ARM Q3 Profit Climbs; Sees Q4 Revenues In-line With Market View

(RTTNews) - Chipmaker ARM Holdings Plc. (ARM.L, ARMH) reported Tuesday higher profit in its third quarter, boosted by improved performance in both licensing and royalty segments, despite weak margins. For the fourth quarter, the company expects revenues in dollar terms to be in-line with market estimates.

For the third quarter, pre-tax profit on IFRS basis increased to 79.2 million pounds from 68.3 million pounds last year.

IFRS earnings per share improved to 4.57 pence from 3.44 pence in the previous year. Earnings were 22.24 cents per ADS, compared with 16.72 cents per ADS last year.

Normalized profit before tax, which excluded certain items, grew 9 percent to 101.2 million pounds from 92.6 million pounds last year. Normalized earnings per share were 5.92 pence, versus 5.11 pence a year ago.

The company generated revenues of 195.5 million pounds in the quarter, 6 percent higher than last year's 184.0 million pounds. In US dollar terms, revenues improved 12 percent to $320.2 million.

In the quarter, total technology licensing revenue climbed 16 percent year-over-year to $142.5 million, with a 13 percent rise in processor licensing revenue and 33 percent jump in Physical IP revenue.

Total technology royalty revenue grew 9 percent with a 11 percent growth in processor royalty revenue, partly offset by weak physical IP revenue.

ARM also recorded 11 percent rise in revenues from software and tools.

Chief Executive Officer Simon Segars said, "Q3 has seen accelerating royalty revenue growth and strong demand for our processors and physical IP. We have seen encouraging license momentum and design activity throughout our customer base, with more Partners choosing to deploy ARMv8-A architecture in multiple end markets."

Looking ahead, ARM said it enters the final quarter of 2014 with a robust opportunity pipeline that points to both strong licence revenues in the fourth quarter and a sequential increase in order backlog.

With market data underpinning the short-term outlook for royalty revenues, the company expects group dollar revenues for the fourth quarter to be in-line with market expectations of about $350 million.

In London, ARM shares are gaining 16.50 pence or 1.94 percent, and trading at 868 pence.