Arm Holdings plc American Depositary Shares Price & Performance (ARM)

These statements represent our best current judgment about future results and performance as of today, our actual results are subject to many risks and uncertainties that cause actual results to differ materially. In addition to any risks that we highlight during the call, important risk factors that may affect our future results and performance are described in our registration statement on Form 20 F filed with the SEC. ARM assumes no obligation to update any forward looking statements. We will refer to non GAAP financial measures during this discussion, Reconciliations of certain of these non GAAP financial measures to their most directly comparable GAAP financial measures as well as a discussion of certain projected non GAAP financial measures that we are not able to reconcile without unreasonable efforts and supplemental financial information. Can be found in our shareholder letter [indiscernible] The shareholder letter and other earnings related materials are all available on our website at investor Thank you, Jeff, and good afternoon, everyone. AI demand continues to drive strong momentum for the Arm ecosystem.

Which is built on the world's most pervasive compute platform.

We're pleased to report record total revenue and an all time record royalty revenue for the third quarter of fiscal twenty twenty five. Total revenue grew 19% year on year to an all time high that exceeded the high end of guidance. Our royalty revenue grew 23% year on year to a new record. This was driven by adoption and deployment of V9 and strong demand for ARM CSS. [indiscernible] Licensing remains strong as our partners make long term commitments to more of our advanced technology to take AI everywhere. AI growth requires significantly more compute across all of our end markets from smartphones with better chat features to autos with better driving and parking assist IoT microprocessors with embedded NPUs.

This is driving continued adoption of our V9 and CSS technologies. New flagship smartphones from Oppo and Vivo take advantage of Mediatek's new Dimensity 9,400 system on chip. This SoC is based on our CSS per client, which includes the ARM Cortex X925 CPU and the Immortals G925 GPU. Increased chip complexity is driving the top hyperscalers to customize silicon on the latest ARM Arm and CSS. We are gaining share in the data center with AWS Graviton, Microsoft Cobalt, Google Axion, and NVIDIA's Grace Arm based chips. AWS recently announced more than 50% of new CPU capacity installed over the past two years was on Graviton. Over 90% of AWS's top 1,000 EC2 customers We have more than 20,000,000 developers The world's largest developer community and we continue to increase investment in our ecosystem. NVIDIA also announced Project Digits, which combines the ARM based gray CPU and the Blackwell GPU into the new GB10 superchip powers the world's smallest AI supercomputer. The Gray CPU is based upon ARM CSS for client, and includes 20 power efficient ARM cores, 10 Cortex X925, and 10 Cortex A-seven 25, [indiscernible] [indiscernible] Data scientists and AI researchers will be able to more easily able to build inference models before deploying them into the cloud.

I'd also like to call out two key projects that further cement ARM's position at the very center of the AI ecosystem. Along with SoftBank Group and OpenAI, Stargate for AI infrastructure deployment and advanced enterprise AI called Crystal Intelligence to develop AI agents for knowledge work. We strongly believe that the advances in AI both for training and inference, are going to increase the demand for compute in the AI cloud. We expect Arm solutions to address the needs from the cloud to the edge to power growth in the world's most popular compute ecosystem for decades to come. And with that, I will hand over to Jason.

Thank you, Rene.

Q3 was another record quarter as we continue to deliver strong growth. Total revenue was $983,000,000 which was above the top end of our guided range. Royalty revenue was a record $580,000,000 and grew 23% year on year and was above our expectations.

This growth was driven by continued Arm D9 adoption, and initial shipments of chips based on our compute subsystems, as well as the growth in revenues from custom silicon going into the data center. Royalty revenue from chips for smartphones the data center, network and equipment and automotive were all within expectations while royalty revenue from IoT showed signs of recovery after multiple quarters of weakness.

