Arm Q2 FY2027 earnings review

Revenue rose 27% to $1,443M and beat consensus by 5%.

Arm Holdings · Q2 FY2027 · Published Nov 4, 2026 · By DeepCell AI · Sources

Arm Q2 FY2027 earnings review

Quarter ended September 30, 2026

For information only, not investment advice. No rating or price target.

Built with DeepCell / deepcell.net

1 · Arm (ARM) Q2 FY2027 earnings review

Revenue rose 27% to $1,443M and beat consensus by 5%

  1. 1.Revenue of $1,443M was 4.6% above the MarketBeat consensus
  2. 2.Non-GAAP EPS of $0.52 beat the $0.48 consensus
  3. 3.License revenue rose 50%; royalties rose 8%
  4. 4.GAAP net income fell 45% to $130M
  5. 5.Q3 guide: revenue $1,490M to $1,590M; EPS $0.56 midpoint
  6. 6.Shares fell 4.1% after hours from the $191.80 Nov 4 close

Note: After-hours price is at 4:28 PM ET, not a close. Consensus is from MarketBeat and TipRanks; no LSEG figure was found.Source: Arm Form 6-K shareholder letter, Nov 4, 2026; MarketBeat consensus, Nov 4, 2026; Yahoo Finance prices, Nov 3–4, 2026

2

2 · Executive summary

Q2 revenue beat consensus by 4.6% and non-GAAP EPS by 8%

Q2 FY2027 results vs. consensus (MarketBeat, Nov 4; TipRanks preview)

MetricActualConsensusVarianceResult
Revenue (MarketBeat)$1,443M$1,380M+$63M / +4.6%Beat
Non-GAAP EPS (MarketBeat)$0.52$0.48+$0.04 / +8.3%Beat
Revenue (TipRanks)$1,443M$1,380M+$63M / +4.6%Beat
Non-GAAP EPS (TipRanks)$0.52$0.48+$0.04 / +8.3%Beat

Share price, Nov 3–4, 2026 (Yahoo Finance)

Arm (Nasdaq)Nov 3 closeNov 4 closeNov 4 after-hoursAfter-hours move
ARM$202.49$191.80$184.00-4.1%

After-hours price at 4:28 PM ET, Nov 4: after-hours, not a close. Move is versus the Nov 4 close.

Note: Consensus figures are rounded to $1.38B and $0.48 by both providers. GAAP diluted EPS was $0.12.Source: Arm Form 6-K shareholder letter, Nov 4, 2026; MarketBeat, Nov 4, 2026; TipRanks preview; Yahoo Finance prices

3

3 · Q2 results vs. consensus

Q3 revenue guide midpoint of $1,540M is 7% above Q2, a solid outlook

Q3 FY2027 guidance (shareholder letter, Nov 4, 2026)

MetricLowHighMidpointvs. Q2 FY2027
Revenue ($M)$1,490M$1,590M$1,540M+6.7%
Non-GAAP opex, about ($M)$825M+6.6%
Non-GAAP EPS ($)$0.52$0.60$0.56+7.7%

Q2 FY2027 guidance vs. results

MetricGuidanceResultDifference
Revenue ($M)$1,380M$1,443M+4.6%
Non-GAAP opex ($M)$780M$774M-0.8%
Non-GAAP EPS ($)$0.47$0.52+10.6%

Note: Arm gives quarterly guidance only. No Q3 consensus from a named provider was verified, so guidance is not scored.Source: Arm Form 6-K shareholder letter, Nov 4, 2026; analysis of company data

4

4 · Q3 FY2027 outlook

Non-GAAP operating income rose 37% to $638M, while GAAP profit fell

  1. License drove growthLicense and other revenue rose 50% to $773M.
  2. Royalties grew slowlyRoyalty revenue rose 8%, held back by the smartphone market.
  3. GAAP profit fellGAAP net income was $130M, against $238M a year ago.

Key figures

$M unless notedQ2 FY2026Q2 FY2027YoY
Total revenue$1,135M$1,443M27.1%
Non-GAAP operating income$467M$638M36.6%
GAAP operating income$163M$201M23.3%
Non-GAAP net income$417M$566M35.7%
Non-GAAP diluted EPS$0.39$0.5233.3%

Note: The prior-year GAAP profit included a $131M gain on a divestiture.Source: Arm Form 6-K shareholder letter, Nov 4, 2026; analysis of company data

