Cover Page
Cover Page | 12 Months Ended |
Mar. 31, 2024 shares | |
Document Information [Line Items] | |
Document Type | 20-F |
Document Registration Statement | false |
Document Annual Report | true |
Current Fiscal Year End Date | --03-31 |
Document Period End Date | Mar. 31, 2024 |
Document Transition Report | false |
Document Shell Company Report | false |
Entity File Number | 001-41800 |
Entity Incorporation, State or Country Code | X0 |
Entity Address, Address Line One | 110 Fulbourn Road |
Entity Address, City or Town | Cambridge |
Entity Address, Postal Zip Code | CB1 9NJ |
Entity Address, Country | GB |
Country Region | 44 |
City Area Code | (1223) |
Local Phone Number | 400 400 |
Title of 12(b) Security | American Depositary Shares, each representing one Ordinary Share, nominal value £0.001 per share |
Trading Symbol | ARM |
Security Exchange Name | NASDAQ |
Entity Common Stock, Shares Outstanding | 1,040,330,497 |
Entity Well-known Seasoned Issuer | No |
Entity Voluntary Filers | No |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Non-accelerated Filer |
Entity Emerging Growth Company | false |
ICFR Auditor Attestation Flag | false |
Document Financial Statement Error Correction [Flag] | false |
Document Accounting Standard | U.S. GAAP |
Entity Shell Company | false |
Entity Central Index Key | 0001973239 |
Document Fiscal Year Focus | 2024 |
Document Fiscal Period Focus | FY |
Amendment Flag | false |
Entity Registrant Name | ARM HOLDINGS PLC /UK |
Business Contact | |
Document Information [Line Items] | |
Contact Personnel Name | Spencer Collins |
Entity Address, Address Line One | 110 Fulbourn Road |
Entity Address, City or Town | Cambridge |
Entity Address, Postal Zip Code | CB1 9NJ |
Entity Address, Country | GB |
City Area Code | (1223) |
Local Phone Number | 400 400 |
Audit Information
Audit Information | 12 Months Ended |
Mar. 31, 2024 | |
Audit Information [Abstract] | |
Auditor Name | Deloitte & Touche LLP |
Auditor Location | San Jose, California |
Auditor Firm ID | 34 |
Consolidated Income Statements
Consolidated Income Statements - USD ($) | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | |
Revenue | $ 3,233,000,000 | $ 2,679,000,000 | $ 2,703,000,000 |
Cost of sales | (154,000,000) | (106,000,000) | (131,000,000) |
Gross profit | 3,079,000,000 | 2,573,000,000 | 2,572,000,000 |
Research and development | (1,979,000,000) | (1,133,000,000) | (995,000,000) |
Selling, general and administrative | (983,000,000) | (762,000,000) | (897,000,000) |
Impairment of long-lived assets | 0 | 0 | (21,000,000) |
Disposal, restructuring and other operating expenses, net | (6,000,000) | (7,000,000) | (26,000,000) |
Total operating expense | (2,968,000,000) | (1,902,000,000) | (1,939,000,000) |
Operating income (loss) | 111,000,000 | 671,000,000 | 633,000,000 |
Income (loss) from equity investments, net | (20,000,000) | (45,000,000) | 141,000,000 |
Interest income, net | 110,000,000 | 42,000,000 | 2,000,000 |
Other non-operating income (loss), net | 11,000,000 | 3,000,000 | 10,000,000 |
Income (loss) before income taxes | 212,000,000 | 671,000,000 | 786,000,000 |
Income tax benefit (expense) | 93,800,000 | (146,800,000) | (109,700,000) |
Net income (loss) from continuing operations | 306,000,000 | 524,000,000 | 676,000,000 |
Loss from discontinued operations before income taxes | 0 | 0 | (99,000,000) |
Income tax benefit (expense) from discontinued operations | 0 | 0 | (28,000,000) |
Net loss from discontinued operations | 0 | 0 | (127,000,000) |
Net income (loss) | $ 306,000,000 | $ 524,000,000 | $ 549,000,000 |
Net income (loss) per share attributable to ordinary shareholders – basic | |||
Net income from continuing operations (in USD per share) | $ 0.30 | $ 0.51 | $ 0.66 |
Net loss from discontinued operation (in USD per share) | 0 | 0 | (0.12) |
Net income (loss) per share - basic (in USD per share) | 0.30 | 0.51 | 0.54 |
Net income (loss) per share attributable to ordinary shareholders – diluted | |||
Net income from continuing operations (in USD per share) | 0.29 | 0.51 | 0.66 |
Net loss from discontinued operation (in USD per share) | 0 | 0 | (0.12) |
Net income (loss) per share - diluted (in USD per share) | $ 0.29 | $ 0.51 | $ 0.54 |
Weighted average ordinary shares outstanding | |||
Basic (in shares) | 1,027,443,122 | 1,025,234,000 | 1,025,234,000 |
Diluted (in shares) | 1,044,497,032 | 1,027,505,008 | 1,025,234,000 |
External Customers | |||
Revenue | $ 2,509,000,000 | $ 2,025,000,000 | $ 2,219,000,000 |
Related Party | |||
Revenue | $ 724,000,000 | $ 654,000,000 | $ 484,000,000 |
Consolidated Statements of Comp
Consolidated Statements of Comprehensive Income - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | |
Statement of Comprehensive Income [Abstract] | |||
Net income (loss) | $ 306 | $ 524 | $ 549 |
Other comprehensive income (loss), net of tax: | |||
Foreign currency translation adjustments | 3 | (31) | (31) |
Net change of the effective portion of designated cash flow hedges | (8) | 8 | 0 |
Total comprehensive income (loss) | $ 301 | $ 501 | $ 518 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Millions | Mar. 31, 2024 | Mar. 31, 2023 |
Current assets: | ||
Cash and cash equivalents | $ 1,923 | $ 1,554 |
Short-term investments | 1,000 | 661 |
Accounts receivable, net (including receivables from related parties of $182 and $402 as of March 31, 2024 and 2023, respectively) | 781 | 999 |
Contract assets (including contract assets from related parties of $22 and $9 as of March 31, 2024 and 2023, respectively) | 336 | 154 |
Prepaid expenses and other current assets | 157 | 169 |
Total current assets | 4,197 | 3,537 |
Non-current assets: | ||
Property and equipment, net | 215 | 185 |
Operating lease right-of-use assets | 205 | 206 |
Equity investments (including investments held at fair value of $573 and $592 as of March 31, 2024 and 2023, respectively) | 741 | 723 |
Goodwill | 1,625 | 1,620 |
Intangible assets, net | 152 | 138 |
Deferred tax assets | 282 | 139 |
Non-current portion of contract assets | 240 | 116 |
Other non-current assets | 270 | 202 |
Total non-current assets | 3,730 | 3,329 |
Total assets | 7,927 | 6,866 |
Current liabilities: | ||
Accrued compensation and benefits and share-based compensation | 298 | 589 |
Tax liabilities | 147 | 162 |
Contract liabilities (including contract liabilities from related parties of $107 and $135 as of March 31, 2024 and 2023, respectively) | 198 | 293 |
Operating lease liabilities | 27 | 26 |
Other current liabilities (including payables to related parties of $7 and $17 as of March 31, 2024 and 2023, respectively) | 835 | 293 |
Total current liabilities | 1,505 | 1,363 |
Non-current liabilities: | ||
Non-current portion of accrued compensation and share-based compensation | 20 | 152 |
Deferred tax liabilities | 135 | 262 |
Non-current portion of contract liabilities | 717 | 807 |
Non-current portion of operating lease liabilities | 194 | 193 |
Other non-current liabilities | 61 | 38 |
Total non-current liabilities | 1,127 | 1,452 |
Liabilities | 2,632 | 2,815 |
Commitments and contingencies (Note 19) | ||
Shareholders’ equity: | ||
Ordinary shares, $0.001 par value; 1,088,334,144 shares authorized and 1,040,330,497 shares issued and outstanding as of March 31, 2024; and 1,025,234,000 shares authorized, issued and outstanding as of March 31, 2023 | 2 | 2 |
Additional paid-in capital | 2,171 | 1,216 |
Accumulated other comprehensive income | 371 | 376 |
Retained earnings | 2,751 | 2,457 |
Total shareholders’ equity | 5,295 | 4,051 |
Total liabilities and shareholders’ equity | $ 7,927 | $ 6,866 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Millions | Mar. 31, 2024 | Mar. 31, 2023 |
Accounts receivable, net | $ 781 | $ 999 |
Contract assets | 336 | 154 |
Equity method investments under fair value option | 573 | 592 |
Contract liabilities | 198 | 293 |
Other current liabilities | $ 835 | $ 293 |
Common stock, par value (in usd per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 1,088,334,144 | 1,025,234,000 |
Common stock, shares issued (in shares) | 1,040,330,497 | 1,025,234,000 |
Common stock, shares, outstanding (in shares) | 1,040,330,497 | 1,025,234,000 |
Related Party | ||
Accounts receivable, net | $ 182 | $ 402 |
Contract assets | 22 | 9 |
Contract liabilities | 107 | 135 |
Other current liabilities | $ 7 | $ 17 |
Consolidated Statements of Shar
Consolidated Statements of Shareholders' Equity - USD ($) $ in Millions | Total | Ordinary Shares | Additional Paid- in Capital | Accumulated Other Comprehensive Income (Loss) | Retained Earnings | |
Balances, beginning of period (in shares) at Mar. 31, 2021 | 1,025,234,000 | |||||
Balance, beginning of period at Mar. 31, 2021 | $ 4,050 | $ 2 | $ 1,214 | $ 430 | $ 2,404 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) | 549 | 549 | ||||
Net change of the effective portion of designated cash flow hedges | 0 | |||||
Foreign currency translation adjustments, net of tax | (31) | (31) | ||||
Distribution to majority ordinary shareholder related to Pelion IOT Limited | (1,020) | (1,020) | ||||
Balances, ending of period (in shares) at Mar. 31, 2022 | 1,025,234,000 | |||||
Balance, ending of period at Mar. 31, 2022 | 3,548 | $ 2 | 1,214 | 399 | 1,933 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) | 524 | 524 | ||||
Net change of the effective portion of designated cash flow hedges | 8 | 8 | ||||
Foreign currency translation adjustments, net of tax | (31) | (31) | ||||
Share-based compensation cost | $ 2 | 2 | ||||
Balances, ending of period (in shares) at Mar. 31, 2023 | 1,025,234,000 | 1,025,234,000 | ||||
Balance, ending of period at Mar. 31, 2023 | $ 4,051 | $ 2 | 1,216 | 376 | 2,457 | |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | ||||||
Net income (loss) | 306 | 306 | ||||
Net change of the effective portion of designated cash flow hedges | (8) | (8) | ||||
Foreign currency translation adjustments, net of tax | 3 | 3 | ||||
Share-based compensation cost | 825 | 825 | ||||
Issuance of vested shares from share-based payment arrangements (in shares) | 17,861,916 | |||||
Tax withholding on vested shares (in shares) | (2,765,419) | |||||
Tax withholding on vested shares from share-based payment arrangements | (213) | (213) | ||||
Reclassification of RSU awards previously liability-classified | [1] | 343 | 343 | |||
Distribution to majority ordinary shareholder related to Pelion IOT Limited | $ (12) | (12) | ||||
Balances, ending of period (in shares) at Mar. 31, 2024 | 1,040,330,497 | 1,040,330,497 | ||||
Balance, ending of period at Mar. 31, 2024 | $ 5,295 | $ 2 | $ 2,171 | $ 371 | $ 2,751 | |
[1]Includes $212 million of share-based compensation cost recognized in the fiscal year ended March 31, 2024 for RSU awards previously liability-classified. |
Consolidated Statements of Sh_2
Consolidated Statements of Shareholders' Equity (Parenthetical) $ in Millions | 12 Months Ended |
Mar. 31, 2024 USD ($) | |
Share-based compensation cost | $ 825 |
Restricted Stock Units, Liability-Classified | |
Share-based compensation cost | $ 212 |
Consolidated Statements of Cash
Consolidated Statements of Cash Flows - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | |
Cash flows provided by (used for) operating activities: | |||
Net income | $ 306 | $ 524 | $ 549 |
Adjustments to reconcile net income (loss) to net cash provided by (used for) operating activities: | |||
