ARM Holdings plc Q Results ROADSHOW SLIDES

Transcription

1 ARM Holdings plc Q Results ROADSHOW SLIDES 1 v1

2 ARM Overview ARM is the world s leading semiconductor IP company Licensing and royalty business model delivers operational leverage and robust cash generation Gaining share in long-term secular growth markets Strong competitive position for longterm sustainable growth 2

3 ARM Introduction Global leader in the development of semiconductor IP R&D outsourcing for semiconductor companies Innovative business model yields high margins Upfront license fee flexible licensing models Ongoing royalties typically based on a percentage of chip price Technology reused across multiple applications Long-term, secular growth markets Approximately 770 licenses Grows by every year More than 250 potential royalty payers >6bn ARM-based chips in 10 >25% CAGR over last 5 years 3

4 Cumulative Licensing Drives Royalties Licensing base typically grows by licenses every year Internet-connected consumer electronics from smartphones to DTV Embedded applications such as microcontrollers and hard disk drives Growing base yields royalty revenues over long period Leading semiconductor companies have made long-term, strategic commitments to ARM technology Applicability of ARM technology broadens over time Processor Licenses ~770 $300m $250m $200m $150m $100m Significant Royalty Potential from Recent Licenses Pre-2001 ~350 Licenses ~300 Licenses Q $50m $0m ~100 Licenses

5 Key Growth Drivers Growth in mobile applications Increasing value of ARM technology per device More chips and higher priced chips Growth Opportunities Growth beyond mobile Increasing ARM penetration into broader range of digital products Growth into new technology outsourcing Physical IP, graphics IP and video IP increase ARM s value per device and penetration Growth in non-mobile applications Increasing the ARM value per device Extending IP Outsourcing 5

6 Increasing Value and Penetration Mobile Phones Mobile Computers Digital TV & STB PC & Peripherals Microcontrollers ARM processors can be found in more than 95% of mobile phones Average of 2.5 ARM-based chips per mobile phone, with smartphones containing between 2 and 5 ARM-based chips Typical smartphone drives six times more royalty than typical dumb-phone ARM processors used in: 2G/3G baseband connection Applications processor GPS, WiFi, Bluetooth Touchscreen, camera Smartphones are evolving into mobile computers 230m unit market in 2010 Forecast 750m units in 2015 ARM in applications processor used to run: User interface, operating system, browser and plugins, , gaming ARM processors also used in: Hard disk drive controller WiFi, Bluetooth, WiMAX 2G/3G baseband connection ARM market share ~35% in brands such as Samsung, Sony Bravia and Vizio Digital TV becoming more internet connected, requiring web-browsers, plug-ins and PCclass OS. Driving need for smarter processor such as ARM ST is market leader and recently announced they are moving to ARM ARM technology can be found in many products in the home office Disk drives (85% share) Printers (65%) Networking (25%) such as broadband router, WiFi, BT and femto cell As these products become more capable and more efficient, they create more opportunity for ARM Microcontroller market is very large with mainly low-cost chips ARM s market share ~10% but growing rapidly ARM processors used in: Electric motor controllers Monitors and sensors Medical applications Industrial robotics Toys Average number of ARM-based chips per phone 7,000 6, , ,000 3,000 2,000 1, Q Royalty Unit Split 66% Mobile Enterprise 9% 17% 8% Embedded Home 5% 15% 16% % Non- Mobile 62% Mobile 6

7 Extending the Model Physical IP and multimedia IP markets represent further outsourcing opportunity Technology complexity increasing, drives cost and risk ARM develops technology and amortises costs over many licenses Additional royalty streams per chip Physical IP Leading-edge physical IP available from 250nm to 20nm Foundries licensing ARM technology for next generation processes >30% of PIPD royalties generated from technology at 65nm or below 12 of top 20 semis are driving ARM royalties from foundries 13 POP licenses signed Multimedia IP 46 licenses for graphics and video Samsung, ST and Mediatek licensees First licenses now delivering royalties Volume expected to grow 2H

