ARM announces record Q4 earnings, but royalty revenues not so strong

ARM has announced its fourth quarter results and figures for the full year of 2013, with the company declaring record earnings for the quarter.

Q4 saw revenue of £189 million – which the company noted was 3 per cent above analyst expectations – and earnings per share were up 30 per cent year-on-year.

The slightly shakier news was that while royalty revenues again set a record for the quarter, and were up 7 per cent, that was actually less than analysts had forecast (and a fair bit down year-on-year – it stood at a very healthy 19 per cent increase last year).

ARM noted that royalty revenues were “up less than previous quarters due to wider industry weakness especially in the sales of chips into premium smartphone and tablets.”

Sales of premium handsets such as the iPhone and Galaxy S4 are indeed suffering. Apple and Samsung have both reported slower than expected sales over the Christmas period – Cupertino might still have shifted a record number of iPhones, but it was less than that all-important expected number.

The fact of the matter is that these days, mid-to-lower-end phones are becoming increasingly impressive and tempting, with budget efforts like the Moto G cutting few corners to get the price right down.

ARM also hit a record fiscal performance for the full year of 2013, with an annual revenue that was ahead of market expectations at £714 million, and a faster growth rate than 2012. Earnings per share were up 40 per cent.

The company also noted a bright outlook for 2014, with a “strong opening order backlog” coupled with a “healthy pipeline of licensing opportunities.”

CEO Simon Segars said: “ARM’s strategy is for our technology to continue to gain share in long‐term growth markets, such as smartphones, tablets, enterprise equipment and embedded computing, and to increase the royalty percentage ARM receives from each device.”

“ARM saw good progress in Q4 as our latest technology was chosen by major companies in all our target markets, with further licenses signed for our latest ARMv8‐A processors, Mali graphics processors and physical IP technology. These design wins will help to drive ARM’s future royalty revenues.”