Message from Arm CEO—SoftBank Group Report 2026

Arm is the world’s most pervasive compute platform, providing the foundational technology that powers billions of devices across smartphones, data center servers, automotive systems and IoT products. At the core of our success is a highly scalable business model, built on licensing our technology designs and earning royalties on every chip that incorporates Arm-based CPUs.

Arm has two main revenue streams. Customers pay an upfront license fee to access Arm’s technology and develop their own chips, and Arm earns a royalty on each chip shipped. Given the long development cycles of semiconductors, license revenues today create a highly predictable stream of future royalties, with many chips remaining in production for a decade or more.

The business growth of this model is driven by the expansion of semiconductor markets, Arm’s increasing share, and rising chip complexity, which drives greater use of Arm technology per device. As workloads become more demanding—particularly with the growth of AI—customers are adopting more advanced Arm technology, such as Armv9, as well as Arm Compute Subsystems (CSS), which combine multiple Arm technologies, both of which support higher royalty per chip over time.

Building on this foundation, Arm has entered a new phase of its strategy. In fiscal 2025, we expanded our business model to include the development and sale of complete chips, starting with the Arm AGI CPU, a data center CPU for AI workloads. This reflects a natural evolution of our platform, as some customers increasingly seek fully integrated solutions from Arm.

Arm delivered another year of strong performance in fiscal 2025, reflecting continued momentum across our key end markets and increasing adoption of our latest technologies. In fiscal 2025, Arm achieved record revenue of $4,920 million, growing 22.8% year-on-year, driven by both royalty revenue and license and other revenue growth.

Royalty revenue grew 20.5% year on year to $2,613 million, driven by end-market demand, share gains, and increased content per chip. The transition from Armv8 to Armv9 remained a key driver, with Armv9 commanding significantly higher royalty rates. Adoption of CSS also accelerated, particularly in high-performance applications, further increasing royalty per chip. License and other revenue increased 25.4% year on year to $2,307 million, supported by strong demand for next-generation chip designs and multi-year agreements as customers aligned with Arm’s roadmap for AI-enabled computing. The continued shift toward subscription-based licensing models, such as Arm Total Access, also contributed to improved visibility and long-term growth.

Growth was broad-based within end markets. In smartphones and consumer devices, demand was supported by increasing AI integration at the edge. In cloud computing, Arm continued to gain share as hyperscalers and enterprise customers deployed Arm-based processors. Automotive also remained a strong growth area, with rising compute requirements in advanced driver-assistance systems and early autonomous applications.

In fiscal 2025, we continued to increase investment in research and development to support our long-term strategy, with R&D expenses rising 42.6% year on year to $1,911 million. This reflected progress in developing next-generation CPU architectures, expanding our CSS portfolio, and introducing our first chip product line. Importantly, much of the required investment for our future roadmap— including our chip strategy—has now been made, positioning us well for operating leverage in the coming years. Despite this increased investment, Arm remains highly profitable, with a gross margin of 98.2% and an operating margin of 43.0%.

Overall, our fiscal 2025 performance reinforces the strength of Arm’s business model and the durability of our growth drivers, positioning us well for sustained long-term growth.

Arm’s growth is increasingly driven by the rapid adoption of AI across three major domains. Each represents a significant and expanding market opportunity, with Arm’s technology playing a central role.