A：For the second quarter of fiscal year 2026, the company achieved revenue of $1.14 billion, a 34% year-on-year increase, and marked the third consecutive billion-dollar quarter. Royalty revenue reached a record $620 million, up 21% year on year, while licensing revenue rose 56% to $550 million.

A：In the second quarter, the company announced a strategic partnership with Meta to scale AI efficiency across every layer of compute, from AI-enabled wearables to AI data centers, using a consistent compute platform.

A：The adoption of Arm's compute platform in the data center is significant as access to power has become a bottleneck, driving the deployment of more than 1 billion CPUs based on the platform. It has become a foundation for custom silicon from leading partners and has helped Google to improve price performance and reduce energy usage.

A：As AI chip design becomes more complex, there is an increased demand for Arm's compute subsystems (CSS) to accelerate development cycles and reduce execution risk. This demand is reflected in the signing of three new CSS licenses during the quarter, bringing the total to 19 across 11 companies.

A：The ZoomX CSS platform is the most advanced mobile compute platform, designed to enable rich on-device AI experiences such as real-time translation, image enhancement, and personal assistance. It is expected to be incorporated into flagship devices from companies like Oppo and Vivo later in the year.

A：AI is transforming consumer interaction across several sectors, including smartphones (with Google's Pixel X and the new Tensor G5 chip), automotive (with Tesla's electric vehicle featuring advanced park assists, voice control, and safety features), and vehicles (with Tesla's next-generation AI 5 chips for faster AI performance).

A：AI is shaping the future of computing, with projections for growth from 'milliwatts to megawatts', where Arm delivers performance, efficiency, and scalability. The company continues to invest in R&D to meet the rising demand from customers for advanced compute solutions.

A：The total revenue grew 34% year on year to $1.14 billion, setting a record for the quarter and exceeding the midpoint of the guidance range by $75 million. Royalty revenue grew 21% year on year to $620 million, driven by higher royalty rates and market share gains in smartphones, data centers, and contributions from automotive and IoT sectors.

A：Quarterly licensing revenue varies due to the timing and size of high value deals. ACD, or annualized contract value, is a key indicator of the underlying licensing trend and grew 28% year on year, indicating strong momentum.

A：Non GAAP operating expenses were $648 million, up 31% year on year, reflecting ongoing engineering headcount expansion to support customer demand for AI technology and innovation in next generation architectures. Non GAAP operating income and margin also showed significant year over year growth.

A：The Q3 guidance indicates an expected revenue growth of about 20% year on year, with royalties up just over 20% and licensing up 25% to 30% year over year. It also suggests that non GAAP operating expense is expected to be approximately $720 million, with a non GAAP EPS of 41 cents.

A：The company views itself strategically positioned due to the efficiency of its compute platform, with customers like Nvidia, Amazon, Google, Microsoft, and Tesla using its technology. The strong demand for compute and the incremental computing announced are all based on the company's technology, driving a huge growth opportunity.

A：The acquisition of Dream Big Semiconductor is based on their interesting intellectual property, particularly around the Ethernet area and RDMA controllers, which are crucial for scale up and scale out networking. This technology is expected to help broaden the company's offerings to end customers.

A：The relationship with SoftBank is viewed as a significant opportunity for the company to partner with SoftBank and their ecosystem on various technology needs for data centers, including compute, networking, power distribution, and data center assembly. This collaboration is expected to contribute to the increase in related-party revenue.

A：More information on the transition from exploration to return on investment or actual strategy will be provided when the company is ready to discuss it, as detailed in their strategy to capture opportunities in the compute space using Arm technology.

A：The company will discuss new business related to full SoCs once there is tape out, samples back, and non-tangible customer orders received. These milestones must be achieved before any announcement is made regarding such new business.

A：The SoftBank contribution in Q2 was a 50 million increase from the previous quarter, with revenues reaching about 178 million. For Q3, the contribution is not specified, but the impact of SoftBank could potentially change if there are any additional deals.

A：The revenue from SoftBank is not directly considered cannibalistic of the company's current licensing stream. It is described as a potential new source of revenue that could be durable and could be complemented by successive generations of products with stacked royalties.

A：The revenue outlook related to the Stargate project and the demand for compute is positive, with the demand for compute being greater now than it was 11 months ago when the Stargate announcement was made. The potential revenue opportunity is stronger than originally announced due to growing demand for compute to train new models and for reinforcement learning and inference.

A：The earlier-than-expected royalties from the new license agreement are attributed to the fact that the partner in question had already established a close partnership with the company during the launch of the first CSS generation. As a result, the adoption of the second generation was expedited, leading to royalties being generated just a few months after the technology was delivered.

A：For the last fiscal year, 10% of the company's royalty revenues were derived from Arm technology in networking markets. Midway through the current fiscal year, it is suggested that this percentage may have increased, potentially approaching 15-20% of total royalty revenues.

A：The demand for different architectures and compute types at the edge is anticipated to positively affect Arm's business. With a shift from 100% reliance on cloud-based solutions to more use at the edge, there is an increase in the need for scalable matrix extensions like those found in CPUs and LUMIX, which enhance performance in AI workloads. This trend is expected to grow, making it beneficial for Arm to provide solutions that run efficiently both in the cloud and at the edge, which aligns with their partnership with Meta.

A：China is driving sales, representing about 22% of sales in the quarter mentioned, with strong performance and demand. The licensing deal that closed in China was one of the largest, and both licensing and royalties are growing significantly. The licensing pipeline for the remainder of the year looks strong, with potential for good renewal deals, suggesting continued growth in licensing revenue.

A：The expected deal flow for large license deals is a mix of timing and market needs. While the exact impact on Q4 is still being guided, there is clarity expected on what will land in that quarter. Large license deal cycles typically take 6 to 9 months, and while the company doesn't lose deals, the timing of when the needs arise is crucial. Next quarter, more detail will be provided on the expected deal flow for Q4.