Depreciation and amortization | 162 | 170 | 185 |
Deferred income taxes | (273) | (34) | (76) |
Income (loss) from equity investments, net | 20 | 45 | (141) |
Impairment losses on long-lived assets and loans receivable | 0 | 0 | 43 |
Share-based compensation cost | 1,037 | 79 | 26 |
Operating lease expense | 35 | 34 | 41 |
Other non-cash operating activities, net | (2) | (6) | 19 |
Changes in assets and liabilities: | |||
Accounts receivable, net (including receivables from related parties) | 218 | 125 | (219) |
Contract assets, net (including contract assets from related parties) | (307) | (2) | (158) |
Prepaid expenses and other assets | (61) | (1) | (41) |
Accrued compensation and benefits and share-based compensation | (292) | (138) | 127 |
Contract liabilities (including contract liabilities from related parties) | (190) | (37) | (51) |
Tax liabilities | (30) | 35 | 112 |
Operating lease liabilities | (28) | (58) | (59) |
Other liabilities (including payables to related parties) | 495 | 3 | 101 |
Net cash provided by (used for) operating activities | 1,090 | 739 | 458 |
Cash flows provided by (used for) investing activities | |||
Purchase of short-term investments | (765) | (1,111) | (750) |
Proceeds from maturity of short-term investments | 425 | 1,081 | 245 |
Purchases of equity investments | (32) | (15) | (8) |
Purchases of intangible assets | (51) | (29) | (41) |
Purchases of property and equipment | (92) | (64) | (34) |
Other investing activities, net, including investments in convertible loans | (1) | 0 | (31) |
Net cash provided by (used for) investing activities | (516) | (138) | (619) |
Cash flows provided by (used for) financing activities | |||
Cash transfers associated with distribution and sale of Treasure Data and IoTP, respectively | 0 | 0 | (43) |
Payment of intangible asset obligations | (40) | (40) | (37) |
Proceeds from short-term debt borrowing | 0 | 0 | 50 |
Other financing activities, net | (10) | (2) | (2) |
Payment of withholding tax on vested shares | (158) | 0 | 0 |
Net cash provided by (used for) financing activities | (208) | (42) | (32) |
Effect of foreign exchange rate changes on cash and cash equivalents | 3 | (9) | (17) |
Net increase (decrease) in cash and cash equivalents | 369 | 550 | (210) |
Cash and cash equivalents at the beginning of the period | 1,554 | 1,004 | 1,214 |
Cash and cash equivalents at the end of the period | 1,923 | 1,554 | 1,004 |
Supplemental disclosure of cash flow information: | |||
Cash payments for income taxes | (188) | (159) | (141) |
Cash refunds from income taxes | 1 | 2 | 52 |
Cash payments for interest | 0 | 0 | (1) |
Non-cash operating, investing and financing activities: | |||
Non-cash distribution, disposal of investment | 0 | 0 | (980) |
Non-cash additions in property and equipment | 15 | 11 | 0 |
Non-cash additions in intangible assets | 53 | 0 | 0 |
Non-cash additions in operating lease right-of-use assets | 27 | 16 | 0 |
Non-cash additions of operating lease liabilities | 27 | 16 | 0 |
Non-cash additions to equity investments from conversion of certain receivables | 9 | 18 | 0 |
Non-cash distributions to shareholders | 12 | 0 | 0 |
Non-cash withholding tax on vested shares | 55 | 0 | 0 |
Non-cash reclassification of share-based compensation costs | $ 343 | $ 0 | $ 0 |
Description of Business and Sum
Description of Business and Summary of Significant Accounting Policies | 12 Months Ended |
Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Description of Business and Summary of Significant Accounting Policies | 1 - Description of Business and Summary of Significant Accounting Policies Description of Business Arm Holdings plc and its wholly owned subsidiaries (the “Company” and also referred to as “we,” “our” or “us”) are a global leader in the semiconductor industry. The Company’s principal operations are the licensing, marketing, research and development of microprocessors, systems intellectual property (“IP”), graphics processing units, physical IP and associated systems IP, software, tools and other related services. Corporate Reorganization In September 2023, the Company completed a board approved corporate reorganization which involved (1) the shareholders of Arm Limited exchanging each of the ordinary shares held by them in Arm Limited for newly issued ordinary shares of Arm Holdings Limited; and (2) the re-registration of Arm Holdings Limited as a public limited company under the laws of England and Wales at which time its name was changed to Arm Holdings plc. This corporate reorganization was solely for the purpose of reorganizing the Company’s corporate structure, in which Arm Limited became a wholly owned subsidiary of the holding company, Arm Holdings plc. This transfer of equity resulted in the issuance of ordinary shares of Arm Holdings plc to shareholders in the same class and the same number of ordinary shares as their previous shareholding in Arm Limited. As a result of the corporate reorganization between entities under common control, the historical consolidated financial statements of the Company were retrospectively adjusted for the change in reporting entity. Therefore, the historical consolidated financial statements of Arm Limited became the historical consolidated financial statements of Arm Holdings plc as of the date of the corporate reorganization. Initial Public Offering The registration statement on Form F-1 relating to the Company’s initial public offering (“IPO”) was declared effective on September 13, 2023 and the Company’s American depository shares (“ADSs”), each representing one ordinary share of the Company, began trading on the Nasdaq Global Select Market under the ticker symbol “ARM” on September 14, 2023. On September 18, 2023, the Company completed the closing of its IPO. The Company’s controlling shareholder sold an aggregate of 102,500,000 ADSs in the IPO at a price of $51 per ADS, including the underwriters’ full exercise of their option to purchase up to an additional 7,000,000 ADSs to cover over-allotments. The Company did not receive any proceeds from the sale of the ADSs in the IPO. Upon completion of the IPO, the Company recognized incremental and accelerated share-based compensation expense for which service-based vesting conditions were satisfied or partially satisfied as of September 13, 2023. See Note 16 - Share-based Compensation for further details. Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the U.S. (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The Company’s fiscal year ends on March 31st. Principles of Consolidation The accompanying financial statements include the accounts of the Company, its wholly owned subsidiaries and the Arm Employee Benefit Trust (the “EBT”). All intercompany balances and transactions have been eliminated in consolidation. The financial statements consolidate all of the Company’s affiliates, and the entities where the Company holds a controlling financial interest, because the Company holds a majority voting interest. The Company reevaluates whether there is a controlling financial interest in all entities when rights and interests change. Foreign Currency The accompanying consolidated financial statements are presented in U.S. dollar (“USD”), which is the Company’s functional and reporting currency. For most of the Company’s international operations, the local currency has been determined to be the functional currency of the respective entity. For transactions entered into in a currency other than its functional currency, monetary assets and liabilities are remeasured into the functional currency at end-of-period exchange rates. Non-monetary assets and liabilities, along with equity are remeasured at historical exchange rates. Income and expenses are remeasured at exchange rates in effect during each period, except for those expenses related to non-monetary balance sheet amounts, which are remeasured at historical exchange rates. Gains or losses from foreign currency remeasurement are included in other non-operating income (loss), net in the Consolidated Income Statements. The Company translates functional currency assets and liabilities to their USD equivalents at exchange rates in effect as of the balance sheet date and income and expense amounts at average exchange rates for the period. The USD effects that arise from changing translation rates are recorded in foreign currency translation adjustments on the Consolidated Statements of Comprehensive Income. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant items subject to such estimates include, but are not limited to, revenue recognition, allowance for expected credit losses, income taxes, share-based compensation, impairment considerations for long-lived assets, fair value estimates and impairment for investments. The Company evaluates these estimates on an ongoing basis and revises estimates as circumstances change. The Company bases its estimates on historical experience, anticipated results, trends, and other various assumptions that it believes are reasonable. Actual results could differ materially from the Company’s estimates. Concentrations of Credit Risk Credit risk is the risk of an unexpected loss if a customer or third-party to a financial instrument fails to meet its contractual obligations. Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, bank deposits, short-term investments, derivative financial instruments and accounts receivable. The Company’s maximum exposure to credit risk is limited to the carrying amount of these assets. The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies. The Company further manages its credit risk on liquid funds and derivative financial instruments through diversification of investment type and credit exposures. For accounts receivable, the credit risk is managed through the use of mitigating controls, including the use of credit checks and credit limits on customers. For financial assets (other than accounts receivable), the Company holds positions with an approved list of investment-grade rated counterparties and monitors the exposures and counterparty credit risk on a regular basis. The Company establishes reserves for potential credit losses and such losses have been within Management’s expectations. Credit losses are monitored on a regular basis and have not been material in any year presented. