A conference call discussing these results will be audiocast today at 08:30 BST at www.arm.com/ir
CAMBRIDGE, UK, 27 April 2011—ARM Holdings plc announces its unaudited financial results for the first quarter ended 31 March 2011. ARM continues to see its technology chosen by leading companies for a broad range of end markets, helping to deliver our highest-ever revenues and profits.
Q1 2011 – Financial Summary
Normalised*
IFRS
Q1 2011
Q1 2010
% Change
Q1 2011
Q1 2010
Revenue ($m)
185.5
143.3
29%
185.5
143.3
Revenue (£m)
116.0
92.3
26%
116.0
92.3
Operating margin
42.5%
40.0%
25.0%
27.3%
Profit before tax (£m)
50.8
37.6
35%
30.5
25.9
Earnings per share (pence)
2.73
2.04
34%
1.57
1.47
Net cash generation**
62.9
43.8
Effective revenue fx rate ($/£)
1.60
1.55
Progress on key growth drivers in Q1
Growth in adoption of ARM® processor technology
39 processor licenses signed for all target end markets
Broadcom and LG Electronics both sign subscription licenses, enabling access to a wide range of ARM’s processors for use across multiple end markets
Several major semiconductor companies developing chips for set-top-box and digital TV applications licensed ARM technology, for the first time in this application area
Long-term strategic agreements deliver further growth in order backlog
Growth in mobile applications
1.15 billion ARM-processor based chips shipped into mobile devices, including smartphones and tablets
Growth beyond mobile into consumer electronics and embedded products
0.7 billion ARM-processor based chips shipped into a broad range of end applications, including digital TVs, disk drives and microcontrollers
Growth in outsourcing of new technology
Physical IP: 3 Processor Optimization Packs licenses signed for Cortex™-A family processors, further increasing the royalty opportunity from high-value chips in mobile computers and smartphones
Graphics: 7 licenses signed for Mali™, ARM’s advanced graphics processor family
Warren East, Chief Executive Officer, said:
“Influential market leaders are licensing ARM technology to gain access to a growing ecosystem of operating systems, software applications, tools and service providers. Many of these companies have been ARM licensees for many years, and are now deploying ARM technology across a multitude of applications; in mobile, consumer electronics and embedded devices.
This licensing drives ARM’s long-term royalty opportunity. Shipments of ARM-processor based chips increased 33% on the same period last year driven by growth in smartphones, tablets, digital TVs and microcontrollers. ARM’s revenue growth enables us to continue to invest in innovative technology development at the same time as delivering strong increases in profits and cash flow.”
Outlook
ARM has made an encouraging start to 2011 with more leading companies choosing to deploy ARM technology in their products. Looking forward, we anticipate normal seasonality for royalty revenues in the second quarter and, notwithstanding the current uncertainty as to the economic impact of the Japanese earthquake on the semiconductor industry supply chain and end-product markets, we expect that group dollar revenues for the full-year 2011 will be at least in line with current market expectations.
Q1 2011 – Revenue Analysis
Revenue ($m)***
Revenue (£m)
Q1 2011
Q1 2010
% Change
Q1 2011
Q1 2010
% Change
PD
Licensing
51.3
34.2
50%
32.3
21.8
48%
Royalties
87.9
66.7
32%
54.6
43.2
26%
Total PD
139.2
100.9
38%
86.9
65.0
34%
PIPD
Licensing
12.6
8.8
43%
7.9
5.7
39%
Royalties1
10.7
10.8
-1%
6.6
6.9
-4%
Total PIPD
23.3
19.6
19%
14.5
12.6
15%
Development Systems
13.3
14.8
-10%
8.4
9.7
-13%
Services
9.7
8.0
21%
6.2
5.0
24%
Total Revenue
185.5
143.3
29%
116.0
92.3
26%
1 Includes catch-up royalties in Q1 2011 of $0.6m (£0.4m) and in Q1 2010 of $0.5m (£0.3m).
* Normalised figures are based on IFRS, adjusted for acquisition-related charges, share-based payment costs, restructuring charges, profit on disposal and impairment of available-for-sale investments and Linaro-related charges. For reconciliation of IFRS measures to normalised non-IFRS measures detailed in this document, see notes 4.1 to 4.12.
** Net cash generation is defined as movement on cash, cash equivalents, short-term investments and marketable securities, adding back share buybacks, dividend payments, investment and acquisition consideration, restructuring payments, other acquisition-related payments, share-based payroll taxes and Linaro-related charges, and deducting inflows from share option exercises and proceeds from investment disposals – see notes 4.7 to 4.10.
*** Dollar revenues are based on the group’s actual dollar invoicing, where applicable, and using the rate of exchange applicable on the date of the transaction for invoicing in currencies other than dollars. Approximately 95% of invoicing is in dollars.