Arm reported record royalty and licensing revenue during its first quarter of FY2027, with the chip company posting total revenue of $1.29 billion for the three-month period ending June 30.

Royalty revenue was up 22 percent Year-over-Year (YoY) for Q1 2027, totaling $715 million, with data center royalty more than doubling from the same period a year ago, growth which the company attributed to the continued adoption of Arm Neoverse. Licensing revenue grew by 23 percent YoY to $574m.

In a letter to shareholders, Arm CEO Rene Haas said the results reflect “two important trends.”

“First, the transition of the data center to Arm continues to accelerate, creating significant opportunities for Arm technology through both Arm AGI CPU silicon and IP royalty revenue. Second, AI is rapidly expanding beyond the cloud… increasing demand for the Arm compute platform across a broad range of devices.”

However, while Arm said the company had delivered “record royalty and licensing revenue for a first quarter,” total revenue decreased by 13.4 percent Quarter-over-Quarter, down from $1.49bn in Q4 2026.

Arm launched its Arm AGI CPU in March 2026 and is the company’s first-ever data center CPU, designed to support “agentic AI infrastructure.” Co-designed with Meta, the chip represents the first time in Arm’s 35-year history that the company has produced its own chip, a departure from its traditional business model of designing and licensing out its chip IP to companies.

Speaking on an earnings call after the results had been published, Haas said since the introduction of the CPU four months ago, the company has made “significant progress,” with the hardware having been delivered to multiple customers already.

He went on to note that while Arm has secured the manufacturing capacity it needs to support the $1bn demand for the chip across FY27 and FY28, demand for the Arm AGI CPU “now exceeds $2 billion as we continue to add new customers, including multiple customers in the US and China.” It is not clear whether this $2 billion refers to booked orders or anticipated demand for the chip that has yet to translate to sales.

Haas said Arm was working closely with its manufacturing and supply chain partners to further expand capacity.

“Making a chip is complex relative to supply chain,” he said. “You have wafers, you have substrates, you have test capacity, you have memory. All of those areas, our confidence level in being able to secure the supply necessary has gotten better [in the last 90 days].“

Haas said Arm would provide an update during its Q3 results presentation, which is when he expects the company to have better visibility of its Q4 2027 and FY28 outlook.

Additionally, in response to an analyst question on the earnings call, Arm CFO Jason Child said that once shipments of the Arm AGI CPU – which are expected to commence at the end of 2026 – total ten percent of the company’s revenue, Arm will break out its silicon financials separately from license and royalty results.

“I would expect that, based on our forecast, that should be broken out in FY28,” he said.