ARM Holdings plc reported results for the fourth quarter and full year 2014. Total dollar revenues in Q4 2014 were $357.6 million, up 18% versus Q4 2013. Q4 sterling revenues of £225.9 million were up 19% year-on-year.
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Full year 2014 dollar revenues amounted to $1,292.6 million, up 16% on full-year 2013.
Total dollar licence revenues in Q4 2014 increased by 27% year-on-year to $162.3 million, representing 46% of Group revenues. Licence revenues comprised $139.5 million from processor licences and $22.8 million from physical IP licences. Processor licence revenues were up strongly in Q4 due both to a record number of licences being signed and to a particularly high proportion of the revenue from those licences being recognised in the quarter.
Group order backlog at the end of Q4 2014 was up about 5% sequentially. This was driven by an ARMv8-A architecture licence, and five partners licensing new processors that are still in development.
Total dollar royalty revenues in Q4 2014 were up 13% on Q4 2013 at $165.5 million, representing 46% of Group revenues. Royalty revenues comprised $150.7 million from processors and $14.8 million from physical IP.
Processor royalty revenues increased 16% year-on-year reflecting the expected acceleration in growth following a period of inventory management by consumer electronics OEMs. Relevant industry revenues were up 5% over the corresponding shipment period (i.e. calendar Q3 2014 compared to calendar Q3 2013).
Physical IP royalty revenue declined 7% year-on-year due to some companies transitioning to the 20nm node, where ARM chose to develop a limited platform of technology as we expect companies to move rapidly to 16/14nm where ARM has a richer library of physical IP.
Sales of software and tools in Q4 2014 were $14.6 million, a decrease of 3% year-on-year. Service revenues were $15.2 million in Q4 2014, up 9% year-on-year. Together revenues from software and tools and services represented 8% of Group revenues.
Normalised gross margins in Q4 2014 were 95.9% compared to 94.8% in Q3 2014 and 95.4% in Q4 2013. ■