In this guide, we'll discuss everything you need to know about the Arm IPO, including:
- Arm IPO: Overview
- What is Arm?
- History of Arm
- Arm CEO & Leadership Team
- Arm's Growth Outlook
- Arm Revenue & Financials
- Similar Companies to Arm
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Arm IPO: Overview
One of the most eagerly anticipated IPOs of 2022 was Arm's, however like many other tech companies, due to concerns about the unfavorable macroeconomic environment, it was rescheduled for until 2023.
The Arm IPO is now anticipated to occur before the fiscal year that ends on March 31, 2023, notwithstanding another delay.
The company's owner, Softbank, may decide to pursue a dual listing on Nasdaq and the London Stock Exchange, as Arm did in their first public offering in 1998. However, it is also possible that Arm will complete its IPO on the Nasdaq.
The Arm IPO price has not yet been finalized and could be decided as late as the day before the actual IPO.
What is Arm?
Arm is a chipmaking and semiconductor company that is a leader in the computer processing and chip industry. Founded in 1990, the company is headquartered in Cambridge, United Kingdom and is most well-known for its ARM processors, which are used in smartphones, tablets, and other mobile devices and accessories.
Arm has been a major player in the computing industry since the first dot com boom, and has actually already IPOed once before. Their 'initial' Initial Public Offering was on the London Stock Exchange in 1998 was a pivotal moment in the following dot com boom and bust.
Going back even further, Arm's breakout year as a startup was in 1993, when they partnered with Texas Instruments, which eventually led to another partnership with Nokia and the development of a groundbreaking processor for the Nokia 6110.
The Arm7 chip, which was subsequently used in over 10 billion chips, became a crucial design for the first wave of mobile devices.
The Relationship between Arm & Nvidia
Nvidia and Arm have had a long relationship of working closely, and in September 2020, Nvidia attempted to buy Arm outright from Softbank, as they referred to the company as the ‘Switzerland’ of semiconductors.
This takeover attempt was met with opposition from other major competitors including Intel and AMD, as well as security and regulatory concerns from the UK government, and lastly opposition from Arm’s subsidiary in China.
In particular, the UK’s Competition and Markets Authority (CMA) began a full ‘phase 2’ probe into the proposed merger, and European Commission Vice President Margrethe Vestager argued ‘the acquisition of Arm by Nvidia could lead to restricted or degraded access to Arm’s IP, with distortive effects in many markets.’
The proposed merger between the two computing giants was ultimately called off at the beginning of 2022, and SoftBank decided to pursue an IPO for Arm instead.
Despite this failed takeover attempt, Nvidia CEO Jensen Huang still said he expects "Arm to be the most important (CPU) architecture of the next decade."
History of Arm
Arm, formerly known as Advanced RISC Machines Ltd, was established in 1990 as a joint venture between Acorn Computers, Apple and VLSI Technology.
In 1998, the company had its first Initial Public Offering on the London Stock Exchange.
Arm remained a publicly traded company for 18 years before being acquired by SoftBank in 2016.
The current CEO of Arm is Rene Haas, who has been working with the company since 2013. Rene has a background in intellectual property and worked at Nvidia for seven years prior to his appointment as CEO.
Rene's appointment as CEO came right after the aforementioned failed takeover by Nvidia, and he was put in place with the goal of accelerating Arm's growth as the company looks to re-enter the public markets.
The founder and CEO of Softbank, Masayoshi Son, has put his full faith behind HaaS and believes he's the right leader to high Arm's growth targets and complete a successful IPO this year.
Arm's Growth Outlook
Arm's revenue and overall growth have both been quite positive in recent years. Most notably, the company reported a 40% year-over-year increase in net sales for the nine months ending December.
NewStreet Research analyst Pierre Ferragu believes that Arm's revenue can grow in the mid-teens range every year for the next five years. Arm has also been using its political alliances in order to navigate the ongoing global microchip crisis. As a result, Arm's growth is likely to remain positive in the coming years.
Arm Revenue & Financials
Arm's revenue is currently on the rise, with net sales increasing 40% year-over-year to $2 billion. The company reported record royalty revenue of $463.2 million for its quarter that ended September 30.
Arm holds a 47% stake in a joint venture that contributes to a fifth of global sales, but as IG highlights, CFO Inder Singh is currently (and quite worryingly) unable to audit the venture’s accounts.
Arm's revenue primarily comes from licensing its designs through intellectual property deals, as the company does not manufacture its chips.
Summary: Arm IPO
- Arm is a leader in the chipmaking and semiconductor industry and is most well-known for its ARM processors
- The company has a long history dating back to 1990 and has already gone public once before on the London Stock Exchange in 1998.
- The Arm IPO was originally expected to be in 2022 but was rescheduled for 2023 due to the unfavorable global macroeconomic environment, particularly for tech stocks
- The arm IPO is expected to take place before the end of fiscal year March 31, 2023, but there is always the possibility of another delay.