Based on the most recent royalty reports, revenues from smartphones continue to grow much faster than the overall smartphone market. This was helped by chips based on both RMB9 and CSS such as MediaTek's Immensity 9,400 which is being deployed in flagship smartphones from both Oppo and DEVO. Licensing revenue increased 14% year on year $4.00 $3,000,000 which was better than we forecasted. License revenue varies quarter to quarter due to normal fluctuations in timing, and size of multiple high value license agreements, and contributions from backlog. As always, we recommend that you look at annualized contract value or ACV to best understand the underlying licensing growth rate. ACV in Q3 was up 9% year on year which was a little lower than the recent run rate of low teens, but is above our long term plan. Remaining performance obligations or RPO was down slightly sequentially as ARM delivered products that released revenue from backlog into the P and L. As you know, ARM's revenues today come from technologies developed years or even decades ago. [indiscernible] To maximize our future revenue opportunity, we want to maximize our investment in R and D today. And in the third quarter, heightened R and D spending led our non GAAP operating which was in line with our expectations.

At the same time, we also delivered near record [indiscernible] Going forward, we will continue to balance increasing investments for the long term growth of the business and near term profitability. Turning now to guidance, I'll briefly touch on both fourth quarter and fiscal year ending 03/31/2025 Arm. This guidance reflects our current view of our end markets and our licensing pipeline. For Q4, we expect revenue of between $1,175,000,000 and $1,275,000,000 At the midpoint, this represents revenue growth of 32% year on year.

We have left the revenue guidance range slightly wider than in prior quarters as we have some large license deals in play. Although we have high confidence of deal closure, the timing of deals can be hard to forecast and some may slip into the next fiscal year. As previously mentioned, Revenue growth today enables us to increase our investments in the R and D essential for our long term success. We are accelerating the investments in our next generation of technologies. We now expect our Q4 non GAAP operating expense to be approximately $590,000,000 and for Q4, we expect non GAAP EPS to be in the range of $0.48 to $0.56 For fiscal year 'twenty five, we are increasing the midpoint of full year guidance to around $4,000,000,000 This midpoint represents about a 24% year on year growth which is ahead of our long term target of 20%. With this, we expect full year royalty revenue growth rate in the high teens year on year, which is consistent with our previous guidance, We expect our full year license revenue to grow around 30% year on year. We expect non GAAP operating expense represents a 21% year on year increase.

We therefore expect our full year non GAAP EPS to be between $1.56 and $1.64 With that, I will turn the call back to the operator for the Q and A portion of the call. [indiscernible] We will now take your first question One moment please. And your first question comes from the line of Lee Simpson from Morgan Stanley. Please go ahead.

Hi, good afternoon. Thanks for fitting me in. Maybe I could just kick off by asking about where we see the strength in licensing as we go into the subsequent year. And I guess I'm really asking this really as it relates some of the recent news flow that we've seen in the broader AI landscape. That also really touches on ARM's capability. So if we look two weeks back, we had the announcement Stargate in The U. S. With budgets ranging over $100,000,000,000 And in the last day or so, we've heard of your new joint development between SoftBank and OpenAI called Crystal Intelligence. We're just trying to understand where it seems ARM sits here. Interestingly, it looks like both an enabler and even having first mover advantage as a kind of AI adopter in an era of agentic AI. So maybe if I take a step back, maybe just trying to help us. Can you outline just more clearly what the opportunity is set is for ARM Arm? Including the sell in of new products to these new and large projects and what the long term benefit is to ARM Arm the earnings perspective?

Yes. Thank you for the question. There's a lot there. So I'll I'll try to simplify a bit. So Stargate project that was announced a few weeks back which is a extremely significant infrastructure project in The United States where $100,000,000,000 will be invested immediately and $500,000,000,000 over time And this is a partnership with OpenAI and Oracle and SoftBank technology partners being those companies in addition to ourselves, Microsoft and NVIDIA. For ARM, we are extremely excited to be the CPU of choice for such a platform. Combined with the Blackwell CPU with Grace, ARM will be the CPU of choice for the initial configurations and going forward, there'll be huge potential for technology innovation around that space. So incredibly exciting project which we think will be transformational for the industry. Crystal Intelligence, which was discussed earlier this week, is really about agentic AI and agents moving across every node of the hardware ecosystem. So if you think about the smallest devices such as earbuds, all the way to the data center this is really about agents increasingly being the interface and or the driver of everything that drives AI inside the device. It's a significant opportunity because AI workloads will run on every one of those endpoints that I mentioned.

