensing fees.

In the three months, Arm’s customers shipped 7.5 billion Arm-based chips, up 9 percent year-on-year. The entire ARM ecosystem has now grown to more than 240 billion ARM-based chips.

Rene Haas, CEO of Arm, who took over the role from Simon Segars earlier this year after Nvidia’s failed purchase, said in a canned statement:

“Arm is defining the future of computing as our technology continues to be adopted in all of the markets we serve, as evidenced by our strong licensing results and record royalty income this quarter.

“As we continue to diversify, our investments across all businesses continue to pay off, particularly with impressive growth in automotive and IoT.”

The adjusted margin before income taxes, depreciation and amortization (EBITDA) was 50 percent compared to 59 percent a year earlier.

The UK-based chip designer’s IPO was widely expected this year, but given the turmoil in financial markets, parent company Softbank may decide to delay the IPO.

In related news, Softbank’s Vision Fund today reported a loss of $7.2 billion for the quarter on the write-down of investments in technology stocks. ® ARM reports royalties but royalties plummet • The Register

Rick Schindler

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