8 Strong Balance Sheet and Cash Generation Healthy margins drive strong cash generation in Q1 Generated 63m of cash in Q1 Net cash of 344.3m at end Q1 Total cash returned of 402m over 5 years 140m via dividend 262m via share buybacks Progressive dividend policy 2010 dividend increased by 20% 200m 180m 160m 140m 120m 100m 80m 60m 40m 20m 0m 3.0p 2.5p 2.0p 1.5p 1.0p 0.5p 0.0p Strong Cash Generation Cash Generated in First 3 Months of the Year Cash Generated in Last 9 Months of the Year Q Dividend Growth Interim

9 Summary ARM business model reduces chip development cost Turns large fixed cost into smaller variable cost Yields high margins for ARM ARM s technology is needed as growing complexity is increasing cost and risk for chip designers ARM is gaining share in structural growth markets Global proliferation of the internet Low power in battery-powered products and in consumer electronics Smart, low-cost devices in everything we use during the day 9

10 Segments for ARM in 2010 Devices Shipped (Million of Units) 2010 Devices Chips/ Device TAM 2010 Chips 2010 ARM 2010 Share Smart Phone ,200 1,100 90% Mobile Feature Phone ,900 1,700 90% Low End Voice % Portable Media Players % Mobile Computing* (apps only) % Desktop PCs & Servers (apps) % Digital Camera % Digital TV & Set-top-box % Non-Mobile Networking % Printers % Hard Disk & Solid State Drives % Automotive 1, , % Smart Card 5, , % Microcontrollers 5, , % Others ** 1, , % Total 19,000 22,000 6,100 28% Source: ABI, Gartner, Semico, Instat, IDC, and ARM estimates * Including tablets, netbooks and laptops * * Includes other applications not listed such as headsets, DVD, game consoles, etc 10

11 Segments for ARM in 2015 Devices Shipped (Million of Units) TAM 2010 Chips 10 ARM Share TAM 2015 Devices Chips/ Unit TAM 2015 Chips Key Growth Areas for ARM Smart Phone 1,200 90% 1, ,000 Mobile Feature Phone 1,900 90% ,000 Low End Voice % ,300 Portable Media Players % Mobile Computing* (apps only) % Desktop PCs & Servers (apps) 220 0% Digital Camera % Digital TV & Set-top-box % ,200 Non-Mobile Networking % ,400 Printers % Hard Disk & Solid State Drives % 1, ,100 Automotive 1,800 10% 2, ,200 Smart Card 5,400 6% 7, ,700 Microcontrollers 5,800 10% 9, ,000 Others ** 1,800 15% 2, ,000 Total 22,000 28% 27,000 34,000 Source: ABI, Gartner, Semico, Instat, IDC, and ARM estimates * Including tablets, netbooks and laptops * * Includes other applications not listed such as headsets, DVD, game consoles, etc 11

12 ARM s Opportunity at all Price Points Volume Opportunity $1-2 $3-6 $10-15 Average Selling Price of a Semiconductor Chip ARM Usage Today >$25 12

13 Processor Royalties Q1 2011: ARM Outperforms Industry Q royalty revenue up 32%* Industry up 13% over the relevant period ARM Royalty Revenue ($M) Q1 ARM Royalty Revenue ARM Royalty Revenue Industry Growth Rate** ARM Growth Rate Q ARM $ Royalty CAGR (06-10) = 12% Industry $ Revenue CAGR (06-10) = 3% *2010 excludes $9m of royalty catch-up * *Source: SIA February 2011 Offset 1 quarter to align with ARM s royalty revenue 40% 30% 20% 10% 0% -10% -20% -30% Growth Rate (%) Q1 2011: 1.85bn units (up ~30%) Industry units (ex-memory) up ~10% ARM mobile shipments up ~30% End market shipments up ~30% ARM STB/DTV shipments up ~15% End market shipments broadly flat ARM hard disk shipments ~flat HDD shipments impacted as PC market slowed ARM MCU shipments up ~60% Overall MCU market up ~20% Non-mobile 39% Enterprise 16% Home 5% Embedded 18% Sources: SIA, February 2011 Gartner, January 2011 Mobile 61% 13

