Arm Q1 Earnings: Record $1.289B Revenue, Up 22%

Rhea-AI Summary

Arm (Nasdaq: ARM) reported record Q1 FYE27 revenue of $1.289 billion, up 22% year over year, with royalty revenue of $715 million (+22%) and license and other revenue of $574 million (+23%). GAAP net income rose to $270 million from $130 million, while non-GAAP net income increased 28% to $480 million. GAAP diluted EPS was $0.25 (+108%) and non-GAAP diluted EPS was $0.45 (+29%).

GAAP gross margin reached 97.2% and non-GAAP gross margin 98.1%. GAAP operating expenses rose 28% to $1.162 billion, narrowing GAAP operating margin to 7.1%, while non-GAAP operating margin expanded to 41.2%. Annualized contract value increased 13% to $1.732 billion. Operating cash flow surged to $902 million from $332 million and non-GAAP free cash flow to $665 million from $150 million, with quarter-end liquidity of $3.888 billion.

Arm highlighted more than doubling of data center royalties, cumulative Neoverse shipments above 1.5 billion cores, and Arm AGI CPU demand now exceeding $2 billion across fiscal 2027–2028. For Q2 FYE27, Arm guides revenue of $1.38 billion ± $50 million and non-GAAP diluted EPS of $0.47 ± $0.04, with expected non-GAAP operating expenses of about $780 million.

Positive

• Revenue $1.289 billion, up 22% year over year
• Non-GAAP net income $480 million, up 28% YoY
• Non-GAAP operating income $531 million, up 29% YoY
• Operating cash flow $902 million vs. $332 million a year earlier
• Non-GAAP free cash flow $665 million vs. $150 million a year earlier
• Data center royalties more than doubled YoY
• Annualized contract value $1.732 billion, up 13% YoY
• Arm AGI CPU demand now exceeds $2 billion for FY27–FY28

Negative

• GAAP operating income declined to $91 million from $114 million
• GAAP operating margin narrowed to 7.1% from 10.8%
• GAAP operating expenses rose 28% to $1.162 billion
• Non-GAAP R&D expense increased 20% to $530 million

News Market Reaction – ARM

+7.40% 1.6x vol

135 alerts

+7.40% Session close to close

+14.1% Peak Tracked

-13.2% Trough Tracked

$311.03B Market Cap

1.6x Rel. Volume

In the Jul 30 session, ARM gained 7.40%, reflecting a notable positive market reaction. Argus tracked a peak move of +14.1% during that session. Argus tracked a trough of -13.2% from its starting point during tracking. Our momentum scanner triggered 135 alerts that day, indicating very high trading interest and price volatility. Trading volume was above average at 1.6x the daily average, suggesting increased trading activity.

Data tracked by StockTitan Argus on the day of publication.

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Arm Holdings plc (Nasdaq: ARM) reported record fiscal first-quarter revenue of $1.289 billion, up 22% year over year, as royalty revenue and license revenue both reached first-quarter records. For the quarter ended June 30, 2026, GAAP net income rose to $270 million from $130 million, while non-GAAP net income increased 28% to $480 million.

Arm Q1 FYE27 Financial Snapshot

Metric	Q1 FYE27	Year-over-year change
Revenue	$1.289 billion	22%
Royalty revenue	$715 million	22%
License and other revenue	$574 million	23%
GAAP diluted EPS	$0.25	108%
Non-GAAP diluted EPS	$0.45	29%

Arm said royalty growth reflected adoption of technologies carrying higher royalty rates per chip, including Armv9 architecture and Arm Compute Subsystems, as well as greater deployment of Arm-based chips in data centers. License and other revenue benefited from demand for Arm intellectual property, contributions from backlog, and the timing and size of several high-value agreements.

Annualized contract value, which Arm uses to normalize license and other revenue, increased 13% to $1.732 billion. The company said it will no longer report quarterly remaining performance obligations or the number of Arm Total Access and Arm Flexible Access licenses because those measures have become less relevant as the business expands into production silicon.

GAAP Margin Narrows as Arm Increases Investment

GAAP gross profit was $1.253 billion, producing a 97.2% gross margin. GAAP operating expenses rose 28% to $1.162 billion, and GAAP operating income declined to $91 million from $114 million. As a result, GAAP operating margin narrowed to 7.1% from 10.8%.

On a non-GAAP basis, gross profit was $1.264 billion and gross margin was 98.1%. Non-GAAP operating expenses increased 18% to $733 million, while operating income rose 29% to $531 million. Non-GAAP operating margin expanded to 41.2% from 39.1%.

