Abstract
ARM Holdings will release its quarterly earnings on February 04, 2026 Post Market. This preview compiles the latest financial data and consensus forecasts to frame expectations for revenue, margins, net profit, and adjusted EPS, and distills institutional perspectives and segment dynamics shaping the company’s near-term performance.
Market Forecast
Consensus and company guidance point to current-quarter revenue of $1.22 billion, with an estimated year-over-year increase of 29.13%, EBIT of $0.48 billion with an estimated year-over-year increase of 21.13%, and adjusted EPS of $0.41 with an estimated year-over-year increase of 19.69%. Forecast margin commentary suggests gross profit margin staying structurally high around the prior quarter’s level and net profit margin tracking near the recent run rate; the company is not providing an explicit margin forecast, so investors are using last quarter’s 97.44% gross margin and 20.97% net margin as reference points. The main business highlight is sustained licensing and royalty momentum from external customers alongside healthy contributions from related-party revenue, supporting a diversified intake across ecosystems. The most promising segment appears to be revenue from external customers, estimated at $0.71 billion last quarter, with continued strength expected into the current quarter driven by new design wins and ongoing royalty uplift; year-over-year growth detail for this sub-segment is not disclosed.
Last Quarter Review
ARM Holdings reported prior-quarter revenue of $1.14 billion, a gross profit margin of 97.44%, GAAP net profit attributable to the parent company of $238.00 million, a net profit margin of 20.97%, and adjusted EPS of $0.39, with year-over-year growth of 34.48% for revenue, 43.25% for EBIT, and 30.00% for adjusted EPS. A notable financial highlight was net profit rising quarter-on-quarter by 83.08%, reflecting operating leverage and mix tailwinds against a high-margin royalty base. Main business composition featured $0.71 billion from external customers and $0.42 billion from related parties, underscoring broad adoption across independent licensees and strategic partners; year-over-year growth by segment was not disclosed.
Current Quarter Outlook
Main business: Licensing and royalties underpin resilient cash generation
ARM Holdings’ core revenue engine remains a blend of licensing fees for new designs and royalties from units shipped on existing architectures. This mix typically yields high gross margin, evidenced by the 97.44% print last quarter, and creates operating leverage as volumes scale without proportional cost increases. Into the current quarter, expectations of $1.22 billion revenue and $0.48 billion EBIT imply solid throughput from the installed base, particularly in applications benefiting from CPU performance-per-watt advantages. Royalty uplift can be sensitive to end-market demand across smartphones, infrastructure, automotive, and IoT; given last quarter’s 34.48% year-over-year revenue increase and the forecast 29.13% year-over-year revenue growth this quarter, the market is modeling sustained demand across diversified verticals. Adjusted EPS of $0.41, up 19.69% year over year, aligns with incremental operating efficiency but presumes stable pricing and licensing cadence; deviations in license timing or shipment trends could swing reported numbers.
Most promising business: External customer momentum drives incremental upside potential
External customers contributed $0.71 billion last quarter, forming the largest revenue pool and the clearest path to outperformance if new wins and shipment royalties outpace model assumptions. Design-win activity among leading CPU adopters and cloud silicon initiatives can translate into near-term licensing and medium-term royalties, compounding growth once products reach volume. The lack of disclosed year-over-year growth by sub-segment requires triangulation through the aggregate forecast, where a 29.13% revenue expansion suggests robust unit adoption and licensing velocity across independent customers. The durability of external customer demand reduces concentration risk and can buffer related-party fluctuations; it also supports a higher-quality revenue profile given the breadth of applications—from mobile and edge compute to data center accelerators—assuming ongoing traction in performance-per-watt leadership.
Stock price drivers this quarter: Earnings trajectory, margins, and design-win visibility
Share performance this quarter will hinge on how reported revenue, EBIT, and adjusted EPS compare with the consensus marks ($1.22 billion, $0.48 billion, and $0.41, respectively). Margins are a pivotal watchpoint: gross margin close to 97.44% and net margin around 20.97% set a high bar, and any mix shift toward lower-margin licensing or elevated operating expenses could nudge profitability and sentiment. Design-win disclosures and royalty shipment signals serve as leading indicators for future quarters; investors will parse commentary for indications of pipeline depth and timing, especially in higher-value compute segments. Cash flow conversion from high-margin royalties underpins valuation support, but volatility around macro demand, inventory digestion, or customer product cycles could introduce near-term noise.
Analyst Opinions
Institutional commentary surveyed across recent previews skews bullish, with the majority of analysts expecting ARM Holdings to deliver results at or modestly above consensus on revenue and adjusted EPS. Reports emphasize continued royalty momentum, healthy licensing pipelines with large-cap customers, and improving visibility in compute-intensive verticals. Bullish views from well-known brokerages highlight the combination of structurally high gross margins and accelerating top-line growth, arguing that operating leverage can sustain EPS expansion even with conservative expense scaling. These opinions also underscore that last quarter’s positive surprise on EBIT and EPS creates a favorable setup, and that potential upside could come from stronger-than-modeled royalty yields if end-market units exceed expectations. The prevailing view is that ARM Holdings’ balance of licensing and royalties supports resilience in the current quarter, with near-term catalysts anchored in design-win updates and management’s commentary on shipment momentum.Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
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