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, short-term deposits and money market funds with original maturities of three months or less that are readily convertible into known amounts of cash and are subject to insignificant risk of changes in value. Cash and cash equivalents are stated at cost, which approximates fair value because the short-term maturity of those instruments. Short-term Investments Short-term investments represent term deposits with banks with a maturity between three and 12 months. These investments are classified as held-to-maturity as the Company has the intent and ability to hold the investments to maturity. These investments are recorded at amortized cost, net of expected credit losses. Amortization of premiums or accretion of discounts are included in interest income, net in the Consolidated Income Statements. Equity Investments The Company regularly invests in equity securities of public and private companies to promote business and strategic objectives. Equity investments are measured and recorded as follows: • Non-marketable equity securities are equity securities without readily determinable fair values and for which the Company does not have the ability to exercise significant influence. Non-marketable equity securities are recorded on the income statement either at fair value on a recurring basis with changes in fair value, whether realized or unrealized; or by election, measured and recorded using a measurement alternative that measures the securities at cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes. • Equity method investments are equity securities in investees in which the Company does not control but has the ability to exercise significant influence. Investments in limited partnerships or certain limited liability companies that maintain a specific ownership account for each investor are also accounted for using the equity method when the Company has more than virtually no influence (i.e., at least 3% to 5% ownership). The Company has elected to account for certain equity method investments under the fair value option. These investments are recorded at fair value with changes in fair value recorded on the income statement. Where the Company has not elected the fair value option, equity method investments are recorded at cost minus impairment, if any, plus or minus the Company’s share of the equity method investees’ income or loss recorded on the income statement. For certain non-marketable equity securities and equity method investments, the Company has elected to apply the net asset value (“NAV”) practical expedient, where NAV is the estimated fair value of the investments. For these securities estimated fair values are determined based on the indicated market values of the underlying assets or investment portfolios. Income statement activity for all equity investments is recorded in income from equity investments, net on the Consolidated Income Statements. The carrying values of non-marketable equity securities under the measurement alternative are adjusted for qualifying observable price changes resulting from the issuance of similar or identical securities in an orderly transaction by the same issuer. Determining whether an observed transaction is similar to a security within the Company’s portfolio requires judgment based on the rights and preferences of the securities. Recording upward and downward adjustments to the carrying values of equity securities as a result of observable price changes requires quantitative assessments of the fair values of the Company’s equity securities using various valuation methodologies and involves the use of estimates. Non-marketable equity securities under the measurement alternative and equity method investments not measured under the fair value option (collectively referred to as “non-marketable equity securities”) are also subject to periodic impairment analysis. The quarterly impairment analysis considers both qualitative and quantitative factors that may have a significant impact on the investee’s fair value. Qualitative factors considered include the investee’s financial condition and business outlook, industry and sector performance, market for technology, operational and financing cash flow activities, and other relevant events and factors affecting the investee. When indicators of impairment exist, the Company prepares quantitative assessments of the fair value of the non-marketable equity securities using both the market and income approaches, which require judgment and the use of estimates, including discount rates, investee revenue and costs, and comparable market data of private and public companies, among others. Non-marketable equity securities under the measurement alternative are tested for impairment using a qualitative model similar to the model used to test goodwill and other long-lived assets for impairment. Upon determining an impairment may exist, the security’s fair value is calculated and compared to its carrying value and an impairment is recognized immediately if the carrying value exceeds fair value. Equity method investments not measured under the fair value option are subject to periodic impairment reviews using the other-than-temporary impairment model, which considers the severity and duration of a decline in fair value below cost and the Company’s ability and intent to hold the investment for a sufficient period of time to allow for recovery. Loans Receivable Loans receivable consist of term loans to a related party and other entities. The term loans are recorded at amortized cost, net of allowances for loan losses. The Company maintains an allowance for current expected credit losses to reserve for potentially uncollectible loans receivable. The Company measures interest income for all loans receivable using the interest method, which is based on the effective yield of the loans rather than the stated coupon rate. The Company classifies loans receivable in other non-currents assets on the Consolidated Balance Sheets. Convertible Loans Receivable Convertible loans receivable consist of convertible loans to certain entities. The Company has elected to apply the fair value option to account for such convertible loans receivable. Under the fair value option, such convertible loans receivable are measured initially and subsequently at fair value with changes in fair value recorded in other non-operating income (loss), net in the Consolidated Income Statements. Convertible loans receivable are included in other non-current assets on the Consolidated Balance Sheets. Fair Value Measurement The Company measures certain assets and liabilities at fair value, either upon initial recognition or for subsequent accounting or reporting. Fair value is defined as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). When determining fair value, the Company considers the principal or most advantageous market in which the Company would transact, as well as assumptions that market participants would use when pricing the asset or liability. When estimating fair value, depending on the nature and complexity of the asset or liability, the Company may use one or all of the following techniques: • Income approach, which is based on the present value of a future stream of net cash flows. • Market approach, which is based on market prices and other information from market transactions involving identical or comparable assets or liabilities. • Cost approach, which is based on the cost to acquire or construct comparable assets, less an allowance for functional and/or economic obsolescence. Fair value disclosures are classified based on the fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: • Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. • Level 2 - Observable inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data by correlation or other means. • Level 3 - Prices or valuation techniques requiring inputs that are both significant to the fair value measurement and unobservable. Please refer to Note 13 - Fair Value , for further discussion on the Company’s fair value measurements. Business Combinations The Company uses the acquisition method of accounting for business combinations, which requires separate recognition of assets acquired and liabilities assumed from goodwill, based on their estimated fair values at the time of acquisition. Goodwill as of the acquisition date is measured as the excess of consideration transferred and the fair value of any non-controlling interests in the acquiree over the net of the estimated acquisition date fair values of the assets acquired and liabilities assumed. The estimates and assumptions used in valuing intangible assets include, but are not limited to, the amount and timing of projected future cash flows, discount rate used to determine the present value of these cash flows and the useful lives of the assets. Although the Company’s fair value estimates are based upon assumptions believed to be reasonable, these estimates and assumptions are inherently uncertain and subject to refinement. As a result, during the measurement period up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon conclusion of the measurement period or final determination of fair values of the purchase price of an acquisition, whichever comes first, any subsequent adjustments are recorded in earnings in the Consolidated Income Statements. Acquisition-related expenses are recognized separately from the business combination and expensed as incurred. Goodwill Goodwill represents the excess of cost over the fair value of net assets acquired in a business combination. Goodwill is tested for impairment annually during the fourth fiscal quarter or during interim periods whenever events and circumstances indicate an impairment may have occurred. The identification and measurement of goodwill impairment involves the estimation of fair value at the Company’s reporting unit level, which is the same or one level below the operating segment level. The Company determined it has one reporting unit. The Company has the option to assess qualitative factors first to determine whether it is necessary to perform the two-step test. If the Company believes, as a result of the qualitative assessment, that it is more-likely-than-not that the fair value of the reporting unit is less than its carrying amount, the two-step quantitative impairment test is required. Otherwise, no further testing is required. In the qualitative assessment, the Company considers primary factors such as industry and market considerations, overall financial performance of the reporting unit, and other specific information related to the operations. The Company completed its annual goodwill impairment test in the fourth fiscal quarter of the fiscal year ended March 31, 2024. It was determined, after performing a qualitative review, it was not more-likely-than-not that the fair value of the Company’s single reporting unit was less than its carrying amount. Accordingly, there was no indication of impairment. Intangible Assets, Net Intangible assets primarily represent acquired intangible assets including those acquired separately, such as computer software and purchased patents and licenses to use technology, as well as those acquired through business combination such as developed technology and customer relationship assets. The Company initially records intangible assets acquired in a business combination at their estimated fair value. Intangible assets are reported net of accumulated amortization and any accumulated impairment losses, and are amortized over their estimated useful lives at amortization rates that are proportionate to each asset’s estimated economic benefit. Amortization of intangible assets is recorded in either cost of sales, research & development or selling, general and administrative expenses in the Consolidated Income Statements depending on the nature of the underlying asset and uses by the Company. The cost of intangible assets is amortized and recorded on the income statement on a straight-line basis over the estimated useful lives of the underlying assets. Useful lives are reviewed each year and adjustments are made, where applicable, on a prospective basis. The estimated useful lives of the Company’s intangible assets are as follows: Patents and licenses 3 – 11 years Computer software 3 – 5 years Developed technology 1 – 8 years Customer relationships 1 – 6 years