Arm: how the business works

Each line = amount ÷ total money in × 100. Lines may not add to exactly $100 because of rounding.

Chip makers, device makers and cloud providers pay Arm license fees and per-chip royalties for its processor designs; more than half the money goes on research and development, and what's left is profit.

• 01In FY2026, royalties were $2,613 million (53.1% of revenue) and license and other revenue was $2,307 million (46.9%).
• 02In FY2026, research and development took $2,776 million and selling and admin costs $1,115 million, leaving operating income of $900 million.

• Outside customers, royalties

  43%

  of revenue

  43.2% of FY2026 revenue. Chip makers and others outside the SoftBank group and Arm China, paying per chip shipped: $2,123 million in FY2026, up 20%.

• Outside customers, licenses

  26%

  of revenue

  26.4% of FY2026 revenue. The same kinds of customers, paying license and other fees: $1,298 million in FY2026, down 9%.

• Arm China

  16%

  of revenue

  16.1% of FY2026 revenue. The exclusive distributor of Arm licenses to Chinese customers, a related party that neither Arm nor SoftBank controls: $790.6 million in FY2026. It is Arm's largest customer.

• A SoftBank affiliate

  14%

  of revenue

  14.3% of FY2026 revenue. Revenue from licensing and servicing arrangements under a Consulting Agreement: $704.4 million in FY2026, up from $145.5 million in FY2025.

• Ampere

  0%

  of revenue

  A chip company SoftBank acquired in November 2025, also a related party: $3.6 million in FY2026.

EBITDA here = operating income plus depreciation and amortization (from the cash flow statement). Fiscal years are the company's own (Mar 31; Arm's fiscal 2026 ended Mar 31, 2026, so Q2 FY2027 is July–September 2026). Net profit is the share belonging to the company's owners.

Learn: Fiscal years that don't end in December: Nvidia's FY2027 explained · Stock-based compensation and dilution: pay that becomes shares

• Rene Haas

  Chief Executive Officer and director · since 2022

  FY2026 total pay $60.6 million, up from $24.5 million, mostly equity plans. Since April 2026 also CEO of SoftBank Group International; Arm said on Apr 21, 2026 that the role is expected to be limited and part-time. A one-time award of 425,000 performance share units carries company market-value conditions; shareholders approved the pay policy behind it on Sep 9, 2026.

• Jason Child

  Executive Vice President and Chief Financial Officer · since 2022

• Masayoshi Son

  Chairman of the Board · since 2018

  Also Chairman and CEO of SoftBank Group, Arm's controlling shareholder.

• Governance

  SoftBank controls Arm

  SoftBank held about 86.4% of Arm on May 21, 2026, and can designate most directors. Arm's 20-F names conflicts of interest, including over Arm China and business opportunities. Masayoshi Son chairs both companies.

  Watch SoftBank's stake and any change in its board rights in the next 20-F.

• Governance

  Most of Arm's shares secure SoftBank's loan

  769,029,000 shares, 72.0% of Arm, are used as collateral for a SoftBank margin loan, a loan backed by shares. A margin call or foreclosure could force sales of shares or change who controls Arm, the 20-F says.

  Watch The collateral share count in the next 20-F and any 6-K about the loan.

• Concentration

  A few customers and related parties pay much of the revenue

  The top five customers were about 57% of FY2026 revenue, and related parties 30%, up from 21%. Related parties were 29.4% in Q2 FY2027 (Cityfort calculation from the Q2 FY2027 shareholder letter). The 20-F says near-term revenue depends partly on arrangements with SoftBank and its affiliates.

  Watch Revenue from related parties against outside customers in each shareholder letter.

• Regulation

  Arm reaches Chinese customers through a company it does not control

  Customers headquartered in China were 17.8% of FY2026 revenue. Arm China, the exclusive distributor there through 2048, is controlled by neither Arm nor SoftBank. Export controls and trade policy also apply. Revenue from Arm China was $208.9 million in Q2 FY2027, down from $243.1 million.

  Watch Revenue under the Arm China license and amounts it owes, in each 6-K.

• Competition

  Rival designs, including a free one

  Arm's 20-F names the x86 design and free, open-source RISC-V as competition. Many customers support RISC-V, and some design their own architectures. Royalty rates per chip also typically fall as volumes grow.

