- FY2013 pre-tax profit rises
- Q4 pre-tax profit falls
- PD royalties short of expectations
- FY and Q4 revenues up
- Dividend raised by 27 per cent
Chipmaker ARM Holdings reported a 32 per cent rise in pre-tax annual profits to 364m pounds on the back of higher revenues, driven by technology licensing.
It came despite a drop in profits in the fourth quarter due to a £59.5m impairment charge related to its decision to no longer pursue a licensing programme through its Bridge Crossing consortium.
In IFRS terms pre-tax profit in the last three months of the financial year was down 79% year-on-year to £12.2m as a result of the exceptional charge. Excluding that charge, and in normalised terms, pre-tax profits increased by 19% to £95.5m.
Revenues jumped 15% to £189.1m during the last three months of the year, with growth across licensing and royalties from its Physical IP and Processor products.
However, total technology royalties slowed to only a 6% rate of growth during the fourth quarter, to reach £90.7m.
Full-year revenue increased 24% to £714.6m, supported by the strong performance in the shipments and licences signed for processor technology.
"ARM's strategy is for our technology to continue to gain share in long-term growth markets, such as smartphones, tablets, enterprise equipment and embedded computing, and to increase the royalty percentage ARM receives from each device," said Chief Executive, Simon Segars.
"ARM saw good progress in fourth quarter as our latest technology was chosen by major companies in all our target markets, with further licences signed for our latest ARMv8-A processors, Mali graphics processors and physical IP technology. These design wins will help to drive ARM's future royalty revenues."
There were 2.9bn chips shipped in the fourth quarter, a record despite slower growth of chips for premium smartphones. It took cumulative shipments since 1993 to more than 50bn chips, including more than 10bn in 2013.
Net cash at the end of 2013 was £706.3m compared to £520.2m at the end of 2012.
The full-year dividend was raised 27% to 5.7p.
Looking ahead, the group expects revenue for the full year 2014 to be in line with market expectations, assuming the outlook for the semiconductor industry improves as anticipated.
Finncap analyst Lorne Daniel believes the results are "good", highlighting how adjusted profits before tax and earnings per share were both in line with market expectations.
Daniel also calls attention to the slight beat in top line growth and the "very strong" cash flow conversion achieved. Cash flow from operations came in at £338.6m.
Analysts at Numis, on the other hand, took a somewhat more critical view of the company´s results, highlighting how PD royalties were short of expectations. Earnings per share also registered a "small" miss versus consensus due to the higher than forecast operating expenditures, they explained.
"[...] We are likely to remain cautious on estimated fiscal year 2014 royalties when the main engine of recent growth is clearly sputtering."