ARM reports strong results


01-02-2011

ARM Holdings plc announces its unaudited financial results for the fourth quarter and full year ended 31 December 2010. ARM continues to gain share as market leaders adopt ARM technology for a broadening range of end-markets, increasing ARM’s long-term royalty opportunity.

Q4 Financial Summary

Normalised*

IFRS

 

Q4 2010

Q4 2009

% Change

 

Q4 2010

Q4 2009

 

Revenue ($m)

179.6

140.0

28%

179.6

140.0

 

Revenue (£m)

113.9

85.2

34%

 

113.9

85.2

 

Operating margin

41.1%

37.3%

 

 

30.1%

23.0%

 

Profit before tax (£m)

47.6

32.3

47%

 

34.9

20.1

 

Earnings per share (pence)

2.90

1.79

62%

 

2.19

1.32

 

Net cash generation (£m)**

40.7

30.7

 

 

 

 

 

Effective revenue fx rate ($/£)

1.58

1.64

 

 

 

 

 

FY Financial Summary

 

Normalised*

IFRS

FY 2010

FY 2009

% Change

 

FY 2010

FY 2009

Revenue ($m)

631.3

489.5

29%

631.3

489.5

Revenue (£m)

406.6

305.0

33%

 

406.6

305.0

Operating margin

40.4%

31.2%

 

 

26.3%

15.0%

Profit before tax (£m)

167.4

96.8

73%

 

110.0

47.3

Earnings per share (pence)

9.34

5.45

71%

 

6.36

3.11

Net cash generation (£m)**

179.9

86.1

 

 

 

 

Effective revenue fx rate ($/£)

1.55

1.60

 

 

 

 

                 

Progress on key growth drivers in Q4

· Growth in adoption of ARM processor technology

o 35 processor licenses signed for a range of applications including smartphones, mobile computers, servers and smartcards

o Microsoft announced that future generations of Windows operating system will support ARM-based chips

o NVIDIA licensed both Cortex-A15 and the next-generation ARM architecture for

computing markets

o Strong licensing drives a 35% sequential increase in order backlog

· Growth in mobile applications

o 1.1 billion ARM-processor based chips shipped into mobile devices

· Growth beyond mobile into consumer electronics and embedded products

o 0.7 billion ARM-processor based chips shipped into everything from smart-meters to solid-state drives

· Growth in outsourcing of new technology

o Physical IP: Freescale became ARM’s first subscription licensee for physical IP at an advanced technology node; and a foundry licensed a royalty-bearing platform of physical IP.

o Graphics: 8 licenses for Mali, ARM’s advanced graphics processor


Warren East, Chief Executive Officer, said: "ARM continues to sign licenses with influential market leaders in an increasingly digital world, and as the industry chooses ARM technology in a broadening range of electronic products, it further drives our long-term royalty opportunity. The growth in licensing and royalty revenues, throughout 2010, has combined to deliver our highest ever annual revenues, profits and cash generation.

"2011 will bring exciting opportunities and challenges as ARM enters competitive new markets and we are well positioned to succeed with leading technology, an innovative business model and a thriving ecosystem of partners."

 

Outlook
It is generally expected that, after a strong recovery in 2010, the semiconductor industry will see more typical growth levels in 2011.  With ARM well positioned to continue to gain share, we expect group dollar revenues for the full-year to be at least in line with market expectations.



Q4 2010 – Revenue Analysis

 

Revenue ($m)***

 

Revenue (£m)

 

Q4 2010

Q4 2009

% Change

 

Q4 2010

Q4 2009

% Change

PD

 

 

 

 

 

 

 

Licensing

53.8

35.7

51%

 

34.0

21.5

58%

Royalties

81.9

63.5

29%

 

52.0

38.4

36%

Total PD

135.7

99.2

37%

 

86.0

59.9

44%

PIPD

 

 

 

 

 

 

 

Licensing

11.6

9.2

26%

 

7.4

5.8

29%

Royalties1

12.0

11.1

8%

 

7.6

6.7

12%

Total PIPD

23.6

20.3

16%

 

15.0

12.5

20%

Development Systems

11.6

12.7

-9%

 

7.4

7.9

-6%

Services

8.7

7.8

12%

 

5.5

4.9

13%

Total Revenue

179.6

140.0

28%

 

113.9

85.2

34%


Q4 2010 – Revenue Analysis

 

Revenue ($m)***

 

Revenue (£m)

 

Q4 2010

Q4 2009

% Change

 

Q4 2010

Q4 2009

% Change

PD

 

 

 

 

 

 

 

Licensing

53.8

35.7

51%

 

34.0

21.5

58%

Royalties

81.9

63.5

29%

 

52.0

38.4

36%

Total PD

135.7

99.2

37%

 

86.0

59.9

44%

PIPD

 

 

 

 

 

 

 

Licensing

11.6

9.2

26%

 

7.4

5.8

29%

Royalties1

12.0

11.1

8%

 

7.6

6.7

12%

Total PIPD

23.6

20.3

16%

 

15.0

12.5

20%

Development Systems

11.6

12.7

-9%

 

7.4

7.9

-6%

Services

8.7

7.8

12%

 

5.5

4.9

13%

Total Revenue

179.6

140.0

28%

 

113.9

85.2

34%

1 Includes catch-up PIPD royalties in Q4 2010 of $0.4m (£0.2m) and in Q4 2009 of

$0.8m (£0.5m).

FY 2010 – Revenue Analysis

 

Revenue ($m)***

 

Revenue (£m)

 

FY 2010

FY 2009

% Change

 

FY 2010

FY 2009

% Change

PD

 

 

 

 

 

 

 

Licensing

166.9

128.2

30%

 

105.9

76.5

39%

Royalties2

291.5

208.1

40%

 

189.4

132.5

43%

Total PD

458.4

336.3

36%

 

295.3

209.0

41%

PIPD

 

 

 

 

 

 

 

Licensing

41.3

35.9

15%

 

26.6

22.0

21%

Royalties1

43.8

36.2

21%

 

28.3

22.9

23%

Total PIPD

85.1

72.1

18%

 

54.9

44.9

22%

Development Systems

55.4

51.6

7%

 

36.0

32.9

9%

Services

32.4

29.5

10%

 

20.4

18.2

12%

Total Revenue

631.3

489.5

29%

 

406.6

305.0

33%

1 Includes catch-up PIPD royalties in FY 2010 of $1.8m (£1.1m) and in FY 2009 of

$5.0m (£2.6m).
2 Includes catch-up PD royalties in FY 2010 of $9.0m (£6.2m).

Notes

*

Normalised figures are based on IFRS, adjusted for acquisition-related, share-based payment costs and restructuring charges, profit on disposal and impairment of available-for-sale investments and Linaro-related charges. For reconciliations of IFRS measures to normalised non-IFRS measures detailed in this document, see notes 6.1 to 6.16.

**

Before dividends and share buybacks, net cash flows from share option exercises, disposals of available-for-sale investments, investment and acquisition consideration and other items excluded from normalised profits – see notes 6.8 to 6.12.

***

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.

 See: http://www.arm.com/about/newsroom/arm-holdings-plc-reports-results-for-the-fourth-quarter-and-full-year-2010.php

CONTACTS:      
Sarah West/Daniel Thöle
Brunswick
+44 (0)207 404 5959

 

Tim Score/Ian Thornton
ARM Holdings plc
+44 (0) 1223 400400
 

 

 

 

 

 

 

ARM is at the heart of the world’s most advanced digital products. Our technology enables the creation of new markets and transformation of industries and society.

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