14 Growing the Licensing Base Cumulative licenses (Q licensing shown in parenthesis*) ARM11 TM Family 81 ARM9 TM Family ARM7 TM Family 268 (+5) 172 (+1) Mali Graphics Cortex-A Family Cortex-R Family Cortex-M Family 46 (+7) 68 (+8) 21(+1) 97 (+15) Processor Roadmap in 2011 Mali T604 & NG Mobile computing, phones and consumer electronics Kingfisher Smartphone, feature phone, and digital TV Initial lead licensee signed up Cortex-R5 & R7 Dual-core embedded processors for storage, baseband & engine management Initial lead licensees signed up Cygnet Accelerating system design for Cortex-M processors Others = 20 (+2) *Note: Licensing numbers adjusted for licenses that are no longer expected to start generating royalties. Estimated Royalty Opportunity for 2015 Application Processors 4bn units per year Real-time Embedded 12bn units per year Microcontrollers 18bn units per year 14

15 Licensing Increases Market Opportunity To gain share ARM works to win designs at market leading semiconductor companies Application Penetration of Key Companies Products 2010 Share Shipments Smartphone Apps >95% Mobile Computer Apps* 10% Mobile Modems 100% Mobile BT 70% Mobile WiFi 65% Digital Camera** 80% Digital TV / Set-Top-Box 35% Networking 25% Printers** 65% Disk Drives (HDD & SSD) 85% Automotive 10% Smart Card 6% Microcontrollers 10% 3D Graphics <1% * Includes handheld computers, tablets, and laptops **Based on OEM market share rather than semiconductor vendor Shipping mainly ARM-based chips Shipping some ARM-based chips Public ARM design wins, but not yet shipping No ARM design win or not yet public Q Q company re-equipped 2 companies re-equipped 3 companies re-equipped 1 company re-equipped 2 new design wins Based on current market shares and ARM s view of how these markets may develop. ARM will update the chart on the left only as design wins become public 15

16 Latest Technology Drives Royalty Growth 16

17 ARM s 2020 Vision ARM is growing into new markets and product categories From sensors to servers, from 50c to $200, from <50MHz to >2GHz Today s processor licenses drive shipments beyond 2015 Expect over 100 billion cumulative ARM based chips by 2020 <50c <50MHz Royalty opportunity grows with volume and scope >$200 >2GHz Microcontrollers SSD HDD Mobile Computing Server Sensors Smartcards BT WiFi Baseband PC HPC The Architecture for the Digital World 17

18 Mobile: Growing Royalties Per Device ARM chips per phone 2.5 in Q1-11 Smartphones have increasing number of ARM based chips Basic phones often have baseband, camera & Bluetooth More ARM-based mobile computing devices announced by leading OEMs in a wide range of form factors Semiconductor partners have announced over 100 design wins Dual and quad core Cortex-A9 and Mali 400 in next generation processors for 2011 Mobile computing market expected to grow to 750m units by 2015* Some of the ARM-based Products Recently Announced Acer Iconia Tab A500 Samsung Galaxy Tab Lenovo LePad Sharp Galapalos LG Optimus Hand-cranked OLPC More Announcements Expected Through 2011 * Apps processors only. Gartner and ARM forecasts 18

19 Opportunity for ARM Low Cost Phones Ultra Low Cost Feature Phones Ultra Low Cost Smartphone Ultra Low Cost Mobile Computer Ultra Low Cost 700m devices in m devices in bn devices in m devices in 2015 Baseband Modem - $ Apps Processor and baseband - $$$ WiFi / BT /GPS - $ Touchscreen/Camera - $ Apps Processor - $$$ 3G/LTE BB - $$$ WiFi / BT /GPS - $ Touchscreen/Camera - $ Apps Processor - $$$$ 3G/LTE BB - $$$ WiFi / BT / GPS - $ Touchscreen - $ Camera - $ Storage - $ 1 x $ 5 x $ 8 x $ 11 x $ $ = Unit of Royalty 19