Trade names 4 years Software Development Costs and Acquired Intangible Software The Company has not historically capitalized software development costs for software to be sold, leased or otherwise marketed as the time and cost incurred between technological feasibility and product release has been determined to be immaterial. As such, these development costs are generally recognized as incurred in research and development expenses in the Consolidated Income Statements. The Company capitalizes certain development costs related to software acquired, developed or modified for internal use, along with certain costs incurred in connection with the implementation of internal use software. Costs related to certain application development activities are subject to capitalization. Costs related to preliminary project and post implementation activities are expensed as incurred. Amortization begins once the software is ready for its intended use, and amortization expense is generally recognized on a straight-line basis over the software’s estimated useful life between three Capitalized costs related to internal use software, net of accumulated amortization, are included in intangible assets, net on the Consolidated Balance Sheets and amortization expense is recognized in selling, general & administrative expenses in the Consolidated Income Statements. Property and Equipment, Net Property and equipment are stated at cost net of accumulated depreciation and impairment losses. Cost comprises expenditures directly attributable to the purchase of the asset. Assets are depreciated to their estimated residual value, on a straight-line basis, over the estimated useful life of the underlying asset. Estimated useful lives and residual values are reviewed at each reporting date. Depreciation on property and equipment is recorded in cost of sales, research and development or selling, general & administrative expenses in the Consolidated Income Statements depending on the nature of the underlying asset and uses by the Company. Estimated useful lives of the Company’s property and equipment are as follows: Buildings 25 years Leasehold improvements Shorter of 5 – 10 years or the remaining lease term Equipment 3 – 6 years Fixtures and motor vehicles 3 – 5 years An item of property or equipment is written off either upon disposal or when there is no expected future economic benefit from its continued use. Gain or loss on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying value of the asset) is included in the Consolidated Income Statements in the year the asset is derecognized. Impairment of Long-lived Assets Other than Goodwill The Company reviews long-lived assets other than goodwill for impairment when facts or circumstances indicate the carrying amount of an asset or asset group may not be recoverable. If impairment indicators are present and the estimated future undiscounted cash flows are less than the carrying value of the assets, the carrying values are reduced to the estimated fair value. Fair value is determined based on quoted market values, discounted cash flows, or external appraisals, as applicable. Impairment losses are recorded in impairment of long-lived assets in the Consolidated Income Statements. Leases The Company determines if an arrangement is or contains a lease at inception or modification of the arrangement. An arrangement is or contains a lease if there are identified assets and the right to control the use of an identified asset is conveyed for a period in exchange for consideration. Control over the use of the identified assets means the lessee has both the right to obtain substantially all of the economic benefits from the use of the asset and the right to direct the use of the asset. The Company recognizes right-of-use assets and operating lease liabilities for lessee operating leases other than those with a term of 12 months or less as the Company has elected to apply the short-term lease recognition exemption. Right-of-use assets represent the right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments over the lease term. Operating lease right-of-use assets and lease liabilities are measured at the lease commencement date based on the present value of the remaining lease payments over the lease term, discounted using the Company’s incremental borrowing rate, which approximates the interest rate at which the Company could borrow on a collateralized basis with similar terms and payments and in similar economic environments. Operating lease right-of-use assets also include initial direct costs incurred and prepaid lease payments, minus any lease incentives. Lease terms include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. All lease and non-lease components, principally common area maintenance costs, are combined in determining operating lease right-of-use assets and lease liabilities. For operating leases, lease expense is recognized on a straight-line basis over the lease term. Asset Retirement Obligations An asset retirement obligation (“ARO”) is recorded as appropriate on assets for which the Company has a legal obligation to retire. The Company records a liability for an ARO and the associated asset retirement cost at the time the underlying asset is acquired and put into service. Subsequent to the initial measurement of the ARO, the obligation is adjusted at the end of each period to reflect the passage of time and changes in the estimated future cash flows underlying the obligation, if any. Over time, the liability is accreted to its present value and the capitalized cost is depreciated over the estimated useful life of the asset. The Company has recognized AROs for contractually mandated removal of leasehold improvements. Derivative Financial Instruments and Hedge Activities The Company uses derivative financial instruments, specifically foreign currency forward contracts, to mitigate exposure from certain foreign currency risk. Certain forecasted transactions, specifically British Pound Sterling (“GBP”) denominated cash flows in the form of payroll and selling, general and administrative expenses are exposed to foreign currency risk. The Company monitors foreign currency exposures on a monthly basis to maximize the economic effectiveness of foreign currency hedge positions. No derivatives were designated hedges prior to July 2022. All derivatives are recorded at fair value as either an asset or liability. For derivatives not designated as hedges, adjustments to reflect changes in the fair value of the derivatives are included in earnings in other non-operating income (loss), net in the Consolidated Income Statements. In July 2022, all foreign currency forward contracts were designated as cash flow hedges in designated hedging relationships with the forecasted foreign denominated cash flows as the hedged transactions. The maximum length of time over which the Company is hedging its exposure to the variability in future foreign denominated cash flows is one year. For cash flow hedges that qualify and are designated for hedge accounting, the change in fair value of the derivative is recorded in the net change in fair value of the effective portion of designated cash flow hedges on the Consolidated Statements of Comprehensive Income, and subsequently recognized in research and development and selling, general and administrative expenses in the Consolidated Income Statements when the hedged transaction affects earnings. The Company classifies all derivative assets and liabilities for designated and non-designated derivatives in prepaid expenses and other current assets and other current liabilities on the Consolidated Balance Sheets. The Company classifies cash flows from the settlement of effective cash flow hedges for designated and non-designated derivatives in the same category as the cash flows from the related hedged items in operating activities on the Consolidated Statements of Cash Flows. The foreign currency forward contracts are classified under Level 2 of the fair value hierarchy. See Note 13 - Fair Value. Revenue Recognition The Company recognizes revenues for the transfer of products or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those products or services. The principle is achieved through the following five-step approach: • Identification of the contract with the customer • Identification of the performance obligations • Determination of the transaction price • Allocation of the transaction price to the performance obligations in the contract • Recognition of revenue when, or as, the Company satisfies a performance obligation Revenue for the Company’s major product offerings consists of the following: License and Other Revenue • Intellectual property license — The Company generally licenses IP under non-exclusive license agreements that provide usage rights for specific applications for a finite or perpetual term. These licenses are made available electronically to address the customer-specific business requirements. These arrangements generally have distinct performance obligations that consist of transferring the licensed IPs, version extensions of architecture IP or releases of IPs, and support services. Support services consist of a stand-ready obligation to provide technical support, patches, and bug fixes over the support term. Revenue allocated to the IP license is recognized at a point in time upon the delivery or beginning of the license term, whichever is later. Revenue allocated to distinct version extensions of architecture IP or releases of IP, excluding when-and-if-available minor updates over the support term, are recognized at a point in time upon the delivery or beginning of license term, whichever is later. Certain license agreements provide customers with the right to access a library of current and future IPs on an unlimited basis over the contractual period depending on the terms of the applicable contract. These licensing arrangements represent stand-ready obligations in that timing of the delivery of the underlying IPs is within the control of the customer and the extent of use in any given period does not diminish the remaining performance obligation. The contract consideration related to these arrangements is recognized ratably over the term of the contract in line with when the control of the performance obligations is transferred. • Software sales, including development systems — Sales of software, including development systems, which are not specifically designed for a given license (such as off-the-shelf software), are recognized upon delivery when control has been transferred and customer can begin to use and benefit from the license. • Professional services — Services (such as training and professional and design services) that the Company provides, which are not essential to the functionality of the IP, are separately stated and priced in the contract and accounted for separately. Training revenue is recognized as services are performed. Revenue from professional and design services are recognized over time using the input method based on engineering labor hours expended to date relative to the estimated total effort required. For such professional and design services, the Company has an enforceable right to payment for performance completed to date, which includes a reasonable profit margin and the performance of such services do not create an asset with an alternative use. • Support and maintenance — Support and maintenance is a stand-ready obligation to the customer that is both provided and consumed simultaneously. Revenue is recognized on a straight-line basis over the period for which support and maint |
