ARM Q2 and Half Year 2008 Trading Update
July 24 2008 - 2:06AM
PR Newswire (US)
CAMBRIDGE, England, July 24 /PRNewswire-FirstCall/ -- Due to an
inadvertent disclosure of our Q2 2008 headline numbers, ARM
Holdings plc [(LSE:ARM); (NASDAQ:ARMH)] announces its expected
preliminary unaudited financial results for the second quarter and
half year ended 30 June 2008. The full set of results will be
released on 30 July 2008. A conference call will be held today at
08:00 BST to discuss this announcement. The dial-in number for the
conference call is +44-1452-541-077, Reference ID: 57633449. A play
back of the conference call will be available on the ARM IR website
at http://www.arm.com/ir. Highlights (US GAAP unless otherwise
stated) - Q2 revenues at $128.1m, GBP65.0m - Normalised operating
margin at 31.5% (US GAAP 18.3%) - Normalised PBT at GBP21.1m (US
GAAP GBP12.6m) - Normalised EPS at 1.17p (US GAAP 0.71p) - Strong
orders increase group backlog above previous quarter's record level
- Reiterating FY 2008 guidance - Processor Division (PD): Strong
licensing platform driving royalty momentum - Licensing revenues
down sequentially and year-on-year - H2 licensing uplift expected
due to strong opportunity pipeline - Architecture license signed
for current and future ARM technology with strategic OEM - Royalty
revenue up 27% year-on-year - Physical IP Division (PIPD): Second
quarter of sequential growth for both licensing and royalty
revenues - Total revenue at $22.3m, up 5% year-on-year - Licensing
revenues increased 7% sequentially to $12.6m - Royalty revenue up
33% year-on-year - Business model yields increasing cash returns -
Record generation of cash in the quarter at GBP26.5m - GBP30.7m
returned to shareholders in Q2 2008, GBP15.3m by dividend and
GBP15.4m by share buybacks - Net cash of GBP50.6m at the end of Q2
- 2008 interim dividend announced at 0.88p per share, up 10%
year-on-year Outlook We enter the second half of 2008 with a broad
product portfolio for licensing into an increasingly diverse
customer base; an opportunity pipeline expected to deliver
near-term license revenue and good royalty momentum across the
business. We therefore reiterate the guidance for FY 2008 given in
both February and April; assuming no further deterioration in the
trading environment, we continue to expect to increase dollar
revenues in FY 2008 by at least the growth rate achieved in FY
2007. Commenting on the results, Warren East, Chief Executive
Officer, said: "ARM has made good progress in the first half of
2008 in challenging market conditions, further extending the
group's backlog which was already at record levels. We see
continued strong demand for ARM's technology including long-term
commitments for our processor and physical IP technology by
industry leaders. Prospects for PD licensing in H2 2008 are
promising notwithstanding the uncertain current trading
environment. We have a broad product portfolio that our customers
are designing into applications from mobile computers to
microcontrollers. We are encouraged by our second successive
quarter of sequential growth in PIPD as we build momentum in that
business. Growth of more than 25% year-on-year in underlying
royalty revenues for both PD and PIPD provides further evidence of
the increasing use of ARM's technology in a rapidly broadening
range of consumer electronics products. Whilst investing in future
technology innovation, we continue to exercise financial restraint,
reducing overall operating costs and headcount, thereby increasing
margins sequentially; generating record levels of cash within the
quarter; and increasing the interim dividend." Q2 2008 - Revenue
Analysis Revenue ($m)*** Revenue (GBPm) Q2 2008 Q2 2007 % Change Q2
2008 Q2 2007 % Change PD Licensing 30.2 45.3 -33% 15.3 23.2 -34%
Royalties 51.0 40.1 27% 26.0 20.2 29% Total PD 81.2 85.4 -5% 41.3
43.4 -5% PIPD Licensing 12.6 14.0 -10% 6.4 7.1 -10% Royalties(1)
9.7 7.3 33% 4.9 3.6 36% Total PIPD 22.3 21.3 5% 11.3 10.7 5%
Development Systems 16.2 14.1 15% 8.2 7.1 15% Services 8.4 8.4 4.2
4.3 -2% Total Revenue 128.1 129.2 -1% 65.0 65.5 -1% (1) Includes
catch-up royalties in Q2 2008 of $1.1m (GBP0.6m) and in Q2 2007 of
$0.6m (GBP0.3m). H1 2008 - Revenue Analysis Revenue ($m)*** Revenue
(GBPm) H1 2008 H1 2007 % Change H1 2008 H1 2007 % Change PD
Licensing 66.6 82.7 -20% 33.5 42.6 -21% Royalties 105.8 85.1 24%
53.9 43.2 25% Total PD 172.4 167.8 3% 87.4 85.8 2% PIPD Licensing
24.4 31.0 -21% 12.3 15.7 -22% Royalties(1) 18.8 15.6 20% 9.6 7.9
21% Total PIPD 43.2 46.6 -7% 21.9 23.6 -7% Development Systems 30.3
27.7 9% 15.3 14.1 9% Services 16.5 16.3 1% 8.3 8.5 -2% Total
Revenue 262.4 258.4 2% 132.9 132.0 1% (1) Includes catch-up
royalties in H1 2008 of $2.1m (GBP1.1m) and in H1 2007 of $2.1m
(GBP1.1m). Q2 2008 - Financial Summary US GAAP Normalised* US GAAP
GBPM Q2 2008 Q2 2007 % Change Q2 2008 Q2 2007 Revenue 65.0 65.5 -1%
65.0 65.5 Income before income tax 21.1 22.5 -6% 12.6 12.0
Operating margin 31.5% 32.0% 18.3% 16.0% Earnings per share (pence)
1.17 1.18 -1% 0.71 0.64 Net cash generation** 26.5 10.0 Effective
fx rate ($/GBP) 1.97 1.97 H1 2008 - Financial Summary US GAAP
Normalised* US GAAP GBPM H1 2008 H1 2007 % Change H1 2008 H1 2007
Revenue 132.9 132.0 1% 132.9 132.0 Income before income tax 42.5
44.1 -4% 24.8 24.7 Operating margin 31.0% 31.1% 17.7% 16.5%
Earnings per share (pence) 2.33 2.32 1% 1.39 1.34 Net cash
generation** 40.2 25.5 Effective fx rate ($/GBP) 1.97 1.96 *
Normalised figures are based on US GAAP, adjusted for
acquisition-related, share-based remuneration and restructuring
charges. ** Before dividends and share buybacks, net cash flows
from share option exercises and acquisition consideration. ***
Dollar revenues are based on the group's actual dollar invoicing,
where applicable, and using the rate of exchange applicable on the
date of the transaction for invoicing in currencies other than
dollars. Approximately 95% of invoicing is in dollars. Contacts:
Fiona Laffan/Pavla Shaw Tim Score/Ian Thornton Brunswick ARM
Holdings plc +44(0)207-404-5959 +44(0)1628-427800 DATASOURCE: ARM
Ltd CONTACT: Contacts: Fiona Laffan/Pavla Shaw, Brunswick,
+44(0)207-404-5959; Tim Score/Ian Thornton, ARM Holdings plc,
+44(0)1628-427800
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