Additionally, given that Arm is the world's most pervasive compute platform, those AI workloads will run on ARM and through ARM and through our Clidy AI libraries, we will make it very easy for developers to target and optimize to the ARM platform running these agents. So both of those announcements are very significant both in terms of their impact of the industry and represent significant opportunity for our company.

Your other question on kind of the licensing upside components, So, within the quarter, it was up about $27,000,000 versus our our kind of guidance or up 14% year on year. Certainly, the drivers have been this same components over the past few quarters, which is AI and the need to continue to access B9 technology to prepare for all of the needs that go into AI chips. And then of course also CSS. As Renee mentioned, there's additional CSS contracts that we've sold and we continue to be working on In terms of the guidance for this next quarter, we're actually guiding that license revenue can grow in the order of kind of in the order of around 60% year on year. And so we've said since early in the year, we have a number of big deals that we had planned on for Q4. Those look to be kind of mostly on track and as expected. And those deals very much are in the same kind of bucket of very much being AI and CSS driven. Thank you.

Thank you. Your next question comes from the line of Joe Catraki from Wells Fargo. Please go ahead.

Yes. Thanks for taking the question. You mentioned that the partner demand for CSS is stronger than initially anticipated.

I guess how should we think about the contribution to royalty revenue ramping as we enter fiscal twenty twenty six? Your prior expectations Yes.

So we're not ready to talk about '26 yet, but in terms of exit rate, we feel very good about the momentum that we've delivered. For example, this last quarter of $500,000,000 of royalty revenue that's about 13% higher than our previous record of $514,000,000 Certainly, no no surprise that that also is in the first quarter that we actually have material CSS revenue this quarter led mostly by the 9,400 chip that we talked about also Cobalt CSS starting to see shipments and deployments and that's flowing into royalty revenue now. As we continue to see more CSS deployments over the next couple of quarters, we do expect there to be continued momentum. In terms of quantifying the momentum, we're going to have to wait until next quarter.

Fair enough. Thank you.

Thank you. Thank you. Your next question comes from the line of Charles Shee from Needham and Company. Please go ahead.

Yes. Can you hear me? Yes.

Thanks. Just want to touch upon since we just had a lot of news coverage on the on the trial last month with a lot of your large customers, There seems to be based on the press reporting, there seems to be some difference between what you think the contract will expire versus what they think they think it's expiring in 2028, Arm you think it's expiring in 2025. I know this is all calendar year commentary, but what's the current view there Revenue, maybe you were expecting to happen calendar '25, maybe that won't happen in the next calendar year. I just want to get some thoughts there.

This is Jason. I think the question was about the impact of the Qualcomm lawsuit and on revenue?

Correct.

Yes.

There are no impact. We had forecasted really all the way back to the IPO and continuing to forecast. As though we were not going to prevail in that lawsuit. The primary reason for the lawsuit very much was around defending our IP and that's important. But from a financial perspective, we'd assume that we'll continue to be receiving royalties that basically the same rates that they've been paying for in the past and will continue to pay.

Got it. Maybe another question, just a little bit clarification. I don't see a RMB9 asset contribution number from the shareholder letter. Maybe I missed this number. But if you have the number, can you tell us what the number is for the past quarter?

Yes. As a percentage of total royalties in the quarter, it was 25%, so consistent with the prior quarter. [indiscernible] looks like it's in a couple of quarters of 25%. Do you expect it to go up? Or can in coming quarters, I know the answer is probably yes, but can you also help us understand why a little bit stalling for a couple of quarters already at the quantum factor?

Let me just maybe cover just some of the math piece and then I'll let Renee kind of talk about the overall kind of larger view of how B9 adoption is occurring and how it will continue to occur. So I would just say first of all, the math is it's a percentage of total. And so we saw 23% growth in the quarter. So it's flat as a percentage of total. If you actually look just at the B9 dollars the rate went from about 15% a year ago to about 25% this quarter. So the absolute dollars grew by, I would say, triple digit rate. And so the fact that it's relatively flat actually is a great indication of the fact that you have we have a longer runway for future growth. We still expect that you will see V9 grow to probably 67% to 70% of total royalties. And the fact that we're able to kind of meet or exceed our royalty growth rates while it's not been accelerating should provide more confidence about our ability as that rate goes higher, our ability to drive further royalty growth in the next quarters and beyond.