Recent Accounting and Disclosur
Recent Accounting and Disclosure Pronouncements | 12 Months Ended |
Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Recent Accounting and Disclosure Pronouncements | 1 - Description of Business and Summary of Significant Accounting Policies Description of Business Arm Holdings plc and its wholly owned subsidiaries (the “Company” and also referred to as “we,” “our” or “us”) are a global leader in the semiconductor industry. The Company’s principal operations are the licensing, marketing, research and development of microprocessors, systems intellectual property (“IP”), graphics processing units, physical IP and associated systems IP, software, tools and other related services. Corporate Reorganization In September 2023, the Company completed a board approved corporate reorganization which involved (1) the shareholders of Arm Limited exchanging each of the ordinary shares held by them in Arm Limited for newly issued ordinary shares of Arm Holdings Limited; and (2) the re-registration of Arm Holdings Limited as a public limited company under the laws of England and Wales at which time its name was changed to Arm Holdings plc. This corporate reorganization was solely for the purpose of reorganizing the Company’s corporate structure, in which Arm Limited became a wholly owned subsidiary of the holding company, Arm Holdings plc. This transfer of equity resulted in the issuance of ordinary shares of Arm Holdings plc to shareholders in the same class and the same number of ordinary shares as their previous shareholding in Arm Limited. As a result of the corporate reorganization between entities under common control, the historical consolidated financial statements of the Company were retrospectively adjusted for the change in reporting entity. Therefore, the historical consolidated financial statements of Arm Limited became the historical consolidated financial statements of Arm Holdings plc as of the date of the corporate reorganization. Initial Public Offering The registration statement on Form F-1 relating to the Company’s initial public offering (“IPO”) was declared effective on September 13, 2023 and the Company’s American depository shares (“ADSs”), each representing one ordinary share of the Company, began trading on the Nasdaq Global Select Market under the ticker symbol “ARM” on September 14, 2023. On September 18, 2023, the Company completed the closing of its IPO. The Company’s controlling shareholder sold an aggregate of 102,500,000 ADSs in the IPO at a price of $51 per ADS, including the underwriters’ full exercise of their option to purchase up to an additional 7,000,000 ADSs to cover over-allotments. The Company did not receive any proceeds from the sale of the ADSs in the IPO. Upon completion of the IPO, the Company recognized incremental and accelerated share-based compensation expense for which service-based vesting conditions were satisfied or partially satisfied as of September 13, 2023. See Note 16 - Share-based Compensation for further details. Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the U.S. (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The Company’s fiscal year ends on March 31st. Principles of Consolidation The accompanying financial statements include the accounts of the Company, its wholly owned subsidiaries and the Arm Employee Benefit Trust (the “EBT”). All intercompany balances and transactions have been eliminated in consolidation. The financial statements consolidate all of the Company’s affiliates, and the entities where the Company holds a controlling financial interest, because the Company holds a majority voting interest. The Company reevaluates whether there is a controlling financial interest in all entities when rights and interests change. Foreign Currency The accompanying consolidated financial statements are presented in U.S. dollar (“USD”), which is the Company’s functional and reporting currency. For most of the Company’s international operations, the local currency has been determined to be the functional currency of the respective entity. For transactions entered into in a currency other than its functional currency, monetary assets and liabilities are remeasured into the functional currency at end-of-period exchange rates. Non-monetary assets and liabilities, along with equity are remeasured at historical exchange rates. Income and expenses are remeasured at exchange rates in effect during each period, except for those expenses related to non-monetary balance sheet amounts, which are remeasured at historical exchange rates. Gains or losses from foreign currency remeasurement are included in other non-operating income (loss), net in the Consolidated Income Statements. The Company translates functional currency assets and liabilities to their USD equivalents at exchange rates in effect as of the balance sheet date and income and expense amounts at average exchange rates for the period. The USD effects that arise from changing translation rates are recorded in foreign currency translation adjustments on the Consolidated Statements of Comprehensive Income. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant items subject to such estimates include, but are not limited to, revenue recognition, allowance for expected credit losses, income taxes, share-based compensation, impairment considerations for long-lived assets, fair value estimates and impairment for investments. The Company evaluates these estimates on an ongoing basis and revises estimates as circumstances change. The Company bases its estimates on historical experience, anticipated results, trends, and other various assumptions that it believes are reasonable. Actual results could differ materially from the Company’s estimates. Concentrations of Credit Risk Credit risk is the risk of an unexpected loss if a customer or third-party to a financial instrument fails to meet its contractual obligations. Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, bank deposits, short-term investments, derivative financial instruments and accounts receivable. The Company’s maximum exposure to credit risk is limited to the carrying amount of these assets. The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies. The Company further manages its credit risk on liquid funds and derivative financial instruments through diversification of investment type and credit exposures. For accounts receivable, the credit risk is managed through the use of mitigating controls, including the use of credit checks and credit limits on customers. For financial assets (other than accounts receivable), the Company holds positions with an approved list of investment-grade rated counterparties and monitors the exposures and counterparty credit risk on a regular basis. The Company establishes reserves for potential credit losses and such losses have been within Management’s expectations. Credit losses are monitored on a regular basis and have not been material in any year presented. Cash and Cash Equivalents Cash and cash equivalents include cash on hand, short-term deposits and money market funds with original maturities of three months or less that are readily convertible into known amounts of cash and are subject to insignificant risk of changes in value. Cash and cash equivalents are stated at cost, which approximates fair value because the short-term maturity of those instruments. Short-term Investments Short-term investments represent term deposits with banks with a maturity between three and 12 months. These investments are classified as held-to-maturity as the Company has the intent and ability to hold the investments to maturity. These investments are recorded at amortized cost, net of expected credit losses. Amortization of premiums or accretion of discounts are included in interest income, net in the Consolidated Income Statements. Equity Investments The Company regularly invests in equity securities of public and private companies to promote business and strategic objectives. Equity investments are measured and recorded as follows: • Non-marketable equity securities are equity securities without readily determinable fair values and for which the Company does not have the ability to exercise significant influence. Non-marketable equity securities are recorded on the income statement either at fair value on a recurring basis with changes in fair value, whether realized or unrealized; or by election, measured and recorded using a measurement alternative that measures the securities at cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes. • Equity method investments are equity securities in investees in which the Company does not control but has the ability to exercise significant influence. Investments in limited partnerships or certain limited liability companies that maintain a specific ownership account for each investor are also accounted for using the equity method when the Company has more than virtually no influence (i.e., at least 3% to 5% ownership). The Company has elected to account for certain equity method investments under the fair value option. These investments are recorded at fair value with changes in fair value recorded on the income statement. Where the Company has not elected the fair value option, equity method investments are recorded at cost minus impairment, if any, plus or minus the Company’s share of the equity method investees’ income or loss recorded on the income statement. For certain non-marketable equity securities and equity method investments, the Company has elected to apply the net asset value (“NAV”) practical expedient, where NAV is the estimated fair value of the investments. For these securities estimated fair values are determined based on the indicated market values of the underlying assets or investment portfolios. Income statement activity for all equity investments is recorded in income from equity investments, net on the Consolidated Income Statements. The carrying values of non-marketable equity securities under the measurement alternative are adjusted for qualifying observable price changes resulting from the issuance of similar or identical securities in an orderly transaction by the same issuer. Determining whether an observed transaction is similar to a security within the Company’s portfolio requires judgment based on the rights and preferences of the securities. Recording upward and downward adjustments to the carrying values of equity securities as a result of observable price changes requires quantitative assessments of the fair values of the Company’s equity securities using various valuation methodologies and involves the use of estimates. Non-marketable equity securities under the measurement alternative and equity method investments not measured under the fair value option (collectively referred to as “non-marketable equity securities”) are also subject to periodic impairment analysis. The quarterly impairment analysis considers both qualitative and quantitative factors that may have a significant impact on the investee’s fair value. Qualitative factors considered include