21st Apr 2015 07:40
LONDON (Alliance News) - ARM Holdings PLC Tuesday reiterated it expects to "at least" meet current market expectations for dollar revenue in 2015, as it posted a rise in pretax profit in the first quarter of the year driven by strong growth in mobile chip demand.
The chip designer posted a pretax profit of GBP103.4 million, up from GBP78.0 million in the first quarter of 2014, as revenue grew to GBP227.5 million from GBP186.7 million.
Within this, dollar licence revenue was up 3%. It signed thirty processor licences during the first quarter, including four licences for processors based on its higher royalty ARMv8-A architecture.
The company continues to expect licence revenue growth of 5 to 10% a year in the medium term, but its order backlog at the end of the quarter was down around 7% sequentially. Based on its medium term outlook for licence revenue growth, it expects quarterly sequential movements of its order backlog to be lumpy.
Dollar royalty revenue was up 28% as shipments or ARM processor-based chips rose 31%, as it saw an increase in the number of chips going into mobile devices, and a strong comparator due to inventory correction in the first half of 2014. The number of ARM-based chips shipped into embedded applications, such as micro-controllers and smartcards, were up 40% compared to the previous year.
The company said that industry data for the first quarter, being the shipment period for its second quarter royalties, indicates a decrease in industry-wide revenues that is broadly consistent with normal seasonality. It expects its second quarter dollar revenue to be in line with current market expectations.
ARM said it expects to benefit from higher royalty percentage per chip from handset manufacturers launching smartphones and tablets using its ARMv8-A and Mali graphics processors compared with previous generations of devices. Production of these smartphones and tablets will ramp up in the second half of the year.
"As the world becomes more digital and more connected, we continue to see an increase in the demand for ARM's smart and energy-efficient technology, which is driving both our licensing and royalty revenues," said Chief Executive Officer Simon Segars in a statement.
Shares in ARM are trading up 4.2% at 1,198.31 pence Tuesday morning, the biggest gainer on the FTSE 100.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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