Simon Segars, ARM Holdings
ARM's CEO Simon Segars said the company's outlook remains promisingReuters/Albert Gea

Shares in ARM Holdings jumped more than 3% early on Wednesday (20 April), after the microchip processor maker posted a sharp increase in first-quarter revenue that beat market expectations.

In the three months to 31 March, the FTSE 100-listed group saw dollar-denominated revenue climb 14% year-on-year to £276.9m ($398m, €350.5m), while revenue rose 22% in sterling terms. Operating margins declined slightly from 51.7% to 48.6%, while earnings per share rose 15% year-on-year to 8.2p, with both figures coming in ahead of market expectations.

The Cambridge-based company added processor royalty revenue in dollar terms was 15%, which saw it outperform the rest of the industry by 18 percentage points. Meanwhile, pre-tax profits rose 14% from the corresponding period in 2015 to $137.5m.

Meanwhile, a significant increase in licensing revenue highlighted how the company's technology was being utilised by a number of bigger firms in their new products, meaning ARM can expect to seen an increase in future royalties.

Licensing revenue jumped 11% year-on-year to $148.3m, representing 37% of quarterly group revenues, while royalty revenues were up 17% to $215.7m, amounting to 54% of total revenues.

"Devices are increasingly being improved by first becoming digital, and then smart, and then connected," said chief executive Simon Segars.

"This is generating huge amounts of data that needs to be protected, transmitted, managed and stored across the internet.

"These trends are creating fantastic opportunities for ARM and our partners. They are driving our licensing, as more companies need access to smart processors to build intelligence into more products, and they will drive future royalty revenue as more consumers and enterprises choose to buy smarter and more connected products."