20 ARM Opportunity in Mobile Computing ARM Opportunity per Mobile Computer Mobile Computer Market Growth Forecast Camera Touch screen Applications Processor $800m $700m $600m $500m ~750M Storage $400m $300m BT/Wi-Fi/GPS $200m $100m $0m 3G Baseband Source: Gartner, ARM estimates Opportunity Relative Royalty ARM Market Share Apps Processor $$$$ TBD 3G/LTE BB $$$ 100% Storage $ 50% BT/Wi-Fi/GPS $ 50% Touch screen $ <10% Camera $ <5% $ = Relative unit of royalty ARM Royalty Opportunity in 2015 Assumption: ARM receives a 20c royalty for each ARM-based applications processor and another 20c for the other chips in device ARM share of applications processor shipments 1% 33% 66% 100% ARM based apps processors 5m 250m 500m 750m Royalty from apps processor $1m $50m $100m $150m Royalty from other chips $150m $150m $150m $150m Total royalty contribution $151m $200m $250m $300m 20

21 ARM s High Performance Computing ARM Cortex-A family are used as applications processors in a wide range of computing products Market size* Smart phones 1100m 280m Mobile** Computers 750m 230m DTVs/ STBs 500m 350m Servers*** 110m 70m Desktops 140m 150m ARM s 2010 Market share >95% 10% 35% 0% 0% * Estimates based on forecasts from Gartner, SIA and ARM ** Includes tablet, netbooks and laptops *** Opportunity for ARM-based application processors in server market Technology: Multi-GHz, multi-core processors and graphics processors delivering unmatched low-power for multi-day battery life Business model: Multi-sourcing enables a collaborative industry of many players enabling differentiation for OEMs Ecosystem: Multiple providers supply complete internet software and broadest range of OSes 21

22 ARM s Opportunity in Microcontrollers Analyst Day 2007 TAM(m) End-Market 2015 Automotive 2,200 Smartcards 7,700 Microcontrollers 9,000 Total 19 billion ABI Research, IDC, Gartner and ARM forecasts Utility Meters IR Fire Detector Teleparking Exercise Machines Intelligent toys Energy Efficient Appliances Plus lots of other companies developing MCUs & sensors Intelligent Vending 22

23 Gathering Momentum Analyst Day Full 2006 Year 2010 Companies with announced ARM MCU product lines Cortex-M is ARM s fastest ever licensing family of processors 97 licensees as of Q % sequential increase in Cortex-M shipments in Q Cortex-M now 13% of all units shipped Many companies selling devices $1 Broad set of devices on market Freescale: Over 200 devices, Atmel (60), NXP (120), ST (135), TI (170), Toshiba (25) ARM technology being broadly designed into smart-grid and smart-meters 23

24 Impact of Microcontroller Growth Embedded products such as microcontrollers have been ARM s fastest growing market Low-cost MCUs typically in $1-2 range As ARM gains share in the lower cost microcontroller market, so ARM s average royalty per chip declines Royalty per ARM-based microcontroller -30% value CAGR 60% volume CAGR Royalty per ARM-based chip ex-mcus -5% value CAGR 20% volume CAGR 7,000 6,000 5,000 4,000 3,000 2,000 1,000 Royalty Unit Split (million units) Embedded Home Enterprise Mobile 1600m 200m 220m 430m 3800m 1050m 300m 970m Royalty per ARM-based chip 6.7c 4.7c -9% value CAGR 25% volume CAGR Total ARM Royalties $164.1m 15% value CAGR $282.5m Excluding catch-up 24

