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Arm Holdings reported $824 million in revenue for its fiscal third quarter ended December 31, 2023—not the $761 million stated in the supplied headline. Revenue rose 14% from $724 million a year earlier, and Arm said it was a quarterly record at the time. The company announced the results on February 7, 2024. Arm’s earnings filing gives the reported figures.
What Arm reported for the quarter
Arm’s fiscal third quarter of fiscal year 2024 covered the three months ended December 31, 2023. The $761 million figure in the headline does not match Arm’s reported quarterly revenue; the company reported $824 million. The table summarizes its principal results and the subsequent-quarter and full-year outlook it provided.
| Measure | Fiscal Q3 2024 | Comparison or outlook |
|---|---|---|
| Total revenue | $824 million | Up 14% from $724 million a year earlier |
| Royalty revenue | $470 million | Up 11% year over year |
| License and other revenue | $354 million | Up 18% year over year |
| GAAP net income | $87 million | Down from $182 million a year earlier |
| GAAP diluted EPS | $0.08 | Versus $0.18 a year earlier |
| Non-GAAP diluted EPS | $0.29 | Versus $0.22 a year earlier |
| GAAP / non-GAAP gross margin | 95.6% / 96.7% | Arm-reported figures |
| GAAP / non-GAAP operating profit | $134 million / $338 million | GAAP down 45%; non-GAAP up 17% year over year |
| Fiscal Q4 revenue guidance | $850 million–$900 million | Management outlook issued with the results |
| Fiscal 2024 revenue guidance | $3.155 billion–$3.205 billion | Full-year outlook raised by Arm |
Revenue, royalty and license figures, and GAAP and non-GAAP results are from Arm’s earnings filing; the year-earlier revenue comparison is also shown in Arm’s financial table. The outlook figures come from the results presentation. GAAP and non-GAAP figures use different accounting treatments and should not be read as interchangeable measures.
How Arm makes money from chips
Arm primarily licenses intellectual property and technology used by chip designers; it is not generally the manufacturer of the Arm-based chips its customers ship. Its two revenue categories behave differently:
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- License and other revenue comes from agreements granting access to Arm architectures, designs and related technology. Large deals and the timing of revenue recognition can make this category uneven from quarter to quarter.
- Royalty revenue is linked to customers’ shipments of chips that incorporate Arm technology. It is influenced by chip volumes, product mix and the royalty terms applicable to each design.
Royalties were a record $470 million and about 57% of the quarter’s revenue; license and other revenue made up about 43%. Those shares are calculated from Arm’s reported dollar figures. The mix matters: a strong licensing quarter can reflect agreements recognized at particular times, while royalties more directly reflect products shipped under Arm licenses.
Why revenue increased
Arm attributed the quarter to record royalty revenue and better-than-expected license and other revenue. It cited a recovering smartphone market, greater adoption of Armv9 technology, continued cloud-server market-share gains, high-value long-term licensing agreements and demand for advanced CPUs used in AI-related products. These were multiple contributors; Arm did not attribute the quarter’s growth to AI alone.
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Armv9 can raise royalty value per chip
Arm said Armv9 products typically carry roughly twice the royalty rate of equivalent Armv8 products. Armv9 accounted for about 15% of royalty revenue in the quarter, compared with about 10% in the preceding quarter, according to the company’s results presentation. If customers adopt those designs and ship them at scale, a richer product mix can lift royalty revenue without an equivalent increase in the number of chips. That is a potential source of growth, not a guaranteed result: actual revenue still depends on customer adoption, shipments and contractual royalty rates.
End markets were not moving in unison
- Smartphones: Arm cited market recovery and rising adoption of Armv9-based handsets, including AI-enabled phones. Both improving unit conditions and higher-value designs could support royalties.
- Cloud and infrastructure: Arm pointed to cloud-server growth, market-share gains and the transition to Armv9 products. These are management’s reported drivers, rather than independently verified market-share measurements.
- Automotive: Arm reported strong growth in chips for advanced driver-assistance systems, partly offset by weakness in automotive microcontrollers during an industry slowdown.
- IoT and embedded: Royalty revenue was flat year over year as the market worked through an inventory correction.
Arm’s shareholder results materials describe these end-market conditions and drivers: Arm’s Form 6-K and shareholder results.
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Revenue grew, but GAAP profit fell
The 14% revenue increase did not mean every profitability measure improved. GAAP net income fell to $87 million from $182 million, and GAAP operating profit fell 45% to $134 million. In contrast, non-GAAP operating profit rose 17% to $338 million and non-GAAP diluted EPS rose to $0.29 from $0.22. Arm’s filing presents both accounting measures; higher operating expenses, including costs associated with being a public company and share-based compensation, weighed on GAAP results. The gap is why a headline focused only on revenue gives an incomplete view of the quarter.
Why the raised outlook mattered
For fiscal Q4, Arm forecast revenue of $850 million to $900 million, non-GAAP operating expenses of about $490 million, and non-GAAP diluted EPS of $0.28 to $0.32. For the full fiscal year, it raised its revenue outlook to $3.155 billion to $3.205 billion, with non-GAAP operating expenses of about $1.7 billion and non-GAAP diluted EPS of $1.20 to $1.24. The ranges were management’s guidance at the time, not reported results. Raising the full-year view indicated that management expected the strength to extend beyond the single quarter, while the range also reflected uncertainty around the business’s demand and revenue timing.
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What chip-shipment figures do—and do not—show
Arm said customers shipped 7.7 billion Arm-based chips during the September-quarter shipping period, and cumulative shipments to end customers worldwide reached 280.3 billion. The 7.7 billion figure does not describe chips shipped in the December quarter: Arm’s chip-shipment reporting has a lag. Nor does a shipment count map one-for-one to quarterly revenue, since revenue depends on shipment timing, product mix and licensing terms. These figures appear in Arm’s Form 6-K and shareholder results.
How to read the headline error and the quarter
The $761 million amount is inconsistent with Arm’s official earnings release, filing and results materials for this quarter. It should not be used as Arm’s fiscal Q3 revenue absent a separate, clearly identified metric or source. The defensible comparison is $824 million versus $724 million a year earlier, with the fiscal period specified so it is not confused with calendar Q3 2023.
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For investors and industry readers, the strongest evidence of momentum was not just top-line growth: royalties reached a record and Arm raised its full-year guidance. The counterweights were weaker GAAP profit, uneven conditions across end markets, and license revenue’s sensitivity to deal timing. The outlook depended on continued adoption and shipments of newer designs as well as broader market demand.
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