Arm Holdings IPO: All you need to know

The Arm IPO is shaping up to be one of the most significant IPOs in the US, with a goal to raise $4.9 billion.

This article discusses Arm's business overview and explores its IPO's price range, size, and opening date in detail.

Arm Holdings IPO: Business Overview

(Source: Reuters)

In 1990, Arm started as a joint venture between Acorn Computers, Apple, and VLSI Technology. From 1998 to 2016, it was listed on both the London Stock Exchange and Nasdaq. However, in 2016, SoftBank stepped in and acquired Arm for $32 billion.

Arm specialises in designing and producing computer chips. Data from their website reveals that around 70% of people worldwide uses Arm-based technology in various sectors. This suggests that nearly every internet user engages with devices powered by Arm, be it cars, phones, drones, or even digital passports.

About 250 billion Arm-based chips have been embedded in products by 1,000+ partners in the company's global ecosystem. Arm has offices in the UK, the US, China, Japan, India, South Korea, Taiwan, France, Germany, Sweden, and several other European nations.

Arm Holdings IPO: Functions and Operations of the Company

The UK-based company designs software for computer chips used in phones, PCs, wearable technology, and even cars. Arm earns revenue by licensing out its technology to other companies, allowing them to use processor technology that would otherwise be too difficult to create.

Nvidia attempted to buy Arm for around $40 billion in 2022, but both companies called off the sale because of significant regulatory challenges.

Arm Holdings IPO Objectives: Key Dates, Valuation, and What Investors Should Know

Arm Holdings has marked the 14th of September 2023 to open its doors to investors on Nasdaq in what is considered to be the biggest IPO in the US.

Here's what's planned:

1. They aim to sell 95.5 million shares, each priced between $47-$51.

2. If everything goes as planned, Arm could be valued at up to $52 billion. This is a bit less than their initial target range of $60-70 billion.

3. There are some words about Arm's strong ties to China and its growth rate slowing down. 

Yet, the company's IPO is still one of the most talked-about, as they hope to benefit from the rise of AI technology.

Who's helping with the IPO? Big names like Barclays, Goldman Sachs, JPMorgan, and Mizuho are on the list. Plus, 24 other firms are assisting. 

Arm Holdings IPO: Financial Performance

The chip designer reported a total revenue of $746 million for the third quarter of FY2022 ending December. An uptick in licensing revenue drove this 28% surge in Arm's total revenue. Licensing revenue was a standout, reaching $300 million for the quarter, up 65% from the year before and significantly higher than the $192.7 million of the prior quarter.

As for royalty revenues, they reported $446 million. According to Arm, this is a 12% increase from the same time the previous year. The reason behind this growth? There's been a high demand for chips designed by Arm, especially in servers and cars. Plus, their latest Armv9 processor technology is becoming popular in high-end smartphones.

Arm Holdings IPO: Key Takeaways

• IPO Launch: Arm Holdings is gearing up to launch its IPO on the Nasdaq on September 14, 2023. This is anticipated to be one of the biggest IPOs in the US.
• Valuation Details: The company's target valuation is up to $52 billion, falling short of the initial range of $60-70 billion.
• Financial Performance: For the third quarter of FY2022, revenue stood at $746 million, a 28% increase from the prior year. Licensing revenue reached $300 million.
• Historical Context: Arm was acquired by SoftBank in 2016 and is now making its return to the public market.
• Previous Acquisition Attempt: In 2022, Nvidia's bid to acquire Arm for $40 billion was retracted.
• Strategic Importance: Arm designs and manufactures chips - a technology that is used in various devices and sectors, from smartphones to cars.