Yes. Maybe just to give you a sense of how to think about those transitions, they're largely driven by the transitions of OEM products and when they get introduced So take for example, the MediaTek 9,400, which has been designed into the open Vivo phones. Those are now in their ramp for production. So you'll see a spike up as they ramp and then you get to a steady state. But as the next versions are released, a couple of things happen. Broader adoption across the high end of the segment and then the high to mid range to mid range products start to move from V eight to V nine. Arm, the transition rate that we're seeing is completely expected. And very, very consistent with how we expected the overall ramp to be. So very happy about where we are Arm as you said room for expansion it's largely driven by OEMs shifting their chip mix as opposed to licensing new companies. Thanks, Rene. Thanks, Jason.

Appreciate the color.

Thank you.

Thanks.

Thank you. We will now go to the next question. And your question comes from the line of Tim Schulte Milanda from Redburn Atlantic. Please go ahead.

Yes.

Hi. Thanks very much for taking my question.

Maybe just to key off the question on the royalty growth. Can you maybe just talk a little bit more specifically about FY '26 and kind of what momentum and what kind of mix evolution we should expect on B9 to contribute to the full year? Thank you. Yes, this is Jason.

We'll provide guidance on '26 next quarter. We typically just like last year, we do it in when we announced Q4 results. So we'll go into more detail then. I would say what we've said in the past is that we would expect royalties to grow probably somewhere in the mid-twenty percent growth rate. That's what we've said in the past. We haven't not providing updates to that today. The way that we're going to get there is through the combination V9 adoption as well as CSS. And so, what you saw in those most recent quarter is V eight actually had some really strong growth. That's great. But overall, you should expect to see B9 over time continue to grow But also remember that B9 is just one input into growth. CSS adoption is a, I would say, even a larger input to growth because the royalty rate on CSS is roughly double that of V9 course, V9 is roughly double the royalty rate of V8. So overall, you have to look at all the components, but but the momentum that we just showed in this last quarter and we'll expect over the next quarter we think sets us up for a very good '26.

Yes.

And maybe just to expand further on that and make sure Jason doesn't kill me.

But the royalty rate on a CSS of '26 is not necessarily the same as the royalty rate for a CSS in '25.

Those CSS rates change year on year. When the new solution is offered to the market. So those are variable over time. And they increase over time.

That's great. Super helpful. And then maybe just one quick follow-up. The licensing revenue clearly it's super hard to predict the exact week or day or month, but is there anything that's sort of structurally changing in terms of complexity of your client agreements that means that these are just structurally going to take longer and longer to get over the Is that something we should expect to see in coming years?

Very much.

This is Jason. I would say no. But you need to kind of look at the contracts primarily in two buckets. There's brand new contracts with someone we haven't done work before that probably takes a while. There's a lot longer approval process. Versus a renewal of maybe an existing ATA and that's probably a shorter cycle. But nonetheless, the larger the deal is, the longer the timeframe Typically, when these get in the hundreds of millions of dollars, they probably involve boards and of Directors and all these different approvals that can just take many, many months.

But in general, to your question, is anything changing now or next year versus where it's been this last year? No. It's all the same factors.

Great, super helpful. Thank you.

Thank you.

Thank you. Your next question comes from the line of Vijay Rakesh from Mizuho.

Yes. Hi. Thanks, Rene and Jason. Just a quick question on the it looks like on AWS, you're having very good success almost 90% of the top 1,000 customers using Graviton the Cobalt 100 is progressing, how that's ramping? My follow-up.

Yeah. I'll defer to Microsoft, making statements about the shipments of cobalt to be be clear, we've taken the AWS comments directly from AWS.

But in general, what we're seeing inside of Microsoft with Cobalt And more broadly with all of our partners is not only increased momentum for deployment of those products into the cloud, But because of the transition away from an X86 plus H100 to a Grace Blackwell GB200 that is also an accelerant for Arm database in the data center. Because these AI data centers the primary CPU being Grace, running everything relative from a host control standpoint is a good tailwind or kicker, if you will. So we're very happy with the momentum in general.

I defer again to Microsoft and specific commentary on cobalt. The momentum has been terrific.

