Revenue growth of 20.1% in 2026Q4 and gross margins consistently above 93% highlight the company's high-margin intellectual property licensing model.
| Sales/Revenue | 4.92B | 4.01B | 3.23B | 2.68B | 2.7B |
| Revenue Growth % | 22.79% | 23.94% | 20.68% | -0.89% | - |
| Cost of Goods Sold | 370M | 206M | 234M | 195M | 220M |
| COGS % of Revenue | 7.52% | 5.14% | 7.24% | 7.28% | 8.14% |
| Gross Profit | 4.55B | 3.8B | 3B | 2.48B | 2.48B |
| Gross Margin % | 92.48% | 94.86% | 92.76% | 92.72% | 91.86% |
| Gross Profit Growth % | 19.71% | 26.74% | 20.73% | 0.04% | - |
| Operating Expenses | 3.64B | 2.97B | 2.9B | 1.81B | 1.8B |
| OpEx % of Revenue | 74.02% | 74.22% | 89.7% | 67.41% | 66.7% |
| Selling, General & Admin | 866M | 965M | 968M | 726M | 858M |
| SG&A % of Revenue | 17.6% | 24.08% | 29.94% | 27.1% | 31.74% |
| Research & Development | 2.78B | 2.01B | 1.93B | 1.08B | 945M |
| R&D % of Revenue | 56.42% | 50.14% | 59.76% | 40.31% | 34.96% |
| Other Operating Expenses | 0 | 0 | 0 | 0 | 0 |
| Operating Income | 908M | 827M | 99M | 678M | 680M |
| Operating Margin % | 18.46% | 20.64% | 3.06% | 25.31% | 25.16% |
| Operating Income Growth % | 9.79% | 735.35% | -85.4% | -0.29% | - |
| EBITDA | 1.16B | 1.01B | 261M | 848.2M | 856.5M |
| EBITDA Margin % | 23.52% | 25.2% | 8.07% | 31.66% | 31.69% |
| EBITDA Growth % | 14.57% | 286.93% | -69.23% | -0.97% | - |
| D&A (Non-Cash Add-back) | 249M | 182.9M | 162M | 170.2M | 176.5M |
| EBIT | 908M | 720M | 212M | 671M | 786M |
| Net Interest Income | 111M | 116M | 110M | 42M | 2M |
| Interest Income | 111M | 116M | 110M | 42M | 2M |
| Interest Expense | 0 | 0 | 0 | 0 | 0 |
| Other Income/Expense | 249M | -107M | 113M | -7M | 106M |
| Pretax Income | 1.16B | 720M | 212M | 671M | 786M |
| Pretax Margin % | 23.52% | 17.97% | 6.56% | 25.05% | 29.08% |
| Income Tax | 253M | -72M | -94M | 147M | 110M |
| Effective Tax Rate % | 21.87% | -10% | -44.34% | 21.91% | 13.99% |
| Net Income | 904M | 792M | 306M | 524M | 549M |
| Net Margin % | 18.37% | 19.77% | 9.46% | 19.56% | 20.31% |
| Net Income Growth % | 14.14% | 158.82% | -41.6% | -4.55% | - |
| Net Income (Continuing) | 904M | 792M | 306M | 524M | 676M |
| Discontinued Operations | 0 | 0 | 0 | 0 | 0 |
| Minority Interest | 0 | 0 | 0 | 0 | 0 |
| EPS (Diluted) | 0.85 | 0.75 | 0.29 | 0.51 | 0.54 |
| EPS Growth % | 13.33% | 158.62% | -43.14% | -5.56% | - |
| EPS (Basic) | 0.85 | 0.75 | 0.30 | 0.51 | 0.54 |
| Diluted Shares Outstanding | 1.07B | 1.06B | 1.04B | 1.03B | 1.03B |
| Basic Shares Outstanding | 1.06B | 1.05B | 1.03B | 1.03B | 1.03B |
| Dividend Payout Ratio | - | - | - | - | - |
Geopolitical and licensing concentration
As reported in recent financial statements, ARM achieved a 20.1% year-over-year revenue growth in 2026Q4, signaling that the transition to the ARMv9 architecture is successfully driving higher royalty capture despite the inherent volatility associated with the company's licensing-heavy business model and its reliance on global semiconductor cycles.
The revenue trajectory appears to be decoupling from simple unit-volume growth, suggesting that the 'Total Compute' strategy is effectively increasing the dollar value per chip. Investors should monitor whether this growth remains durable as the company faces potential saturation in mobile markets and increased competition from open-source alternatives.
Based on the provided income statement data, ARM maintains a robust gross margin profile, peaking at 97.4% in 2026Q2, which underscores the company's unique position as a high-margin intellectual property licensor that faces minimal marginal costs for each additional design deployment across its vast global ecosystem.
This exceptional gross margin reflects the inherent scalability of an IP-based business model compared to traditional semiconductor manufacturers. However, the wide gap between gross and operating margins suggests that the company is heavily reinvesting in R&D to maintain its architectural moat against emerging RISC-V competitors.
According to the latest quarterly figures, ARM's operating margin fluctuated significantly, reaching 29.5% in 2026Q4, which indicates that while the company possesses inherent operating leverage, it is currently prioritizing aggressive R&D spending to secure its long-term competitive position in data center and high-performance computing architectures.
The variability in operating income suggests that management is willing to sacrifice short-term profitability to fund the development of next-generation IP. Analysts should evaluate whether this R&D intensity will eventually yield a permanent step-up in operating margins as these new architectures reach mass-market adoption.
Analysis of the income statement reveals that stock-based compensation has historically acted as a significant drag on GAAP profitability, with figures reaching as high as $265 million in 2026Q2, which complicates the assessment of the company's true underlying earnings power and cash-generating efficiency for shareholders.
The absence of stock-based compensation in the most recent quarter warrants further investigation to determine if this represents a structural change in compensation policy or a temporary reporting anomaly. Investors should remain cautious, as the reliance on equity-based incentives can mask the true cost of maintaining the company's specialized engineering talent.
While the company's growth narrative is compelling, the potential for 'insourcing' by hyperscalers and the geopolitical sensitivity of the Arm China relationship, which contributes roughly 20-25% of revenue, present significant risks that could lead to margin compression if licensing power begins to erode over time.
Short-term revenue spikes driven by lumpy licensing deals may obscure a more challenging environment for long-term royalty growth. If the industry shifts toward proprietary ISA designs, the company's current valuation premium may face downward pressure as the market re-evaluates the durability of its intellectual property moat.
Quick answers to the most common questions about buying ARM stock.
For fiscal year 2026, Arm Holdings plc American Depositary Shares (ARM) reported total revenue of $4.92B. This represents a 82.0% increase compared to $2.70B in 2022.
Arm Holdings plc American Depositary Shares (ARM) is profitable, generating $904.0M in net income for the fiscal year ending 2026 with a net profit margin of 18.4%.
Arm Holdings plc American Depositary Shares (ARM) reported an operating income of $908.0M, resulting in an operating profit margin of 18.5%. This margin reflects the operational efficiency of the business before interest and taxes.
Arm Holdings plc American Depositary Shares (ARM) generated $4.55B in gross profit for the year, representing a gross profit margin of 92.5%. This demonstrates the company's core pricing power and production efficiency.