  Watch Royalty growth and mentions of RISC-V in the next 20-F.

• Execution

  Selling its own chip is a new kind of business

  The Arm AGI CPU may put Arm in competition with some customers and relies on outside factories. Arm said on Nov 4, 2026 that its move into selling chips may have materially different margins from licensing. Separately, Arm's Nov 4, 2026 6-K reports $672.0 million of purchase commitments and $200.0 million of expected capacity advances, with shortfall payments possible, without naming the product.

  Watch First deliveries, gross margin and purchase commitments in each 6-K.

• Legal

  Lawsuits with Qualcomm

  Arm sued Qualcomm and Nuvia in 2022, alleging a breach of the termination terms of Nuvia's license; a court ruled Nuvia did not breach, and Arm is appealing. Qualcomm sued Arm in 2024, alleging failed delivery obligations and more. Arm disagrees. An October 2026 jury found for Arm on four claims and for Qualcomm on two, with nominal damages. Whether Qualcomm can withhold certain royalties is undecided.

  Watch The court's bench-trial rulings and Arm's appeal, reported in 6-K legal notes.

• Demand

  Royalties lean on smartphones and chip cycles

  Mobile applications processors were about 43% of FY2026 royalties. Arm said on Nov 4, 2026 that memory pricing on the smartphone market partly offset Q2 FY2027 royalty growth of 8%.

  Watch Royalty revenue each quarter and what Arm says about smartphones.

What does Arm do, and how big is it?

Arm Holdings designs processors, the part of a chip that does the computing, and licenses those designs to chip makers, device makers and cloud providers. Arm had revenue of $4.92 billion and operating income of $900 million in FY2026 (year ended Mar 31, 2026), and 9,584 employees.

How does Arm make money?

Arm makes money from license fees for access to its designs and from royalties on chips that use them. In FY2026, Arm's royalties were $2,613 million (53.1% of revenue) and its license and other revenue was $2,307 million (46.9%).

What is Arm's business model?

Arm's business model is to design processors once and license them to many customers. A customer pays Arm a license fee, then a royalty on most chips it ships with the design. Arm's cost of sales was $121 million on $4.92 billion of revenue in FY2026.

Is Arm profitable?

Yes. Arm's net income was $904 million and its operating income $900 million in FY2026. Net income included a $131 million pre-tax gain on selling its Artisan business, and costs included $1,052 million of stock-based compensation (what this means)stock-based compensationPay given as shares instead of cash, which spreads ownership more thinly. Learn more. In Q2 FY2027 (July to September 2026) net income was $130 million.

What is Arm's revenue by segment?

Arm reports one operating segment and splits revenue by type. In FY2026, Arm's royalties were $2,613 million and its license and other revenue $2,307 million. By customer headquarters, the United States was 35.8% of FY2026 revenue and China 17.8%.

How much does Arm earn from royalties?

Arm's royalty revenue was $2,613 million in FY2026, up from $2,168 million in FY2025, and $670 million in Q2 FY2027. Mobile applications processors, the main chips in smartphones, were about 43% of Arm's FY2026 royalties.

How much does Arm earn from licenses?

Arm's license and other revenue was $2,307 million in FY2026, up from $1,839 million in FY2025. Revenue from outside customers was $1,298 million of the FY2026 figure, and revenue from related parties, such as Arm China and a SoftBank affiliate, was $1,009 million.

Does Arm make its own chips?

Arm announced the Arm AGI CPU, a production chip it designed itself, in March 2026, with outside factories making it. Arm's FY2026 20-F says the chip did not materially affect FY2026 revenue of $4.92 billion, which came from licenses and royalties.

Who are Arm's customers?

Arm's top five customers were about 57% of its FY2026 revenue, and Arm China, the largest, was 16%. Arm's 2023 IPO prospectus names customers including Amazon Web Services, Alphabet, AMD, Intel, MediaTek, NVIDIA, Qualcomm and Samsung.

Who owns Arm?

SoftBank Group owned about 86.4% of Arm's ordinary shares as of May 21, 2026, according to Arm's FY2026 20-F. Public holders of American Depositary Shares had about 13.6%. Arm has one share class, with one vote per share.

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