Got it. Thanks.

And then on the related Arm side, it looks like very nice traction sequentially. I saw it up 48%.

Just wondering long term, are you seeing any changes there? Does that ramp as you look out longer term, how does that progress? Thanks.

I would expect it to be pretty consistent. I mean, really a Arm, the largest component is Arm China. And so I would expect that will be kind of pretty consistent over time. Arm China probably we expect it to probably be a smaller percentage of revenue. I think this quarter was in the 25 ish percent range. And I've said in the past, we expect to probably default to mid teens over time. But over the next few quarters, it's probably not going to change a whole lot.

Got it. Thank you.

Thank you.

Your next question comes from the line of Andrew Garner from Citi. Please go ahead.

Good afternoon. Thank you for taking the question. I had one on M and A. There continues to be continues to be speculation in the press about M and A whether it's ARM or perhaps related to SoftBank Arm you.

And in particular, sort of the potential for you to move beyond a pure traditional IP model and get further into the silicon space. Can you without sort of saying anything specific on M and A, and I know you won't be able to really do that, but just in terms of the discussions you're having internally and perhaps with your customers and what they're needing why what is happening that causing you to perhaps lean further in that direction as you look out sort of beyond the current years?

Thank you. Yes. Thank you for the question. And as you surmise, there isn't very much we can say about speculation and or rumors. We spend a lot of time most of my time personally, thinking about growth and thinking about the future. One thing I can say that we're seeing that I'm sure all of us in the market in our space are trying to reflect upon is at the rate of which AI is evolving, and the rate at which the software models change, it puts a tremendous pressure on our ecosystem to develop products faster, better, sooner, more efficient. And as Arm Arm the heart of all of that, we look very hard in terms of how to solve customer problems. Unfortunately, I can't give you much more detail than that and certainly can't speculate on any rumors on M and A. Thank you.

Your next question comes from the line of Harlan Sur from JPMorgan. Please go ahead.

Yes, good afternoon. Thanks for taking my question. Maybe as a follow on to that question, Renee, I mean, the team has always led with a system level strategy, which then pulls demand for your compute IP solutions, right?

AMBA was a good example of that. Your move to CSS is another good example of that.

Now it seems like the team is like scaling the strategy to attack the complex SoC market that is rapidly moving towards this more sort of heterogeneous sort of triplet based strategy. You guys are building an ecosystem around your CSA or this triplet system architecture, like what's the what's the progress like so far? Are you seeing an acceleration of activity around CSA? And importantly, like how is the Arm team going to monetize this strategy? Yes. Thanks for all. A lot of good points there. We've absolutely seen an acceleration of demand for CSS as Jason mentioned. Customers clearly see the benefit of it. We're now involved with CSS in just about all the major markets that we engage. There's just significant demand for that product. We've also kicked off something we call the Arm Total Design Partners Arm.

This allows end partners design houses to take our CSSs and potentially develop triplets and very, very strong demand for that program as well. To your point in terms of what's really driving all of this, I go back previous answer I gave.

It is really the fact that these designs are in There's a very, very strong link between the hardware and the software. And as ARM is the heart of everything that takes place in any one of these chips, relative to the software ecosystem there's just huge demand on asking us to do more sooner and help products get to market faster because we're in a time in our industry where the compute demands are outpacing the silicon to serve it.

We get lots of questions about the smartphone market and the AI capabilities to harness what's going on inside there. Have to remember that these smartphones were the chips for these smartphones were designed two, three years ago the memory subsystem, the power, everything was predefined. So to be able to fit these small language models or anything that goes inside phone is quite a challenge given the fact that you still have to run a display, you still have to run an operating system, you still have to run apps. So what helps address that Getting products to market faster. And that is really what we're very focused on.

Thank you.

Thank you. Your next question comes from the line of Vivek Arya from ahead.

Thanks for taking my question. I wanted to go back to this V9 adoption question and I appreciate that an absolute numbers, right? Of course, it represents more dollars of as a percentage of your royalty But at the start of the fiscal year, I think you said that adoption would go by or percentage contribution would grow by five points or 500 basis points every quarter. But it has stalled at 25%. So I was hoping you could explain what's happening versus the assumption you had at the start of the year And since we did not see it as much in the last fiscal year, does this create an acceleration or a up side driver for next year or is that not the right way to look at it?

