ARM delivers record sales, profits -

ARM delivers record sales, profits


ARM Holdings plc has reported 2010 full-year revenues were $631.3 million, up 29 percent on 2009.  Full-year sterling revenues were £406.6 million, up
33 percent on 2009.

In November the Semiconductor Industry Association, reported that dollar revenue for the semiconductor industry was up 23 percent over the equivalent period.

The company did particularly well in the fourth quarter of 2010 with total revenues of $179.6 million, up 28 percent on Q4 2009 with sterling revenues of £113.9 million, up 34 percent year-on-year which outperformed the SIA dollar revenue for the semiconductor industry was up 14 percent over the equivalent period.

Total dollar license revenues in the fourth quarter 2010 increased by 46 percent year-on-year to $65.4million, representing 36 percent of group revenues.  
License revenues comprised $53.8 million from the Processor Division (PD) and $11.6 million from the Physical Intellectual Property Division (PIPD).   
During the fourth quarter, several partners entered into long-term commitments to use ARM technology where the revenue associated with these agreements goes into backlog. The revenue for these agreements will be recognised in future quarters as engineering and delivery milestones are achieved. In addition, two new subscription licenses were signed and a third was renewed during the quarter. As a result, group backlog at the end of the quarter was up about 35 percent sequentially, and about 75 percent year-on-year, to a record high.  A total of 35 processor licenses were signed in Q4.  
Full-year dollar license revenues were $208.2 million, up 27 percent on 2009.
Royalties are recognised one quarter in arrears with royalties in he fourth quarter generated from semiconductor unit shipments in the third quarter.  Total dollar royalty revenues in the fourth quarter 2010 increased 26 percent to $93.9 million, representing 52 percent of group revenues.  Royalty revenues comprised $81.9 million for PD and $12.0 million for PIPD.   
Full-year dollar royalty revenues were $335.3 million, up 37 percent on 2009.  Royalty revenues now represent 53 percent of ARM’s total revenues, having grown from less than 40 percent in 2005.  It is expected that royalty revenues will become a greater proportion of Group revenues in the future.
Sales of development systems were $11.6 million in the fourth quarter 2010, down 9 percent on 2009 and representing 7 percent of group revenues.  Service revenues were $8.7 million in the fourth quarter 2010, up 12 percent and representing 5 percent of group revenues.
Full-year development systems revenues were $55.4 million, up 7 percent year-on-year. Full-year service revenues were $32.4 million, up 10 percent on 2009.
Gross margin in the fourth quarter 2010, excluding share-based payment costs of £0.7 million, was 94.9 percent, compared to 94.3 percent in the fourth quarter 2009.   Full-year gross margin, excluding share-based payment costs of £2.8 million, was 94.3 percent compared to 92.2 percent in 2009.
The higher gross margin in 2010 compared to 2009 is due primarily to the higher proportion of royalty and licensing revenue compared to development systems and services revenues.
At 31 December 2010, ARM had 1,889 full-time employees, a net increase of 179 since the start of the year. At the end of 2010, the group had 784 employees based in the UK, 505 in the US, 219 in Continental Europe, 276 in India and 105 in the Asia Pacific region.

Warren East (pictured right), Chief Executive Officer, said, “ARM continues to sign licenses with influential market leaders in an increasingly digital world, and as the industry chooses ARM technology in a broadening range of electronic products, it further drives our long-term royalty opportunity. The growth in licensing and royalty revenues, throughout 2010, has combined to deliver our highest ever annual revenues, profits and cash generation.”

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