the investee’s financial condition and business outlook, industry and sector performance, market for technology, operational and financing cash flow activities, and other relevant events and factors affecting the investee. When indicators of impairment exist, the Company prepares quantitative assessments of the fair value of the non-marketable equity securities using both the market and income approaches, which require judgment and the use of estimates, including discount rates, investee revenue and costs, and comparable market data of private and public companies, among others. Non-marketable equity securities under the measurement alternative are tested for impairment using a qualitative model similar to the model used to test goodwill and other long-lived assets for impairment. Upon determining an impairment may exist, the security’s fair value is calculated and compared to its carrying value and an impairment is recognized immediately if the carrying value exceeds fair value. Equity method investments not measured under the fair value option are subject to periodic impairment reviews using the other-than-temporary impairment model, which considers the severity and duration of a decline in fair value below cost and the Company’s ability and intent to hold the investment for a sufficient period of time to allow for recovery. Loans Receivable Loans receivable consist of term loans to a related party and other entities. The term loans are recorded at amortized cost, net of allowances for loan losses. The Company maintains an allowance for current expected credit losses to reserve for potentially uncollectible loans receivable. The Company measures interest income for all loans receivable using the interest method, which is based on the effective yield of the loans rather than the stated coupon rate. The Company classifies loans receivable in other non-currents assets on the Consolidated Balance Sheets. Convertible Loans Receivable Convertible loans receivable consist of convertible loans to certain entities. The Company has elected to apply the fair value option to account for such convertible loans receivable. Under the fair value option, such convertible loans receivable are measured initially and subsequently at fair value with changes in fair value recorded in other non-operating income (loss), net in the Consolidated Income Statements. Convertible loans receivable are included in other non-current assets on the Consolidated Balance Sheets. Fair Value Measurement The Company measures certain assets and liabilities at fair value, either upon initial recognition or for subsequent accounting or reporting. Fair value is defined as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). When determining fair value, the Company considers the principal or most advantageous market in which the Company would transact, as well as assumptions that market participants would use when pricing the asset or liability. When estimating fair value, depending on the nature and complexity of the asset or liability, the Company may use one or all of the following techniques: • Income approach, which is based on the present value of a future stream of net cash flows. • Market approach, which is based on market prices and other information from market transactions involving identical or comparable assets or liabilities. • Cost approach, which is based on the cost to acquire or construct comparable assets, less an allowance for functional and/or economic obsolescence. Fair value disclosures are classified based on the fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: • Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. • Level 2 - Observable inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data by correlation or other means. • Level 3 - Prices or valuation techniques requiring inputs that are both significant to the fair value measurement and unobservable. Please refer to Note 13 - Fair Value , for further discussion on the Company’s fair value measurements. Business Combinations The Company uses the acquisition method of accounting for business combinations, which requires separate recognition of assets acquired and liabilities assumed from goodwill, based on their estimated fair values at the time of acquisition. Goodwill as of the acquisition date is measured as the excess of consideration transferred and the fair value of any non-controlling interests in the acquiree over the net of the estimated acquisition date fair values of the assets acquired and liabilities assumed. The estimates and assumptions used in valuing intangible assets include, but are not limited to, the amount and timing of projected future cash flows, discount rate used to determine the present value of these cash flows and the useful lives of the assets. Although the Company’s fair value estimates are based upon assumptions believed to be reasonable, these estimates and assumptions are inherently uncertain and subject to refinement. As a result, during the measurement period up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon conclusion of the measurement period or final determination of fair values of the purchase price of an acquisition, whichever comes first, any subsequent adjustments are recorded in earnings in the Consolidated Income Statements. Acquisition-related expenses are recognized separately from the business combination and expensed as incurred. Goodwill Goodwill represents the excess of cost over the fair value of net assets acquired in a business combination. Goodwill is tested for impairment annually during the fourth fiscal quarter or during interim periods whenever events and circumstances indicate an impairment may have occurred. The identification and measurement of goodwill impairment involves the estimation of fair value at the Company’s reporting unit level, which is the same or one level below the operating segment level. The Company determined it has one reporting unit. The Company has the option to assess qualitative factors first to determine whether it is necessary to perform the two-step test. If the Company believes, as a result of the qualitative assessment, that it is more-likely-than-not that the fair value of the reporting unit is less than its carrying amount, the two-step quantitative impairment test is required. Otherwise, no further testing is required. In the qualitative assessment, the Company considers primary factors such as industry and market considerations, overall financial performance of the reporting unit, and other specific information related to the operations. The Company completed its annual goodwill impairment test in the fourth fiscal quarter of the fiscal year ended March 31, 2024. It was determined, after performing a qualitative review, it was not more-likely-than-not that the fair value of the Company’s single reporting unit was less than its carrying amount. Accordingly, there was no indication of impairment. Intangible Assets, Net Intangible assets primarily represent acquired intangible assets including those acquired separately, such as computer software and purchased patents and licenses to use technology, as well as those acquired through business combination such as developed technology and customer relationship assets. The Company initially records intangible assets acquired in a business combination at their estimated fair value. Intangible assets are reported net of accumulated amortization and any accumulated impairment losses, and are amortized over their estimated useful lives at amortization rates that are proportionate to each asset’s estimated economic benefit. Amortization of intangible assets is recorded in either cost of sales, research & development or selling, general and administrative expenses in the Consolidated Income Statements depending on the nature of the underlying asset and uses by the Company. The cost of intangible assets is amortized and recorded on the income statement on a straight-line basis over the estimated useful lives of the underlying assets. Useful lives are reviewed each year and adjustments are made, where applicable, on a prospective basis. The estimated useful lives of the Company’s intangible assets are as follows: Patents and licenses 3 – 11 years Computer software 3 – 5 years Developed technology 1 – 8 years Customer relationships 1 – 6 years Trade names 4 years Software Development Costs and Acquired Intangible Software The Company has not historically capitalized software development costs for software to be sold, leased or otherwise marketed as the time and cost incurred between technological feasibility and product release has been determined to be immaterial. As such, these development costs are generally recognized as incurred in research and development expenses in the Consolidated Income Statements. The Company capitalizes certain development costs related to software acquired, developed or modified for internal use, along with certain costs incurred in connection with the implementation of internal use software. Costs related to certain application development activities are subject to capitalization. Costs related to preliminary project and post implementation activities are expensed as incurred. Amortization begins once the software is ready for its intended use, and amortization expense is generally recognized on a straight-line basis over the software’s estimated useful life between three Capitalized costs related to internal use software, net of accumulated amortization, are included in intangible assets, net on the Consolidated Balance Sheets and amortization expense is recognized in selling, general & administrative expenses in the Consolidated Income Statements. Property and Equipment, Net Property and equipment are stated at cost net of accumulated depreciation and impairment losses. Cost comprises expenditures directly attributable to the purchase of the asset. Assets are depreciated to their estimated residual value, on a straight-line basis, over the estimated useful life of the underlying asset. Estimated useful lives and residual values are reviewed at each reporting date. Depreciation on property and equipment is recorded in cost of sales, research and development or selling, general & administrative expenses in the Consolidated Income Statements depending on the nature of the underlying asset and uses by the Company. Estimated useful lives of the Company’s property and equipment are as follows: Buildings 25 years Leasehold improvements Shorter of 5 – 10 years or the remaining lease term Equipment 3 – 6 years Fixtures and motor vehicles 3 – 5 years An item of property or equipment is written off either upon disposal or when there is no expected future economic benefit from its continued use. Gain or loss on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying value of the asset) is included in the Consolidated Income Statements in the year the asset is derecognized. Impairment of Long-lived Assets Other than Goodwill The Company reviews long-lived assets other than goodwill for impairment when facts or circumstances indicate the carrying amount of an asset or asset group may not be recoverable. If impairment indicators are present and the estimated future undiscounted cash flows are less than the carrying value of the assets, the carrying values are reduced to the estimated fair value. Fair value is determined