25 Impact of Functional Integration Integration of multiple functions into a single chip has limited overall impact on ARM total royalty revenue Chips containing multiple ARM processors yield higher royalties Function X Function Y Combination Function X & Y $5 $2.50 Integrated chip reduces cost for OEM and increases profitability for the semiconductor manufacturer $6 ARM royalty rate at 2% per chip 15c royalty ($5@2%)+ ($2.50@2%) Average of 7.5c royalty per chip For this high volume application example: ARM gets full royalty for first processor per chip; discounted royalty for subsequent processors OEM, semi and ARM all benefit from integration Chips with multiple ARM-based processors expected to increase ARM royalty rate at 2% for 1 st processor 1% for 2 nd processor 18c royalty $6@(2% + 1%) Average of 18c royalty per chip 25

26 Impact of New ARM Technologies ARM is introducing new technologies that generate additional royalties per chip often alongside an ARM processor Mali Graphics and Video Mali technology has been licensed 46 times by 40 companies Generates a similar per chip royalty as an ARM processor Mali typically found in higher priced chips such as applications processors ARM CPU $+$ Mali GPU Both CPU and GPU generate a full royalty per chip - no discounts 4 billion consumer electronics devices in 2015 will have screens all are an opportunity for Mali Physical IP has been licensed to all the major foundries Royalty is paid by the foundry on a per wafer basis $ Physical IP Wafer royalties and chip royalties are paid by different entities in the value chain Wafer $ All chips need physical IP. ARM s opportunity grows as companies increasingly outsource to reduce cost 26

27 Average Royalty Percentage Per Chip Average royalty percentage per chip is beginning to increase Cortex-A family of processors command higher percentage royalty Increasing number of chips contain multiple ARM-based processors ARM Mali and Physical IP generate additional royalties per chip Increasing percentage per chip is likely to grow over time Higher Royalties for Cortex-A Processors Cortex per chip royalties typically higher than historic royalty rates 90m 80m 70m 60m 50m 40m 30m 20m 10m 0m Cortex-A Shipments 1Q10 2Q10 3Q10 4Q10 1Q11 Multiple ARM Processors Per Chip When multiple ARM processors are integrated into a single chip, higher royalty rates typically apply Combo chip Q4 10 Q % increase in chips with multiple ARM processors per chip Multiple Royalty Sources Per Chip Mali and Physical IP generate additional royalties per chip There are chip designs based on ARM processors and/or Mali and physical IP Physical IP M0 A9 Mali 27

28 Physical IP Licensing Base ARM develops and licenses physical IP for leading ASIC, foundry and fabless semis 32/28nm licenses signed with all advanced foundries Working on 20nm Over 30 foundries have licensed 78 platforms on process nodes from 250nm to 20nm Nine new platforms licensed in 2010 Higher than historical average Over 30 platforms yielding royalties 6 platforms driving royalties at advanced nodes at 65nm or below 12 of top 20 semis are driving ARM royalties from foundries Platforms Licensed by Foundry 22/20 32/28 45/40 65nm 90nm 130nm 180nm -250nm Chartered Dongbu GlobalFoundries Grace HHNEC IBM (CMOS &SOI) Magnachip Samsung SMIC Tower TSMC UMC Vangaurd X-Fab Fabless, ASIC and IDM Customers Collaboration with IBM to 14nm 28

29 Advanced Roadmap is Moving to 20nm 32nm engineering work starts ARM processor functional on 32nm Optimised Cortex-A9/A5 on 32nm 28nm alpha deliverables released to customers 3 rd 20nm R&D tape-out Q110 Q210 Q310 Q410 Q111 On going activity Next Steps Leading foundries license 32/28 nm physical IP GLOBALFOUNDRIES licenses28nm physical IP TSMC licenses 28nm & 20nm physical IP Fresecale chooses ARM physical IP IBM & ARM collaborate on 20 to 14nm Commercial activity - Focus on 32/28nm design wins to drive royalties Engineering execution - Multiple customer tape-outs at 32nm 29