Yes, this is Jason. I'll take that one. So I would say I mean, ultimately, what you're trying to get to is, does the set us up for better growth next year? I would say it could. I just don't know if it's going to be next year and the year after or what exactly is the timeframe. If you go back to as you said, our assumptions we had seen three straight quarters of it went from 10% of total to 15% and then went to 20% and then it went to 25% and then now a few quarters where it's leveled out at 25. The reason we provide the metric is to help people understand the adoption of of B9.

The fact that it's slowed as a percentage of total Again, as I said, it's actually a good thing because that just gives us, as you said, an already indicated, it gives us, I think, a better view into the growth because we still believe it's going to reduce the 60% to 70% as a percentage of total. Why do we believe that? Well, we've already sold the contracts and we already have insight into the products that are going to come to market on V9 So as a result, we have high confidence. It's just a question of what's the timing. The fact that it has not grown over the past few quarters is a little bit surprising to us. And the reason why is because you've actually seen stronger VA growth than we previously expected. That's great. If all generations are going to be able to have strong growth, that's Good. But what's coming online, again, already under contract and we know it's coming. It's a question of when do those shipments occur and what's the mix. So ultimately, those are the drivers. Again, the reason we provided this number was more as a indicator to try to help understand the leading indicators of royalty growth.

And so the fact that we've been able to meet or exceed our royalty numbers while having a slightly slower growth of B9 mix, again is a good thing, but I think you should focus on the overall royalty growth We gave those metrics back when royalties were going much slower than they are now. And so that's why I think I would focus more on overall royalty growth than I would V9 adoption.

Thank you. Thank you.

Thank you.

Your next question comes from the line of John DiFucci from Guggenheim Securities.

Please go ahead.

Thank you. My question is for Renee. It's kind of a high level question, I think. There's been a lot of investor discussion around trading optimization. And a lot of discussion around how in regards to DeepSeq Assuming this is all valid, how does that change your view on Arm opportunity as it pertains to AI, if at all? And I guess, Renee, more broadly, just like to hear your thoughts on on this topic even beyond Arm A few things.

Broadly speaking, if you think about the achievements of DeepSeq, both V3 sort of their generic model, if you will, and R1 their reasoning model. There was obviously a lot of work that was done on top of existing work, AKA a Frontier model that was created by someone else and then DeepSeq doing some very creative work to build a model. On top of that, that was very, very efficient in terms of inference I think that's great to be honest with you and I think it's great for a couple of reasons. It's great for the industry because it drives efficiency, it lowers the cost and by doing that it expands the demand for overall compute just from a general standpoint, it's a good thing. When you think about the application to Arm, given the fact that AI workloads will need to run everywhere and lower cost inference more efficient inference makes it easier to run these applications in areas where power is constrained the amount of compute you can put down is constrained, It's terrific for ARM.

Wonderful a product as Grace Blackwell is, you'd never be able with cell phone, you'd never be able to put it into earbuds, you can't even put it into a car. But ARM isn't all those places. And as a result, think when you drive down the overall cost of inference, it's great. I also think that we're also nowhere close to good enough. Because if you look at the expenditures being announced by the large players in this market, I think Google just announced a $60,000,000,000 spend in their call Satya has talked about $80,000,000,000 Meta has talked about $40,000,000,000 to $15,000,000,000 No one is pulling back and the reason for that is the capabilities that could be transformational in terms of what AI can do. So I'm actually I think it's a great thing and a good thing and I think it will actually increase overall compute demand and for ARM even better because it allows us play in areas where efficiency is key and that's our sweet spot. Makes sense and thanks for your thoughts, Renee. [indiscernible] Your next question comes from the line of Chris Sanker from TD Cowen. Please go ahead.

Yes.

Hi. Thanks for the question. Jason, just wanted to follow-up.

On the ACV. You mentioned the growth detail. I know you will view full year guidance later on. Just kind of curious how to think about the ACV go forward on a longer term basis. Are there any big data center or mobile programs that are coming that could ramp it back to the teens double digit growth?

