# Arm Holdings (ARM): A Record Quarter, a 50% Crash — And Still 970x Owner Cash Flow

Page: https://stenobird.com/podcast/charged-alpha-stock-encyclopedia-7819792/arm-holdings-arm-a-record-quarter-a-50-crash-and-still-970x-owner-cash-flow
Text version: https://stenobird.com/podcast/charged-alpha-stock-encyclopedia-7819792/arm-holdings-arm-a-record-quarter-a-50-crash-and-still-970x-owner-cash-flow.md
Podcast: [Charged Alpha Stock Encyclopedia](https://stenobird.com/podcast/charged-alpha-stock-encyclopedia-7819792)
Published: 2026-07-29T22:42:20+00:00
Episode link: https://chargedalpha.podbean.com/e/arm-holdings-arm-a-record-quarter-a-50-crash-%e2%80%94-and-still-970x-owner-cash-flow/
Audio file: https://mcdn.podbean.com/mf/web/w3hki392uwnrfrhg/audio_j.mp3
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Duration seconds: 959

## Resource

Arm Holdings plc (ARM) Q1 FY2027 — Arm Holdings (ARM), the UK-based company whose CPU architecture sits inside almost every smartphone on earth and a fast-growing share of AI data centers, reported fiscal Q1 2027 (quarter ended June 30, 2026) after the close on July 29: revenue rose 22% YoY to a record $1,289M, beating the $1.26B guide; royalty revenue +22% to $715M with data-center royalties more than doubling; license and other revenue +23% to $574M. Non-GAAP EPS of $0.45 (+29% YoY) beat both the $0.40 guide and the $0.40 Street estimate, and non-GAAP operating margin rose to 41.2%. Management raised Q2 guidance to $1.38B +/- $50M (Street ~$1.34B) and non-GAAP EPS to $0.47 +/- $0.04 (Street ~$0.43). But the GAAP books tell a different story: GAAP operating income was just $91M and the GAAP operating margin FELL to 7.1% from 10.8%, because Arm expensed $343M of share-based compensation plus $90M of employer taxes — 33.6% of revenue — in a single quarter. Of $270M GAAP net income, $128M was a non-cash equity-investment mark-up and $17M a tax benefit. Arm touts $1,397M of TTM non-GAAP free cash flow (+134%), but that treats $1,154M of TTM stock comp as free; subtract it and true owner free cash flow is roughly $243M, and on that basis Arm's FCF was negative in FY2024, FY2025 and FY2026. Annualized contract value rose only 13% versus reported licensing +23%, and Arm quietly stopped disclosing remaining performance obligations, Access licence counts and chip unit volumes. 30% of revenue ($388M) is related-party, principally Arm China. The stock closed at $224.89 on July 29 (down 8.1% on the day, pre-print) after a 50% collapse from its $452.70 June high, and traded near $225.84 after hours — essentially flat on a beat and raise. Our owner-earnings DCF with SBC honestly ex…

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