Arm Holdings plc American Depositary Shares (NASDAQ:ARM) Q3 2024 Earnings Call Transcript

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Andrew Gardiner: Thanks very much for taking the question. I have one on the licensing side. You guys have spoken about how strong it was in the quarter and the — being surprised at the quicker sales cycle time on some of these licenses. A point that you haven’t brought up on the call yet but within the shareholder letter was that you also saw three of the five ATA licensees in the quarter, the upgrades from the Arm Flexible Access program, and you said that was the first time that it happened. Did that take you by surprise or were these customers that were getting to be particularly large for an AFA and so it was natural for them to upgrade? Yes, it wasn’t a surprise. And is this something that might actually continue to surprise positively, right? Is there a portion of that cohort that is sort of natural to be upgrading from AFA to ATA and therefore contribute more in terms of license dollars?

Rene Haas: Yeah. Thank you for the question. We didn’t bring it up in our comments. We had a lot of good stuff to talk about this quarter, and I was trying to keep it as concise. But the AFA transition to ATA, thank you for calling that out. That’s a great trend for us. When we designed the program a number of years ago, that was absolutely the intent is that customers that launched into an AFA would ultimately go on to a total excess license. What largely drives that, quite frankly, is the company that AFA start to get commercial traction in their business. Some of the AFA customers are early-stage companies. They may have an early exit or get acquired. But as they get larger and mature, we expect them to embrace Arm technology in a broader way. So I wouldn’t call it a surprise. I would actually call it an expected outcome that we have, and we’re really happy to see it. It’s great. Thanks very much.

Operator: Thank you. I would now like to turn the conference back to Rene Haas for closing remarks. Sir?

Rene Haas: Thank you, and thank you, everyone, for the kind words on the quarter and a good set of questions that we had. We’re thrilled about Q3, and we’re very, very excited about Q4. I think what you’re seeing coming to life are all the strategies that we’ve been working hard on over the last number of years, investment in the v9 technology, the diversification of our business into data center, into automotive and of course, IoT. And then now the — what I think is probably the most profound opportunity in our lifetimes, which is around AI. And I think regarding AI, particularly when you think about artificial general intelligence, that’s going to drive the need for more compute in a way that we’ve never seen before. So as good as the last couple of quarters were, we’re just at the beginning. I could not be more excited about the growth that we have going forward, and thank you for all your time and questions.

Operator: This concludes today’s conference call. Thank you for participating. You may now disconnect.

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