By Razak Musa Baba and Rory Gallivan
Chip designer ARM Holdings PLC on Tuesday reported a 36% rise in
first-quarter net profit amid strong demand for its technology in
smartphones and tablets and said it expects 2015 revenue in dollar
terms to meet expectations.
ARM, whose technology can be found in the vast majority of the
world's smartphones including those made by Apple Inc., recorded
net profit of GBP85 million ($126.7 million) for the three months
to March 31, compared with GBP62.3 million a year earlier. Revenue
rose 22% to GBP227.5 million, beating analysts' projection of
GBP224.1 million.
Shares in ARM, which makes money by licensing its designs to
chip makers, then collecting royalty revenue when the chips ship,
were up by more than 5% at 0725 GMT.
Processor-royalty revenue in dollar terms, a much-watched
figure, rose 31% on the year, the company said, adding that it has
signed 30 processor licenses for a broad range of applications.
"As the world becomes more digital and more connected, we
continue to see an increase in the demand for ARM's smart and
energy-efficient technology, which is driving both our licensing
and royalty revenues," said Simon Segars, chief executive.
Processor-licensing revenue was down 2% in the quarter, which
was in line with expectations following strong growth previously,
said Chief Financial Officer Tim Score during a call with
journalists, adding that he expects it to grow in future
quarters.
ARM didn't give a figure for full-year revenue expectations, but
analysts at Citi are predicting revenue of GBP979.6 million.
Consensus estimates on ARM are likely to edge up following the
encouraging royalty performance reported Tuesday, the analysts
said.
Aside from smartphones and tablets, ARM said it is also seeing
demand for its processors to be used for servers and networking and
for the "Internet of Things", a term used for the growing tendency
for more items to be wirelessly connected.
ARM expects to benefit from the growth of the Internet of Things
in areas such as health and in cars, said Mr. Score.
Write to Rory Gallivan at rory.gallivan@wsj.com
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