Operating cash flow to net income ranged from -1.30x to 3.34x and free cash flow margin reached 53.8% in 2027Q1 before falling to 9.0% in 2027Q2, suggesting cash conversion remains highly variable and capital returns have been minimal.
Arm Holdings plc American Depositary Shares (ARM) cash flow statement — 5-year operating, investing & financing cash flows
| Metric | TTM | Mar'26 | Mar'25 | Mar'24 | Mar'23 | Mar'22 |
|---|
| Cash from Operations | 2.09B | 1.52B | 397M | 1.09B | 739M | 458M |
| Operating CF Margin % | - | 30.98% | 9.91% | 33.71% | 27.58% | 16.94% |
| Operating CF Growth % | 9508.75% | 283.88% | -63.58% | 47.5% | 61.35% | - |
| Net Income | 1.04B | 904M | 792M | 306M | 524M | 549M |
| Depreciation & Amortization | 264M | 249M | 183M | 162M | 170M | 185M |
| Stock-Based Compensation | 1.15B | 1.05B | 820M | 1.04B | 79M | 26M |
| Deferred Taxes | -37M | 15M | -218M | -273M | -34M | -76M |
| Other Non-Cash Items | -207M | -94M | 285M | 53M | 73M | -38M |
| Working Capital Changes | -124M | -602M | -1.47B | -195M | -73M | -188M |
| Change in Receivables | -194M | -510M | -743M | -89M | 125M | -219M |
| Change in Inventory | 0 | 0 | 0 | 0 | 0 | 0 |
| Change in Payables | 0 | 0 | 0 | 0 | 0 | 0 |
| Cash from Investing | -220M | -325M | -35M | -516M | -138M | -619M |
| Capital Expenditures | -588M | -575M | -239M | -92M | -93M | -75M |
| CapEx % of Revenue | 11.4% | 11.69% | 5.96% | 2.85% | 3.47% | 2.77% |
| Acquisitions | 45M | 127M | -57M | -32M | -15M | -8M |
| Investments | - | - | - | - | - | - |
| Other Investing | -2M | 39M | 1M | -51M | 0 | 0 |
| Cash from Financing | -751M | -548M | -202M | -208M | -42M | -32M |
| Debt Issued (Net) | 0 | 0 | 0 | 0 | 0 | 50M |
| Equity Issued (Net) | -163M | 74M | 0 | 0 | 0 | 0 |
| Dividends Paid | 0 | 0 | 0 | 0 | 0 | 0 |
| Share Repurchases | -202M | 0 | 0 | 0 | 0 | 0 |
| Other Financing | -588M | -622M | -202M | -208M | -42M | -82M |
| Net Change in Cash | 1.1B | 666M | 162M | 369M | 550M | -210M |
| Free Cash Flow | 1.47B | 979M | 178M | 947M | 646M | 383M |
| FCF Margin % | 28.59% | 19.9% | 4.44% | 29.29% | 24.11% | 14.17% |
| FCF Growth % | 124.35% | 450% | -81.2% | 46.59% | 68.67% | - |
| FCF per Share | 1.37 | 0.92 | 0.17 | 0.91 | 0.63 | 0.37 |
| FCF Conversion (FCF/Net Income) | 1.41x | 1.69x | 0.50x | 3.56x | 1.41x | 0.83x |
| Interest Paid | 0 | 0 | 0 | 0 | 0 | 1M |
| Taxes Paid | 0 | 0 | 0 | 188M | 159M | 141M |
Quick answers to the most common questions about buying ARM stock.
Arm Holdings plc American Depositary Shares (ARM) generated $1.52B in net cash from operating activities in 2026. This reflects the cash generated directly from core business operations.
Arm Holdings plc American Depositary Shares (ARM) generated $979.0M in free cash flow in 2026. Free cash flow is the cash left over after capital expenditures, which can be used to pay dividends, repurchase shares, or pay down debt.
Arm Holdings plc American Depositary Shares (ARM) spent $575.0M on capital expenditures in 2026. CapEx represents the cash invested in physical assets like property, plant, and equipment to maintain or grow the business.
Key Metrics
Top Statement Risk
Volatile quarterly operating cash flow
Earnings Backed Unevenly by Operating Cash
Based on reported figures, ARM's operating cash flow to net income ratio swung from -1.30x in 2025Q1 to 3.34x in 2027Q1, indicating cash conversion has been highly erratic rather than steadily tracking reported earnings over the ten quarters shown.
The wide dispersion in OCF/NI suggests reported net income and actual cash generation are timing-mismatched, with working capital swings (such as -$726M in 2025Q1 and +$389M in 2027Q1) doing much of the work. Over the full window the cumulative operating cash flow appears to exceed cumulative net income, which may indicate that earnings are not overstated, though the quarter-to-quarter noise warrants further investigation before drawing firm quality-of-earnings conclusions. Investors should monitor whether conversion normalizes toward a stable range as working capital movements reverse.
Free Cash Flow Margins Swing Sharply
As reported in the quarterly statements, ARM's free cash flow margin ranged from -34.9% in 2025Q1 to a peak of 53.8% in 2027Q1, with the most recent 2027Q2 reading at 9.0%, showing that cash generation remains highly variable.
The trajectory points to free cash flow being driven more by working capital timing than by a stable underlying earnings base, since the margin path does not track the steadier revenue growth. The recent compression to 9.0% in 2027Q2 after the strong prior quarter may suggest a reversal of favorable timing rather than a structural shift. Analysts should weigh trailing-period averages rather than single-quarter readings when assessing sustainable free cash generation.
Cash Retained Rather Than Returned
Based on reported figures, ARM recorded no dividend payments across the ten quarters, with buybacks appearing only in 2026Q1 and 2026Q2 at -$85M and -$202M, meaning capital returns have been minimal relative to cash generated.
The absence of dividends combined with sporadic repurchases suggests management is retaining cash for reinvestment in R&D and strategic acquisitions, consistent with the high engineering cost base described in prior analysis. Acquisition outflows were generally small in most quarters, which may indicate limited reliance on inorganic growth to date. Whether retained cash is deployed productively will depend on future return on invested capital, which investors should monitor.
Light Capital Intensity With Episodic Spikes
According to reported quarterly figures, ARM's capital expenditure as a share of revenue ran between roughly 3% and 15%, with the highest intensity of 15.3% in 2027Q1, indicating capex is modest on average but lumpy.
Given that ARM is an IP licensor without manufacturing operations, capex levels in the 3% to 6% range appear consistent with ongoing infrastructure and tooling needs, while the spikes above 14% may reflect periodic investments in development systems or facilities. Depreciation and amortization of roughly $44M to $81M per quarter sits well below capex in the higher-spend quarters, which may indicate a growing asset base. Investors should monitor whether elevated capex persists as data center exposure expands.
Stock Compensation Masks Cash Cost
As reported in the statements, stock-based compensation ran between $193M and $376M per quarter, which is a large non-cash charge that flatters operating cash flow relative to the economic cost of employee pay.
Because SBC is added back to reach operating cash flow, a substantial share of ARM's cash generation may reflect equity issued to engineers rather than cash retained from the business. In several quarters SBC approached or exceeded reported free cash flow, which suggests the economic cash burden of talent may be understated by headline FCF. Analysts should consider SBC-adjusted free cash flow to assess the true cash return available to shareholders.