ARM 2Q Net Profit Rises on Higher Chip Shipments, Licensing Revenue

By Simon Zekaria

LONDON--Computer-chip designer ARM Holdings PLC (ARM.LN) Wednesday reported a rise in second-quarter profit on higher revenue boosted by higher chip shipments and licensing revenue.

The Cambridge, U.K.-based company said net profit in the three months to June 30 rose to 77.1 million pounds ($120 million) from GBP55.5 million in the same period a year earlier. Revenue rose 22% year-over-year to GBP228.5 million, lower than a consensus market forecast of GBP234.5 million.

In U.S. dollar terms, the group said it expects full-year revenue in line with market expectations, assuming macroeconomic uncertainty doesn't further impact consumer spending.

"[The second quarter] has been a strong quarter for ARM," Chief Executive Officer Simon Segars said.

The company said it recommends raising its interim dividend 25% to 3.15 pence a share.

ARM designs the chips found in 95% of all smartphones. It earns licensing fees from chip manufacturers such as Qualcomm Inc. (QCOM) and Nvidia Corp. (NVDA) and royalties on every chip shipped. The company's revenue often lags the market, because nearly half of its business comes from royalties.

ARM shares closed Tuesday at 1,039 pence, valuing the company at GBP14.6 billion.

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