5

5 · Q2 key financials

6 · Revenue by type

7 · Revenue bridge

Annualized contract value rose 12% to $1,790M, a healthy base

Key operating metrics

Q2 FY2027

MetricQ2 FY2027YoY
Annualized contract value ($M)$1,790M+11.9%
Data center royalty revenue+100.0%
Physical AI royalty revenue+50.0%
Arm-based chips shipped (B), over10+1.5B
Arm sees AGI CPU revenue of up to $2.0B across FY27–FY28

Note: Data center and physical AI growth are given only as rates; data center royalties roughly doubled.Source: Arm Form 6-K shareholder letter, Nov 4, 2026; analysis of company data

8

8 · Licensing and royalty KPIs

Share-based pay of $377M explains most of the gap to non-GAAP profit

GAAP to non-GAAP operating income

$M, Q2 FY2027

$M · GAAP operating income: $201M$M · Share-based pay: $377M$M · Employer taxes: $48M$M · Acquisition costs: $12M$M · Non-GAAP op. income: $638MGAAP operatingincomeShare-basedpayEmployer taxesAcquisitioncostsNon-GAAP op.income$0M$200M$400M$600M$700M$201M$377M$48M$12M$638M
Share-based pay rose to $377M from $265M

Note: Employer taxes are payroll taxes on share-based pay, net of recharges.Source: Arm Form 6-K shareholder letter, Nov 4, 2026; analysis of company data

9

9 · GAAP to non-GAAP profit

Non-GAAP operating margin rose 307 bps to 44.2%, a strong gain

Margins to revenue

%, Q2 FY2026 vs. Q2 FY2027

Gross margin · Q2 FY26: 97.4%Gross margin · Q2 FY27: 97.1%GAAP operating margin · Q2 FY26: 14.4%GAAP operating margin · Q2 FY27: 13.9%Non-GAAP operating margin · Q2 FY26: 41.1%Non-GAAP operating margin · Q2 FY27: 44.2%Q2 FY26Q2 FY270%25%50%75%100%97.4%97.1%14.4%13.9%41.1%44.2%
GAAP operating margin fell 43 bps to 13.9%

Note: Non-GAAP operating margin is non-GAAP operating income divided by revenue.Source: Arm Form 6-K shareholder letter, Nov 4, 2026; analysis of company data

10

10 · Margin analysis

Free cash flow fell 73% to $110M, a weak cash quarter

Operating cash flow to free cash flow

$M, Q2 FY2027

$M · Operating cash flow: $207M$M · Property, equipment: -$72M$M · Intangibles: -$5M$M · Intangible payments: -$20M$M · Free cash flow: $110MOperating cashflowProperty,equipmentIntangiblesIntangiblepaymentsFree cash flow$0M$50M$100M$150M$200M$250M$207M-$72M-$5M-$20M$110M
TTM free cash flow was $1,096M

Note: TTM is trailing twelve months. Free cash flow is Arm’s non-GAAP measure, after intangible asset payments.Source: Arm Form 6-K shareholder letter, Nov 4, 2026; analysis of company data

11

11 · Free cash flow

Non-GAAP R&D fell to 38% of revenue from 41%, on faster sales

Cost lines to revenue

%, Q2 FY2026 vs. Q2 FY2027

Non-GAAP R&D · Q2 FY26: 41.1%Non-GAAP R&D · Q2 FY27: 37.9%Non-GAAP SG&A · Q2 FY26: 16.0%Non-GAAP SG&A · Q2 FY27: 15.7%Share-based pay · Q2 FY26: 23.3%Share-based pay · Q2 FY27: 26.1%Q2 FY26Q2 FY270%10%20%30%40%50%41.1%37.9%16.0%15.7%23.3%26.1%
Share-based pay rose to 26% of revenue

Note: Share-based pay is the equity-settled amount in the non-GAAP reconciliation.Source: Arm Form 6-K shareholder letter, Nov 4, 2026; analysis of company data

12

12 · Operating cost ratios

13 · Balance sheet

Q3 guidance needs 7% sequential revenue growth

Indicator
What to watch
Implication
Latest reading
Smartphones
Royalty growth
Memory prices weighed on phone units
Royalties +8.1% YoY
Data center
Royalty mix
Royalties roughly doubled
+100.0% YoY
License timing
Quarterly swings
Large deals drive lumpy revenue
License +50.1% YoY
Cost growth
Margin
Q3 opex guide is $825M
+6.6% vs Q2

Note: These are analytical watch points, not company targets.Source: Arm Form 6-K shareholder letter, Nov 4, 2026; analysis of company data

14

14 · Key risks to guidance

Appendix: licensing and royalty detail

ClaimEvidenceCalculation
Annualized contract value$1,600M to $1,790MKey metrics
License share of revenue45% to 54%Revenue by type
Royalty share of revenue55% to 46%Revenue by type
Arm-based chips shippedOver 10B in the quarterShareholder letter
Physical AI royalties+50.0% YoYShareholder letter
Six-month revenue rose25% to $2,732M6M FY2027