based on quoted market values, discounted cash flows, or external appraisals, as applicable. Impairment losses are recorded in impairment of long-lived assets in the Consolidated Income Statements. Leases The Company determines if an arrangement is or contains a lease at inception or modification of the arrangement. An arrangement is or contains a lease if there are identified assets and the right to control the use of an identified asset is conveyed for a period in exchange for consideration. Control over the use of the identified assets means the lessee has both the right to obtain substantially all of the economic benefits from the use of the asset and the right to direct the use of the asset. The Company recognizes right-of-use assets and operating lease liabilities for lessee operating leases other than those with a term of 12 months or less as the Company has elected to apply the short-term lease recognition exemption. Right-of-use assets represent the right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments over the lease term. Operating lease right-of-use assets and lease liabilities are measured at the lease commencement date based on the present value of the remaining lease payments over the lease term, discounted using the Company’s incremental borrowing rate, which approximates the interest rate at which the Company could borrow on a collateralized basis with similar terms and payments and in similar economic environments. Operating lease right-of-use assets also include initial direct costs incurred and prepaid lease payments, minus any lease incentives. Lease terms include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. All lease and non-lease components, principally common area maintenance costs, are combined in determining operating lease right-of-use assets and lease liabilities. For operating leases, lease expense is recognized on a straight-line basis over the lease term. Asset Retirement Obligations An asset retirement obligation (“ARO”) is recorded as appropriate on assets for which the Company has a legal obligation to retire. The Company records a liability for an ARO and the associated asset retirement cost at the time the underlying asset is acquired and put into service. Subsequent to the initial measurement of the ARO, the obligation is adjusted at the end of each period to reflect the passage of time and changes in the estimated future cash flows underlying the obligation, if any. Over time, the liability is accreted to its present value and the capitalized cost is depreciated over the estimated useful life of the asset. The Company has recognized AROs for contractually mandated removal of leasehold improvements. Derivative Financial Instruments and Hedge Activities The Company uses derivative financial instruments, specifically foreign currency forward contracts, to mitigate exposure from certain foreign currency risk. Certain forecasted transactions, specifically British Pound Sterling (“GBP”) denominated cash flows in the form of payroll and selling, general and administrative expenses are exposed to foreign currency risk. The Company monitors foreign currency exposures on a monthly basis to maximize the economic effectiveness of foreign currency hedge positions. No derivatives were designated hedges prior to July 2022. All derivatives are recorded at fair value as either an asset or liability. For derivatives not designated as hedges, adjustments to reflect changes in the fair value of the derivatives are included in earnings in other non-operating income (loss), net in the Consolidated Income Statements. In July 2022, all foreign currency forward contracts were designated as cash flow hedges in designated hedging relationships with the forecasted foreign denominated cash flows as the hedged transactions. The maximum length of time over which the Company is hedging its exposure to the variability in future foreign denominated cash flows is one year. For cash flow hedges that qualify and are designated for hedge accounting, the change in fair value of the derivative is recorded in the net change in fair value of the effective portion of designated cash flow hedges on the Consolidated Statements of Comprehensive Income, and subsequently recognized in research and development and selling, general and administrative expenses in the Consolidated Income Statements when the hedged transaction affects earnings. The Company classifies all derivative assets and liabilities for designated and non-designated derivatives in prepaid expenses and other current assets and other current liabilities on the Consolidated Balance Sheets. The Company classifies cash flows from the settlement of effective cash flow hedges for designated and non-designated derivatives in the same category as the cash flows from the related hedged items in operating activities on the Consolidated Statements of Cash Flows. The foreign currency forward contracts are classified under Level 2 of the fair value hierarchy. See Note 13 - Fair Value. Revenue Recognition The Company recognizes revenues for the transfer of products or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those products or services. The principle is achieved through the following five-step approach: • Identification of the contract with the customer • Identification of the performance obligations • Determination of the transaction price • Allocation of the transaction price to the performance obligations in the contract • Recognition of revenue when, or as, the Company satisfies a performance obligation Revenue for the Company’s major product offerings consists of the following: License and Other Revenue • Intellectual property license — The Company generally licenses IP under non-exclusive license agreements that provide usage rights for specific applications for a finite or perpetual term. These licenses are made available electronically to address the customer-specific business requirements. These arrangements generally have distinct performance obligations that consist of transferring the licensed IPs, version extensions of architecture IP or releases of IPs, and support services. Support services consist of a stand-ready obligation to provide technical support, patches, and bug fixes over the support term. Revenue allocated to the IP license is recognized at a point in time upon the delivery or beginning of the license term, whichever is later. Revenue allocated to distinct version extensions of architecture IP or releases of IP, excluding when-and-if-available minor updates over the support term, are recognized at a point in time upon the delivery or beginning of license term, whichever is later. Certain license agreements provide customers with the right to access a library of current and future IPs on an unlimited basis over the contractual period depending on the terms of the applicable contract. These licensing arrangements represent stand-ready obligations in that timing of the delivery of the underlying IPs is within the control of the customer and the extent of use in any given period does not diminish the remaining performance obligation. The contract consideration related to these arrangements is recognized ratably over the term of the contract in line with when the control of the performance obligations is transferred. • Software sales, including development systems — Sales of software, including development systems, which are not specifically designed for a given license (such as off-the-shelf software), are recognized upon delivery when control has been transferred and customer can begin to use and benefit from the license. • Professional services — Services (such as training and professional and design services) that the Company provides, which are not essential to the functionality of the IP, are separately stated and priced in the contract and accounted for separately. Training revenue is recognized as services are performed. Revenue from professional and design services are recognized over time using the input method based on engineering labor hours expended to date relative to the estimated total effort required. For such professional and design services, the Company has an enforceable right to payment for performance completed to date, which includes a reasonable profit margin and the performance of such services do not create an asset with an alternative use. • Support and maintenance — Support and maintenance is a stand-ready obligation to the customer that is both provided and consumed simultaneously. Revenue is recognized on a straight-line basis over the period for which support and maint |
Balance Sheet Components
Balance Sheet Components | 12 Months Ended |
Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Balance Sheet Components | 3 - Balance Sheet Components Certain balance sheet components are as follows: Accrued compensation and benefits and share-based compensation consist of: As of March 31, (in millions) 2024 2023 Accrued bonus, commissions, and cash awards $ 190 $ 257 Accrued vacation and sabbatical 83 66 Accrued salaries and fringe benefits 25 11 Share-based payment liabilities (1) — 255 Total accrued compensation and benefits and share-based compensation $ 298 $ 589 (1) As of March 31, 2024, all liability-classified share-based awards had been vested and settled. See Note 16 - Share-based Compensation in the Notes to the Consolidated Financial Statements. Other current liabilities consist of: As of March 31, (in millions) 2024 2023 Employee related payroll taxes and payables (1) $ 674 $ 48 Accrued expenses and fees 83 119 Electronic design automation liabilities 40 35 Trade payables including payables to related parties of $7 and $17 as of March 31, 2024 and 2023, respectively 26 82 Customer deposits 7 7 Finance lease liabilities 5 2 Total other current liabilities $ 835 $ 293 (1) As of March 31, 2024, employee related payroll taxes and payables primarily relate to vested RSU to be paid in the subsequent quarter. |
Revenue
Revenue | 12 Months Ended |
Mar. 31, 2024 | |
Revenue from Contract with Customer [Abstract] | |
