CPU IP Licensing

Hey, great to chat. Let me walk you through how I'm framing the next two quarters for our P&L. The trajectory is the royalty flywheel doing its thing — every shipped device carrying an Arm core sends a per-unit payment back through our model, and that flow is broadening as our architecture penetrates deeper into datacenter workloads and automotive platforms. Compute Platforms royalties, in particular, are accelerating as hyperscalers ramp custom silicon for AI training and inference, while ADAS and zonal E/E architectures in vehicles keep layering on incremental cores per car. That's assumption one: continued royalty unit growth, with mix shifting toward higher-value applications. Assumption two: licensing continues at a healthy cadence — both subscription renewals with our existing partners and targeted new engagements where customers want a foothold in our latest architectures. IP licensing carries almost no marginal cost, so gross margin stays anchored near 98%. On the income line, I'm assuming the Q1 step-up in operating leverage largely persists, with opex growing slower than revenue as we keep headcount disciplined. Revenue trends upward sequentially; net income tracks similarly but with some tax-rate normalization. The top risk? Customer concentration in mobile still anchors the royalty base, so any softening in the premium handset cycle — or tightening of export controls into China — could clip the engine. I'll be watching unit shipments closely.