Arm Q2 revenue rises 27%; licenses supply 84% of the increase
License and other revenue drove most of Arm's quarterly growth. Royalties and annualized license commitments grew more slowly, offering different checks on the result.
Arm's latest revenue jump is largely a licensing story. That matters because recognizing revenue from a license agreement is different from earning royalties as customers ship chips. Investors following the stock should keep those sources of growth separate before projecting the quarter forward.
Arm Holdings, listed on Nasdaq as ARM, reported fiscal second-quarter revenue of $1.443 billion, up 27% from $1.135 billion a year earlier, in its November 4 shareholder letter. The figures cover the three months ended September 30, 2026.
Where the increase came from
License and other revenue rose from $515 million to $773 million. Royalties rose from $620 million to $670 million. TrendyVest's calculation puts the licensing category's $258 million increase at about 84% of the $308 million rise in total revenue.
Arm attributes licensing growth partly to the timing and size of major agreements and contributions from backlog. That is a reason to inspect the mix, rather than assume every revenue stream accelerated at the headline rate.
The company also reported annualized contract value of $1.790 billion, up 12%, against 50% growth in recognized license and other revenue. Its definition annualizes committed fees across active signed agreements, excludes future royalties and uses specified contract durations. This is an operating metric, not recognized revenue.
The growth rates can differ without one invalidating the other. Revenue records what qualifies for recognition during the quarter. Annualized commitments spread fees over the periods in Arm's definition. Neither should be treated as a guaranteed forecast of the next quarter's chip shipments.
For the next report, watch whether royalty growth strengthens and how licensing revenue compares with the commitment metric. A large licensing quarter can be valuable while still depending on deal timing. The useful question is how that business translates into revenue over time, rather than whether one percentage can stand in for all of Arm's demand.