Source: Arm Form 6-K shareholder letter, Nov 4, 2026; analysis of company data

15

15 · Appendix: KPIs

16 · Appendix: Profit detail

17 · Appendix: Cash detail

18 · Appendix: Balance and shares

Appendix: operating expense and non-GAAP detail

GAAP and non-GAAP operating expenses, $M and YoY %

$M unless notedQ2 FY2026Q2 FY2027YoY
GAAP R&D$691M$857M24.0%
GAAP SG&A$252M$343M36.1%
Non-GAAP R&D$466M$547M17.4%
Non-GAAP SG&A$182M$227M24.7%
Non-GAAP opex$648M$774M19.4%

GAAP to non-GAAP operating income, $M

$MQ2 FY2026Q2 FY2027
GAAP operating income$163M$201M
Share-based compensation$265M$377M
Employer taxes on SBC$39M$48M
Acquisition-related$0M$12M
Non-GAAP operating income$467M$638M

Note: Adjustments follow Arm’s own reconciliation in the shareholder letter.Source: Arm Form 6-K shareholder letter, Nov 4, 2026; analysis of company data

19

19 · Appendix: Opex and non-GAAP

Appendix: sources

  • Filing: Arm Form 6-K, Nov 4, 2026 (accepted 4:02 PM ET) — https://www.sec.gov/Archives/edgar/data/1973239/000197323926000141/0001973239-26-000141-index.htm
  • Earnings release, Q2 FY2027 (Ex. 99.1) — https://www.sec.gov/Archives/edgar/data/1973239/000197323926000141/exhibit991fye27q230-sepx26.htm
  • Shareholder letter, Q2 FY2027 (Ex. 99.2) — https://www.sec.gov/Archives/edgar/data/1973239/000197323926000141/exhibit992fye27q230-sepx26.htm
  • Q2 consensus: MarketBeat, Nov 4, 2026 — https://www.marketbeat.com/earnings/reports/2026-11-4-arm-holdings-plc-american-depositary-shares-stock/
  • Q2 consensus check: TipRanks preview — https://www.tipranks.com/news/arm-arm-q2-earnings-preview-what-to-expect-as-ai-chip-demand-tops-2-billion
  • Share price: Yahoo Finance ARM, Nov 3 and Nov 4 closes; Nov 4 after-hours at 4:28 PM ET — https://finance.yahoo.com/quote/ARM/
  • Investor relations results page — https://investors.arm.com/financials/quarterly-annual-results
  • Release: published after the US close on Nov 4, 2026; the 6-K was accepted at 4:02 PM ET.
  • Gaps: no LSEG consensus and no verified Q3 consensus were found.
  • Times are US Eastern. The after-hours price is not a close.

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20

20 · Sources

Important disclosures and disclaimer

For information only. This presentation is provided for information only. It is not investment, legal, tax or accounting advice, and it is not an offer, or a solicitation of an offer, to buy or sell any security.

No recommendation. It carries no rating, price target or buy, sell or hold view, and it was prepared without regard to any reader's investment objectives, financial situation or needs.

Sources and accuracy. Company figures come from Arm Holdings plc's Form 6-K of November 4, 2026 (Exhibits 99.1 and 99.2). Consensus estimates (MarketBeat, TipRanks) and share prices (Yahoo Finance) are third-party data, credited on the sources page. We have not independently verified third-party data.

Basis of presentation. Figures are as reported for the quarters ended September 30, 2026 and 2025, in US dollars. Arm's fiscal year ends March 31.

Forward-looking statements. Company guidance, consensus estimates and the watch items in this deck are forward-looking. They rest on assumptions that may prove wrong, and actual results may differ materially.

Non-GAAP measures. Non-GAAP operating income, net income, EPS and free cash flow follow Arm's own definitions and are reconciled to GAAP in its shareholder letter. They may not be comparable with other companies' measures.

No liability. No liability is accepted for any direct or indirect loss arising from the use of this presentation or its contents.

No affiliation. This presentation is not affiliated with, reviewed or endorsed by Arm Holdings plc. Company and brand names belong to their owners.

How it was made. The deck was built with DeepCell, with figures linked to a model in the file. Readers should check the figures against the original filings.

Date of analysis. The analysis reflects information available shortly after the November 4, 2026 release. The after-hours price is not a close.

Built with DeepCell / deepcell.net

21

21 · Disclosures

Sources

Not investment advice; no rating or price target.

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