30 PIPD s Market Development PIPD market share has grown steadily All major foundries licensed physical IP PIPD Market Share by No of Wafers* 25% 19% 20% 21% 20% 16% 15% Foundry wafer volume expected to grow significantly as IDMs continue to outsource 10% 5% 0% * 200mm equivalent wafers ARM well positioned for long-term royalty growth Advanced foundries signed up for geometries at 45nm and below Leading fabless semis starting to make outsourcing decisions Creates opportunity for growth as advanced nodes are forecast to become fastest growing nodes Market Size (m of wafers) Market Size (m of wafers) Foundry Market Forecast Gartner, ARM estimates Forecast by Node 90 nm 65 nm 45 nm x1.5 x4 X Gartner, ARM estimates 30

31 Physical IP Building Better Processors Processor Optimisation Packages (POPs) Optimised physical IP that will deliver a predetermined processor implementation Different options for higher performance or lower power Range of Cortex processors, process nodes and foundries supported Combination of processor and physical IP delivers multiple royalties per chip 13 POPs licensed for Cortex-A family processors 5 licensees for Cortex-M family ultra low leakage libraries Dual Core Cortex-A9 Speed Optimised 1 1.9W 2GHz Dual Speed Core Optimised Cortex-A9 1 Power Optimised 2 0.5W 800MHz Dual Core Cortex-A5 Speed Optimised 3 80mW Cortex-M0 Ultra Low Leakage 4 5mW 500MHz 50MHz 1. Speed Optimised: Dual Core Cortex-A9, TSMC 40nm G, typical silicon, 85C T j Overdrive 3. Speed Optimised: Dual Core Cortex-A5, TSMC 40nm G, typical silicon, 85C T j Overdrive 2. Power Optimised: Dual Core Cortex-A9, TSMC 40nm G, slow silicon, 125C T j, Worst case V 4. Cortex-M0 implemented with TSMC 180ULL with ARM physical IP library at 1.8V dd 31

32 Extending IP Outsourcing: Media Growing the Media Processor Licensing Base 46 licenses for graphics and video 7 licenses added in Q Q Growing Shipments in Mobile and Non-Mobile Applications More Mali-based chips shipping into mobile and consumer electronics devices STMicroelectronics announced 10 major STB design wins for Mali-based STi Samsung announced that Mali-based Orion delivered 5 times more graphics performance than their previous design Pre-2007, Licenses Partners 6 Royalty Payers 32

33 Processor Ecosystem Development ARM s processor ecosystem gets broader and richer with every OEM design win or software/tools/content developer porting their product to run on ARM-processor based chips Microsoft Announced Future Windows on ARM Microsoft announced that future versions of their Windows operating systems and Office application software is available on ARM Digital TV Design Wins NDS, Skyworth and Hisense demonstrated their STB/DTV products based on ARM Cortex-A9 processor and Mali 400 graphics Internet explorer 10 demo on NVIDIA Tegra 2 at Microsoft developer conf. Infinite TV is a global B2B over-the-top content marketplace Leading baseband providers using ARM for LTE Leading baseband modem providers declared that they would be using ARM processors for their LTE and LTE-advanced modems Major Content Providers Supporting Mali Autodesk, Gameloft and Polarbit optimised some of their premium UI and gaming content to run on Mali in high definition 3D graphics Autodesk's Scaleform User Interface is used in many PC and console games 33

34 From Revenue to Profits and Cash FY2010 Revenues $m m %revs Licensing % Royalty % Other % Total % COGS 23.3 Gross Margin 94.3% Operating Costs Operating Margin 40.4% Profit Before Tax EPS 9.34p Free Cash Flow % of revenues earned in US dollars Royalties approximately 50% of revenues R&D expensed as incurred Approximately 50% of costs in USD 10% move in $/ impacts EPS by ~15% Operating margins and earnings will increase as royalties grow Cash generative, debt free 34

35 ARM Holdings plc Q Results 35

36 Q Highlights Licensing positions ARM for further gains in multiple markets ARM technology increasingly chosen by market leaders Computers and servers becoming new markets for ARM-based technology ARM gaining share in end markets with structural growth drivers Several consumer electronics companies chose ARM technology for the first time during Q1 Physical IP developing optimisation packages at 20nm Additional royalty per chip for Cortex-A family processors Group backlog up over 100% year-on-year Expect FY11 group revenues at least in-line with market expectations Growth in non-mobile applications Growth Opportunities Q1 Group Revenues $185m Dev. Sys. & Services 12% Physical IP Division 13% Processor Division 75% Increasing the ARM value per device Extending IP Outsourcing 36

