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Speaker 1: Chip design firm ARM out with earnings for the first

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Speaker 1: time since it returned as a public company. That was

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Speaker 1: back in September. It beat expectations for revenue and adjusted

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Speaker 1: earnings per share in the second quarter. Shares, as you'll see,

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Speaker 1: under pressure at the moment. This is more about the

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Speaker 1: outlook for the company. Best person to speak to about

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Speaker 1: it the m CEO, Renee Has. It is great to

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Speaker 1: have some time with you and you're backtraining. It kind

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Speaker 1: of where you priced on the IPA at the moment,

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Speaker 1: I'm looking at a fifty one twenty at the moment.

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Speaker 1: Tell us a little bit about the ongoing weakness in

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Speaker 1: the industry when it comes to mobile because you've been diversifying,

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Speaker 1: but why is that not bearing fruit in the here

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Speaker 1: and the now?

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Speaker 2: Yeah, thank you, Caroline. You know, we had a record

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Speaker 2: revenue quarter, which we are thrilled about. ARM has never

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Speaker 2: done eight hundred million dollars in a quarter, and we

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Speaker 2: also raised our yearly guidance. So we're very very confident

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Speaker 2: about the outlook going forward. The stock's a little noisy,

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Speaker 2: I think based upon timings and things of that nature,

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Speaker 2: but you know, generally speaking, what we're seeing is our

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Speaker 2: our royalty business has increased three quarters in a row.

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Speaker 2: And what we're hearing from our partners that were in

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Speaker 2: the trough in terms of the overall inventory and getting better,

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Speaker 2: and our licensing business is really strong. So as a result,

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Speaker 2: great quarter and we have raised our yearly guidance.

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Speaker 1: Okay, the context there is clear, and I'm interested about

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Speaker 1: perhaps the AI focus that you've been having. There's been

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Speaker 1: licenses for potentially a bit lumpy at the moment when

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Speaker 1: it comes to companies wanting to deploy your technology within

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Speaker 1: their AI offerings. I'm interested in when that becomes big volumes,

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Speaker 1: when does that become more dependable rising royalties.

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Speaker 2: Do you think yes. I think one of the things

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Speaker 2: we saw this last quarter in terms of our increased

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Speaker 2: licensing activity was companies looking to invest more to address

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Speaker 2: this demand for AI and AI everywhere. I think the

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Speaker 2: general perspective was that you need more and more compute technology.

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Speaker 2: What existing systems today is not good enough. More is needed.

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Speaker 2: So I think across all markets, we're going to see

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Speaker 2: AI find its way into the end product. So for us,

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Speaker 2: you know, seventy percent of the world's population uses ARM.

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Speaker 2: It's literally impossible to do an AI application without us,

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Speaker 2: and we think over the next several years it's going

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Speaker 2: to drive great growth for US and for.

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Speaker 1: That R and D is needed. And I go back

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Speaker 1: to the fact that you sort of said there's noise

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Speaker 1: around the share price. That's kind of the conundrum of

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Speaker 1: being a public company is the fact that you are

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Speaker 1: a business that needs to spend internally, need to innovate,

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Speaker 1: you need to invest, but you've now got these short

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Speaker 1: term goals that in public investors want to see in

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Speaker 1: terms of revenue build in terms of profitability. How are

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Speaker 1: you finding that tension as a publicly traded company with

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Speaker 1: ultimately a more demanding public investor base.

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Speaker 2: Yeah, And as mentioned again, we had record revenue in

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Speaker 2: the quarter. Our licensing business was up over one hundred percent.

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Speaker 2: So what that says is companies are increasingly spending money

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Speaker 2: on developing products that have arm inside. And based upon

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Speaker 2: that and the royalty outlook improving for the year, we

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Speaker 2: did raise our guidance annually. So as I mentioned, we're

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Speaker 2: very very confident about the year ahead. As far as

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Speaker 2: the balance between R and D and meeting goals and

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Speaker 2: things of that nature. It's want something every public company

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Speaker 2: CDEO or even private company CEO has to consider. So

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Speaker 2: I don't think we're in any different bucket there.

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Speaker 3: Welcome to our Bloomberg radio and television audience worldwide. Speaking

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Speaker 3: to ARM CEO, Rene has Yes, the ego Eyede out

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Speaker 3: there would notice, Rene, there's a discrepancy rights in the

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Speaker 3: cautious outlook for the current period and then this kind

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Speaker 3: of full fiscal year boost you had relative to the

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Speaker 3: kind of guidance during the IPO roadshow. What accounts for

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Speaker 3: that discrepancy? Why short term worry but kind of confidence

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Speaker 3: that longer term you're going to start booking, particularly on

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Speaker 3: the licensing side.

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Speaker 2: Yeah. So we've just returned to the public markets, and

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Speaker 2: I think we've got some time to help teach the

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Speaker 2: outer community about how our business works. Our licensing business,

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Speaker 2: the combination of timing and rtable revenue in terms of

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Speaker 2: when we can actually recognize the revenue. We have great

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Speaker 2: visibility into deals. We have great visibility in terms of

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Speaker 2: revenue profile, which is why again we're very very confidence

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Speaker 2: in the year. So inside the quarter, our licensing tends

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Speaker 2: to be lumpy. Something might happen one month versus the next,

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Speaker 2: But in the main, we're very very confident and have

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Speaker 2: great outlook in terms of when and if those deals

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Speaker 2: will close.

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Speaker 3: Rene ARM is still mostly a smartphone story, highly cyclical,

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Speaker 3: low margin market. You may gains in data center in auto.

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Speaker 3: Can you tell us when ARM will stop being mostly

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Speaker 3: a smartphone story?

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Speaker 2: I think I can tell you that today in terms

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Speaker 2: of mostly we were probably sixty percent of our revenues

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Speaker 2: prior to the acquisition, maybe more. We're tied to smartphones

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Speaker 2: today it's less than half, so we are not mostly

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Speaker 2: a smartphone company anymore. Our royalty revenues in the last

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Speaker 2: quarter we're up twenty percent in cloud out in twenty

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Speaker 2: percent up in automotive, So we have greatly, greatly diversified,

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Speaker 2: and that's really a combination of both a very very

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Speaker 2: focused strategy to do so and the pull and demand

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Speaker 2: for armed technology driven by power efficiency. These megawatt data

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Speaker 2: centers cannot afford to add more and more energy. At

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Speaker 2: the same time, your automobile running off a battery, it's

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Speaker 2: a computer on wheels, needs to be very very efficient

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Speaker 2: as well. So the trends are in our favor, and

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Speaker 2: we've also made the investment in the specific products. So

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Speaker 2: as a result, we're seeing very very strong growth across

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Speaker 2: these other businesses, and I think you can say that

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Speaker 2: today we're not a smartphone company.

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Speaker 1: Thirty seconds left Renee, which is always a joy for

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Speaker 1: Sere to hear. But I'm interested in London listing anytime soon.

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Speaker 2: London listening anytime. So nothing that I can talk about

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Speaker 2: specifically today. Know something we're considering down the road, but

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Speaker 2: nothing specific I can tell you today.

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Speaker 3: I'm CEO, Rene Hass. Thank you for joining us.

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Speaker 2: Thank you so much.