Arm reported revenues of $928 million for its fourth fiscal quarter, ended March 31, 2024, up 47% year-over-year, with record royalty revenue and strong growth in license revenue. Royalty revenue amounted to $514 million, up 37% year-over-year was driven by the rapidly increasing penetration of Armv9-based chips which typically command a higher royalty rate, and the recovery in the semiconductor industry.
In its shareholder letter, Arm highlighted multiple growth drivers for its long-term strategy, including:
- Growth will be driven by royalty revenue. We expect the demand for Arm-based compute to continue across all market segments, especially as AI is deployed in virtually all applications, from the most advanced data centers to the smallest edge devices. All this extra compute requires increased performance with less power consumption, which is driving the need for Arm’s most advanced technology, such as Armv9, into smartphones, servers, smart IoT, and networking devices. Chips based on Armv9 technology now contribute around 20% of royalty revenue, up from around 15% last quarter1.
- Growth will be driven by the need for more energy-efficient compute and AI capability from the data center to edge computers. As the amount of compute to run these complex AI workloads is increasing exponentially, the amount of energy required will increase too.
- According to a 2023 report from Boston Consulting Group, US data centers already consume around 126TWh per year, and this is expected to rise three-fold by 2030.
- Arm’s data center customers are reporting substantial performance-per-watt savings compared with legacy architectures and this contributes to why Arm’s energy-efficient technology is being chosen to help run these workloads.
- Google recently announced its first custom Arm- based Axion product, which provides 50% better performance and up to 60% better energy-efficiency compared to legacy architectures, and will be used to run AI training and inference.
- Ten of the world’s largest hyperscalers are deploying Arm- based chips for their data centers, including Amazon Web Services, Microsoft, and Oracle Cloud.
- NVIDIA also recently announced their Grace Blackwell Superchip that combines NVIDIA’s Blackwell GPU architecture with an Arm-based Grace CPU. This provides significant power savings compared to running a GPU alongside a legacy server chip.
- Arm technology provides similar power-efficiency for chips in PCs, smartphones, automotive applications, and networking equipment, and as AI goes everywhere, we believe it will be enabled by our technology.
- During the quarter, Arm also announced its next generation family of processors for automotive, including the world’s most power efficient and high performance server-class CPU with safety-critical automotive enhanced (AE) features, Arm Neoverse V3AE. This new family of automotive processors is already being adopted by leading players, including Marvell, MediaTek, NVIDIA, NXP, Renesas, Telechips, Texas Instruments, and others.
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