Arm Posts Record Q2: $1.44 Billion Revenue as AGI CPU Target Doubles to $2 Billion

What happened

The results were published on Nov 4 as a letter to shareholders, for the quarter ended Sept 30, 2026. Licensing carried the growth: license and other revenue reached $773 million, up 50% year over year and a record for a second quarter, which Arm calls an important leading indicator of future royalty growth; SoftBank-related technology licensing and design services contributed $209 million, up 17% year over year. The chief financial officer said on the earnings call that licensing revenue came in about $100 million above the company's expectations as customers accelerated long-term commitments to the technology.

Royalties split by segment. Royalty revenue was $670 million, up 8% year over year and below the $707 million analysts expected; data center royalties doubled year over year, physical AI royalties from automotive and robotics grew 50%, and edge AI royalties were roughly flat as rising memory prices continued to depress low- and mid-tier smartphone shipments. Partners shipped more than 10 billion Arm-based chips during the quarter, the first time past 10 billion in a single quarter, up 1.5 billion year over year. Non-GAAP earnings per share were $0.52, up 33% and above the $0.47 expected; GAAP earnings per share were $0.12.

The in-house chip was the other main thread of the call. Arm's AGI CPU, launched in March, has purchase orders from multiple customers running through calendar 2027, with first commercial deliveries on track for the fourth quarter of fiscal 2027. Management said confidence in up to $2 billion of AGI CPU revenue across fiscal 2027 and 2028 has increased over the past 90 days, against the earlier figure of more than $1 billion. The company also guided fiscal third-quarter revenue to $1.54 billion, plus or minus $50 million, about 24% growth at the midpoint and roughly in line with the $1.53 billion consensus. On the market side, chip stocks fell broadly on Nov 5, with the PHLX Semiconductor Index down 8.05% that morning.

Key facts

1. Publisher and date: Arm, after the US close on Nov 4, 2026; Q2 FY2027, ended Sept 30, 2026
2. Total revenue: $1.443 billion, up 27% year over year, a record second quarter, above the $1.38 billion analysts expected
3. License and other revenue: $773 million, up 50% year over year, a record second quarter; SoftBank-related licensing contributed $209 million, up 17%
4. Royalty revenue: $670 million, up 8% year over year, below the $707 million expected; data center royalties doubled, physical AI royalties up 50%, edge AI roughly flat
5. Earnings per share: non-GAAP $0.52, up 33% year over year and above the $0.47 expected; GAAP $0.12
6. Shipments: partners shipped more than 10 billion Arm-based chips in the quarter, the first quarter past 10 billion, up 1.5 billion year over year
7. AGI CPU: launched in March; purchase orders from multiple customers run through calendar 2027; first commercial deliveries on track for Q4 FY2027
8. AGI CPU target: up to $2 billion across FY2027 and FY2028, against the earlier figure of more than $1 billion
9. Guidance: Q3 FY2027 revenue of $1.54 billion, plus or minus $50 million, about 24% growth at the midpoint
10. Market: chip stocks fell broadly on Nov 5, with the PHLX Semiconductor Index down 8.05% that morning