And how much of the ACV is coming from the On China business today?

Thank you.

Sure.

So let's see. So in terms of the I guess the forecast and what do we think it should land. If you go back to way back when we went public, we basically provided ACV with the idea that if probably should be growing in the mid to high single digits. And the reason for that is if you treat all of our deals as ratable, knowing that the vast majority of our license revenue and ACD is actually coming from ATA deals. And the nearly all of our ATA deals typically have a 7% annual escalator. So it should be and then all the non ATA deals won't have that. So it's probably plus or minus in the 7%, range. So that's kind of what our forecast looks Then over the last, I guess now six quarters, we've seen the because of AI, we've seen licenses mostly around adopting V9 as well as now CSS as well. So that's provided upside that took us from that seven ish percent plus or minus all the way up to over the 14% or 15% at a high. Will we get back to the mid teens range? I don't know. That's not not what we never really forecasted.

It certainly could happen. When I provide guidance next quarter, I'll try to give you a little more insight on that. But in terms of kind of the longer term growth model, you should expect the vast majority of the growth really to come from royalties. And so certainly with V9 at a much higher royalty rate, And as Renee said earlier, both B9 and CSS, those are not one time increases in royalty rate. They're a step change but each year there's still with new versions typically going to be increases annually as well. So overall, you should expect majority of the growth coming more from royalties in the future than from license. [indiscernible] [indiscernible] The Arm sorry, the arm China portion, it's somewhere in kind of the the 20 ish percent range, so pretty close to kind of the overall mix.

This last quarter was, like, 25%, so it's kind of somewhere in that range.

Thank you very much. Thank you.

Thank you.

Thank you.

We will now take our final question for today and your final question comes from the line of Mark Lipaksis from Evercore. Great. Thank you. That's Arm Lipatis from Evercore.

Thanks for taking the question. A CSS question for Jason and Renee. Jason, the CSS license activity, is that mostly data center or is it is it balanced between data center and handsets? And then and then Renee, when you I just want to make sure I understood your comments that you made earlier. As AI comes into smartphones, does that necessarily mean that those processors are going to be kind of chiplet architected and so then longer term there's likely a very high attach rate of CSS to the smartphones. And then then it's a similar question on the IoT side. Does the earbud become a CSS device also or is that like a monolithic die with just more processing power on the Arm chip? Thank you.

Yes. So maybe I'll take the first part of that and then Jason sort of can address the numbers. Think every endpoint that you just described, earbuds may be maybe not just because they're so, so tiny. But certainly this chiplet approach is going to be pervasive across just about every and SoC, if you will. In other words, inside the package, you'll have a number of small die everywhere. It exists on the high end today almost as a standard. But I think you'll see that everywhere which is a gigantic opportunity for us because not only can we provide the compute CSS from a CPU standpoint, but it allows us to have the right mix of whether it's an NPU, or combined with a GPU and the right CPU combination, to maximize performance. You've sort of hit on a very, very key point in terms of demand driver. Which is why we're seeing really strong CSS type of demand across all those end markets. And I'll just let Jason have the last piece.

Yes. On the CSS mix, we've said in the past that auto, we've announced that it's coming, not here yet. So in terms of the roughly dozen that we've sold, assume that it's It's basically not fifty-fifty. Between infrastructure and our client business.

Great. Very helpful. Thanks so much guys. Thank you, Mark Arm.

Thank you. I will now hand the call back for closing remarks.

Thank you, and thank you everyone for all your questions. As always, very much appreciate the interest in what ARM Arm doing and very, very good questions. As summarized at the beginning, the quarter was just phenomenal, a record quarter. We've never been close to $1,000,000,000 before in revenue. And we just about got there. [indiscernible] So, being able to share with you record revenues for [indiscernible] quarter just ended and a projection to beat that by a healthy margin in the next quarter is just something we're so proud of at ARM. So we are very excited about the future. Whether it's about the near term execution of our strategies with B9 and CSS. To all the opportunities that Stargate and Crystal Intelligence bring us fantastic time to be with ARM. So thank you all for your questions and interest. And we will speak to you next quarter.

Thank you. This concludes today's conference call. Thanks for participating. You may now disconnect. [indiscernible] [indiscernible]