ARM CEO Rene Haas: Our data center business is growing like crazy
Speakers
Rene Haas
— CEO, Arm
Jim Cramer
— Host, Mad Money
Summary
Arm CEO Rene Haas joins Jim Cramer on Squawk on the Street after the company's latest earnings. Haas defends the licensing revenue miss as normal quarterly lumpiness and highlights record revenue, 27% royalty growth, and 100% year-over-year growth in data-center royalty revenue. He also argues Arm is less exposed to memory shortages than handset vendors and that even a 20% unit decline in handsets would have only a modest royalty impact. The segment is bullish on Arm's data-center momentum and resilient royalty model.
- Arm reported record revenue of $1.24 billion and a fourth straight record quarter.
- Data-center royalty revenue rose 100% year over year; overall royalties rose 27%.
- Haas called the licensing revenue miss insignificant because licensing deals can be lumpy.
- Haas said Arm's memory exposure is lower than a handset vendor's due to diversification.
- Memory shortages mainly affect low-end devices with Arm's lowest royalty rates.
- Arm modeled a 20% handset unit decline as only about 1% total royalty impact.
- The interview focused on whether Arm's data-center growth can outweigh memory and handset concerns.
Ideas
Record revenue and data-center growth outweigh concerns
Arm reported record revenue of $1.24 billion for a fourth straight quarter, with overall royalties up 27% and data-center royalty revenue up 100% year over year. Management says the licensing revenue miss is not significant because licensing is lumpy, and the data-center business is growing rapidly enough to become Arm's biggest business in a few years. Memory shortages mostly squeeze low-end devices with Arm's lowest royalty rates, so even a 20% decline in handset units would likely cost only a couple percent of handset royalties and about 1% of total royalties.