Research and development accounted for much of the spending. GAAP R&D expense was $838 million. Non-GAAP R&D expense increased 20% to $530 million, which Arm attributed mainly to engineering headcount and related costs. Non-GAAP figures exclude items such as share-based compensation and certain other expenses, so they supplement rather than replace results reported under GAAP.

Operating cash flow reached $902 million, compared with $332 million a year earlier, while non-GAAP free cash flow rose to $665 million from $150 million. Arm said favorable timing of receivables collections and tax payments benefited both measures. Cash, cash equivalents, and short-term investments totaled $3.888 billion at quarter-end.

Data Center Royalties and AGI CPU Demand

Data center royalties more than doubled from the prior-year quarter as adoption of Arm Neoverse expanded. Arm said cumulative Neoverse shipments have surpassed 1.5 billion cores. The most recent 500 million shipped in nine months, compared with six years for the first billion.

The company also updated its Arm AGI CPU initiative, which extends the business into production silicon. Arm said it has delivered initial products to multiple customers and secured manufacturing capacity for the $1 billion opportunity it previously outlined across fiscal 2027 and fiscal 2028. Customer demand now exceeds $2 billion across those two fiscal years, according to the company, although Arm said it continues working with manufacturing and supply-chain partners to expand capacity.

Arm linked its broader opportunity to AI workloads spreading across cloud infrastructure, edge devices, and physical systems. It cited expanding Arm-based products and deployments from NVIDIA, Google, AWS, Microsoft, and Qualcomm. Arm also said its software ecosystem now supports more than 22 million developers worldwide.

Arm Provides Q2 FYE27 Guidance

For the second quarter of fiscal 2027, Arm guided to revenue of $1.38 billion, plus or minus $50 million. It expects non-GAAP operating expenses of approximately $780 million and non-GAAP diluted EPS of $0.47, plus or minus $0.04.

Arm did not provide reconciliations of the forward-looking non-GAAP measures to their most directly comparable GAAP measures. The company said excluded items cannot be projected without unreasonable effort and could significantly affect the corresponding GAAP results.

This independent StockTitan article is based solely on information provided by Arm Holdings plc on July 29, 2026. It was not authored, sponsored, or endorsed by Arm. The content is for informational purposes only and does not constitute financial, investment, legal, or tax advice. StockTitan and its writers make no representation as to the accuracy, completeness, or timeliness of the company-provided information. Readers should conduct their own due diligence before making financial decisions.

Source: Arm Holdings plc

FAQ

How did Arm (ARM) perform in Q1 fiscal 2027 earnings?

Arm reported Q1 FYE27 revenue of $1.289 billion, up 22% year over year. According to Arm, GAAP net income reached $270 million and non-GAAP net income was $480 million, with record royalty and license revenues driving growth.

What were Arm (ARM) Q1 FYE27 EPS results on a GAAP and non-GAAP basis?

Arm posted Q1 FYE27 GAAP diluted EPS of $0.25, up 108% year over year. According to Arm, non-GAAP diluted EPS was $0.45, up 29%, reflecting higher revenue and improved non-GAAP operating margin despite increased investment.

How strong was Arm (ARM) cash flow and balance sheet in Q1 fiscal 2027?

Arm generated Q1 FYE27 operating cash flow of $902 million, up from $332 million a year earlier. According to Arm, non-GAAP free cash flow was $665 million, and cash, cash equivalents, and short-term investments totaled $3.888 billion at quarter-end.

What is driving Arm (ARM) data center and Neoverse growth in 2026?

Data center royalties more than doubled year over year in Q1 FYE27, driven by expanding Arm Neoverse adoption. According to Arm, cumulative Neoverse shipments surpassed 1.5 billion cores, with the most recent 500 million shipped in nine months.

What does Arm’s AGI CPU initiative mean for future revenue in FY27–FY28?

Arm has secured manufacturing capacity for a previously outlined $1 billion Arm AGI CPU opportunity across FY27–FY28. According to Arm, customer demand now exceeds $2 billion, and initial products have been delivered to multiple customers.

What guidance did Arm (ARM) give for Q2 fiscal 2027 revenue and EPS?

Arm guides Q2 FYE27 revenue to about $1.38 billion, plus or minus $50 million. According to Arm, expected non-GAAP diluted EPS is $0.47, plus or minus $0.04, with non-GAAP operating expenses around $780 million.

How are Arm (ARM) margins and R&D spending trending in Q1 FYE27?

Arm reported GAAP gross margin of 97.2% and non-GAAP gross margin of 98.1% in Q1 FYE27. According to Arm, GAAP operating margin narrowed to 7.1% as GAAP operating expenses rose 28%, largely from higher R&D and engineering headcount.