37 Outlook Q2 outlook Expect normal seasonality for royalty revenues in the second quarter Normalised operating expenses, assuming constant currency, to be in the range 58m to 60m Looking further ahead ARM has made an encouraging start to 2011 Notwithstanding current uncertainty as to the economic impact of Japanese earthquake, we expect group dollar revenues for the fullyear 2011 to be at least in line with current market expectations 37

38 Q Revenue Summary ($) Q Q $m $m PD Licensing % Royalties % PD Total % PIPD Licensing % Royalties* % PIPD Total % Development Systems % Services % Total Revenue % * Includes catch-up royalties in Q of $0.6m and $0.5m in Q

39 Q Revenue Summary ( ) PD Q m Q m Licensing % Royalties % PD Total % PIPD Licensing % Royalties* % PIPD Total % Development Systems % Services % Total Revenue ** % * Includes catch-up royalties in Q of 0.4m and 0.3m Q ** ARM s $/ effective rate of $1.60 in Q and $1.55 in Q

40 Backlog Analysis End Q Backlog by Maturity Profile Backlog Composition 24% 15% 12% 54% 22% 73% Q2/Q311 Q411/Q Processors Physical IP Support, Maintenance & Other 40

41 Revenue Split Analysis 100% 6% 11% 5% 7% % of $ Revenues 75% 50% 25% 43% 40% 35% Licensing 53% Royalties 0% Q Services Development Systems PIPD Licensing PD Licensing PIPD Royalties PD Royalties 41

42 Processor Licensing 27% group $revs Revenues at $51.3m up 50% year on year Group backlog up over 100% Base of licenses grows to over 770 with 39 licenses signed in Q Two subscription licenses signed by Broadcom and LG Electronics Eight licenses for Cortex-A class processors One license for Cortex-R class processor Fifteen licenses for Cortex-M class processors Seven licenses for Mali graphics processors Non-mobile licensing strong in all target markets Several companies making chips for DTV or STB license ARM processor technology for the first time 13 companies licensing Cortex-M for microcontrollers Mobile opportunity increasing too Applications processors for smartphones and mobile computing Processor Licenses Number of licenses signed in Q Mobile Non-mobile Both Q ~770 42

43 Q1 Financial Highlights Strong financial performance Q1 dollar revenues up 29% YonY to $185.5m Normalised PBT at 50.8m Normalised EPS at 2.73p Financial discipline balances investment with margin expansion Operating margin at 42.5% year-to-date Headcount up 33 since end of 2010 Robust balance sheet Strong net cash generation of 62.9m Net cash at end of Q1 at 344.3m 43

44 Summary Balance Sheet IFRS Assets 31 Mar Dec 10 MM MM Cash (net of accrued interest) Accounts receivable (net of AROC) Amounts recoverable on contracts (AROC) Other debtors, inventory and investments Property and equipment Goodwill Other intangibles Total assets 1, ,084.7 Liabilities & shareholders equity Deferred revenue Other creditors Shareholders equity Total liabilities & shareholders equity 1, ,

45 Normalised Cash Flow Summary MM Q1 11 Q1 10 Operating activities Interest received Tax (6.7) (4.2) Capital expenditure (4.2) (1.8) Investments and acquisitions (net of disposals) - (1.0) Share options Other (forex, loans) Cash flow Opening cash (net of accrued interest) Closing cash (net of accrued interest) Profit before tax Interest income, depreciation and amortisation Cash flows from items excluded from normalised profits (12.5) (4.4) Movements in working capital Operating activities

46 Contact Information If you have any questions please contact Ian Thornton, VP of Investor Relations To get onto our distribution list 46