ARM Q2 Profit Climbs; Stock Down

(RTTNews) - Chipmaker ARM Holdings plc. (ARM.L, ARMH) reported Wednesday significant profit growth in its second quarter, benefited by higher revenues mainly processor royalty revenues.

Looking ahead, ARM said it enters the second half of 2015 with a robust pipeline of opportunities for licensing, and that it continues to expect overall Group dollar revenues for full year 2015 to be in-line with current market expectations.

In London, ARM shares were losing around 3.75 percent in the early morning trading at 1,000 pence.

ARM's profit before tax for the second quarter, on an IFRS basis, climbed 39 percent to 94.7 million pounds from 68.0 million pounds last year. IFRS earnings per share improved to 5.42 pence from 3.91 pence in the previous year.

Normalised profit before tax, which excluded certain items, was 123.9 million pounds, compared to 94.2 million pounds in the year ago quarter. Normalised earnings per share were 7.28 pence, compared to 5.43 pence last year.

IFRS operating margin grew to 40.4 percent from 34.9 percent last year, while normalized operating margin improved to 52.3 percent from 49.7 percent a year ago.

Revenues for the quarter grew 22 percent to 228.5 million pounds from 187.1 million pounds in the previous year. In dollar terms, revenues improved 15 percent to $357.1 million from $309.6 million a year ago.

Total technology licensing revenues grew 3 percent, with 3 percent increase in processor licensing revenue and 6 percent increase in Physical IP revenues.

Total technology royalty revenues climbed 30 percent to $175.9 million, representing 49 percent of Group revenues. The revenues reflected a 31 percent growth in processor royalty revenue and an 18 percent increase in Physical IP revenues.

Further, the company said its directors declared an interim dividend of 3.15 pence per share, an increase of 25 percent over last year, to be paid October 5 to shareholders of record on September 4.

Simon Segars, Chief Executive Officer, said, "Q2 2015 has been a strong quarter for ARM ….. ARM has been investing in advanced technology products for mobile devices, automotive applications and enterprise infrastructure, and in Q2 ARM signed licences for many of these new products. This licensing activity will help to grow the royalty revenue opportunity for years to come."