Revenue | 4 - Revenue Disaggregation of Revenue A summary of the Company’s disaggregated revenue is as follows: Fiscal Year Ended March 31, External Customers Related Parties Total (in millions) 2024 2023 2022 2024 2023 2022 2024 2023 2022 License and Other Revenue (1) $ 1,051 $ 569 $ 902 $ 380 $ 435 $ 239 $ 1,431 $ 1,004 $ 1,141 Royalty Revenue 1,458 1,456 1,317 344 219 245 1,802 1,675 1,562 $ 2,509 $ 2,025 $ 2,219 $ 724 $ 654 $ 484 $ 3,233 $ 2,679 $ 2,703 (1) Includes over-time revenue of $121 million, $100 million, and $102 million and point-in-time revenue of $1,310 million, $904 million, and $1,039 million for the fiscal years ended March 31, 2024, 2023, and 2022, respectively. Revenue by geographic region is allocated to individual countries based on the principal headquarters of the customers. The geographical locations are not necessarily indicative of the country in which the customer sells products containing the Company’s technology IP. The following table summarizes information pertaining to revenue from customers based on the principal headquarters address by geographic regions: Fiscal Year Ended March 31, (in millions) 2024 2023 2022 United States $ 1,413 $ 1,088 $ 1,243 PRC (1) 697 657 476 Taiwan 522 359 431 Republic of Korea 308 241 226 Other countries 293 334 327 Total $ 3,233 $ 2,679 $ 2,703 (1) “PRC” means the People’s Republic of China, including the Hong Kong Special Administrative Region and the Macau Special Administrative Region, but excluding Taiwan. For the fiscal year ended March 31, 2024, the Company had three customers that collectively represented 42% of total revenue, with the single largest customer accounting for 21% of total revenue, the second largest customer accounting for 11% of total revenue and the third largest customer accounting for 10% of total revenue. For the fiscal year ended March 31, 2023, the Company had three customers that collectively represented 44% of total revenue, with the single largest customer accounting for 24% of total revenue, the second largest customer accounting for 11% of total revenue and the third largest customer accounting for 9% of total revenue. For the fiscal year ended March 31, 2022 , the Company had three customers that collectively represented 42% of total revenue, with the single largest customer accounting for 18% of total revenue, the second largest customer accounting for 12% of total revenue and the third largest customer accounting for 12% of total revenue. No other customer represented 10% or more of total revenue for the fiscal years ended March 31, 2024, 2023 , and 2022 . Receivables A summary of the components of accounts receivable, net is as follows: As of March 31, (in millions) 2024 2023 Trade receivables $ 405 $ 625 Royalty receivables 379 377 Total gross receivables 784 1,002 Allowance for current expected credit losses (3) (3) Total accounts receivables, net $ 781 $ 999 As of March 31, 2024, the customer with the largest total receivables balance represented 23% of total receivables, the customer with the second largest total receivables balance represented 13% of total receivables, the customer with the third largest total receivables balance represented 11% of total receivables, and the customer with the fourth largest total receivables balance represented 10% of total receivables. As of March 31, 2023, the customer with the largest total receivables balance represented 40% of total receivables. No other customer represented 10% or more of receivables as of March 31, 2024 or March 31, 2023 . A summary of the movement in the allowance for current expected credit losses is as follows: (in millions) Total Balance as of April 1, 2021 $ 12 Additional provision 28 Balance as of March 31, 2022 $ 40 Reversal of provision (34) Amounts written off during the year as uncollectible (3) Balance as of March 31, 2023 $ 3 Additional provision — Balance as of March 31, 2024 $ 3 Contract Assets The timing of revenue recognition may differ from the timing of invoicing to customers. Contract assets are created when invoicing occurs subsequent to revenue recognition. Contract assets are transferred to accounts receivable when the right to invoice becomes unconditional. Contract assets increased by $663.9 million and $254.1 million due to the timing of billings to customers, which fell into subsequent periods, as of March 31, 2024 and 2023, respectively, offset by $357.4 million and $250.7 million of contract assets transferred to accounts receivable, as of March 31, 2024 and 2023, respectively. The balance and activity for loss allowances related to contract assets was immaterial for all periods presented. Contract Liabilities A reconciliation of the movement in contract liabilities is as follows: (in millions) Total Balance as of March 31, 2022 $ 1,126 Customer prepayment and billing in advance of performance 209 Revenue recognized in the period that was included in the contract liability balance at the beginning of the period (128) Revenue recognized in the period that was included in the contract liability balance during the period (105) Effect of disposal ( Note 21 - Related Party Transactions ) (2) Balance as of March 31, 2023 $ 1,100 Customer prepayment and billing in advance of performance 198 Revenue recognized in the period that was included in the contract liability balance at the beginning of the period (226) Revenue recognized in the period that was included in the contract liability balance during the period (157) Balance as of March 31, 2024 $ 915 Satisfied Performance Obligations For the fiscal years ended March 31, 2024, 2023, and 2022 , revenue recognized from previously satisfied performance obligations in prior reporting periods was $1,866.6 million, $1,705.0 million, and $1,562.0 million, respectively. These amounts primarily represent royalties earned during the period. Remaining Performance Obligations Remaining performance obligations represent the transaction price allocated to performance obligations that are unsatisfied, or partially unsatisfied, which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods. The Company has elected to exclude potential future royalty receipts from the disclosure of remaining performance obligations. In certain arrangements, the Company’s right to consideration may not correspond directly with the performance of obligations. Revenue recognition occurs upon delivery or beginning of license term, whichever is later. Accordingly, the analysis between time bands below has been estimated, but the final timing may differ from these estimates. In the absence of sufficient information, where the timing of satisfaction of the remaining performance obligations is dependent on a customer’s action, the transaction price allocated to such performance obligation is included in the outer-year time band unless contract or option expiration aligns with an earlier period or category. As of March 31, 2024, the aggregate transaction price allocated to remaining performance obligations was $2,484.4 million, which includes $0.8 million of non-cancellable and non-refundable committed funds received from certain customers, where the parties are in negotiations regarding the enforceable rights and obligations of the arrangement. The Company expects to recognize approximately 28% of remaining performance obligations as revenue over the next 12 months, 14% over the subsequent 13-to 24-month period, and the remainder thereafter. |
Discontinued Operations
Discontinued Operations | 12 Months Ended |
Mar. 31, 2024 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | 5 - Discontinued Operations During the fiscal year ended March 31, 2022, the Company decided to distribute Treasure Data to the immediate shareholders of the Company and sell IoTP to SoftBank Group Capital Limited. The distribution and sale of Treasure Data and IoTP, respectively represented a strategic shift that has or will have a major effect on the Company’s operations and financial results. In the course of the Company’s evaluation, it considered examples provided in ASC 205-20 of what may constitute a strategic shift that will have a major effect on operations and financial results. The following metrics were analyzed among others: total revenues of Treasure Data and IoTP when compared to those of the Company, total assets, losses and profits before and after taxes, respectively. As a result of this analysis, the Company determined the distribution and sale of the businesses qualified for classification as discontinued operations because Treasure Data was distributed to the immediate shareholders of the Company and IoTP was sold to SoftBank Group Capital Limited, the results of operations were not recorded as discontinued operations until the period in which the businesses were actually disposed of other than by sale. Treasure Data In June 2021, the Company completed a pro rata distribution of its controlling stake in Treasure Data to SoftBank Group Capital Limited. The distribution was recorded as a reduction to retained earnings at the carrying amount of Treasure Data’s net assets of $44.2 million and did not result in the recognition of gain or losses. Upon the distribution, the Company and Treasure Data entered into a transition services agreement pursuant to which the Company provided enabling functions support services to the owners of Treasure Data on an interim transitional basis for up to three months after disposition. The revenue and cash flows associated with this transition services agreement were not significant to the operations of the Company. The Company completed its transition services for Treasure Data during the fiscal year ended March 31, 2022 . The Company provided no transition services in the fiscal years ended March 31, 2024 and 2023. IoTP In November 2021, the Company sold 100% of its ownership in IoTP. The IoTP business was sold to the Company’s immediate shareholders for $12.0 million in cash consideration. In the fiscal year ended March 31, 2024 , the Company distributed its receivable related to the Company’s sale of IoTP to the majority shareholder of the Company, which represented a non-cash distribution of $12.0 million. Consideration with respect to the sale was unpaid as of March 31, 2023 and recorded as an other receivable in prepaid expenses and other current assets on the Consolidated Balance Sheets. Upon the sale, the carrying value of the net assets of IoTP equaled total consideration and no gain or loss was recognized. The Company provided no transition services to IoTP post-distribution in the fiscal years ended March 31, 2024 , 2023 and 2022 . Summarized Financial Information Operating results of Treasure Data and IoTP are reflected in discontinued operations in the consolidated financial statements for all periods presented through the dates of distribution and sale, respectively. A summary of the major components of revenues and expenses from discontinued operations is as follows: Fiscal Year Ended March 31, (in millions) 2022 Revenue from external customers $ 41 Cost of sales (20) Research and development (44) Selling, general and administrative (53) Restructuring and related costs — Impairment of long-lived assets (23) Loss from discontinued operations before income taxes (99) Income tax (expense) benefit (28) Net loss from discontinued operations $ (127) Prior to the sale of IoTP, in November 2021, an impairment loss of $23.5 million was recognized on long-lived intangible and property and equipment assets of IoTP. The impairment was primarily a result of lower than anticipated operating results and a deterioration in projected results. For purposes of determining the impairment, the Company relied on the income approach utilizing discounted cash flows to arrive at fair value. A summary of significant non-cash items and capital expenditures from discontinued operations is as follows: Fiscal Year Ended March 31, (in millions) 2022 Amortization and depreciation expense $ 8 Other non-cash items $ 3 |
Goodwill
Goodwill | 12 Months Ended |
Mar. 31, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Goodwill | 6 - Goodwill As of March 31, 2024 and 2023, the Company had a goodwill balance of $1,625 million and $1,620 million, respectively. The period-over-period change in goodwill for the fiscal year ended March 31, 2024 was due to foreign currency translation adjustments. The Company did not record any goodwill impairment for the fiscal years ended March 31, 2024 , 2023, and 2022 . |
Intangible Assets, Net
Intangible Assets, Net | 12 Months Ended |
Mar. 31, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Intangible Assets, Net | 7 - Intangible Assets, Net Information related to intangible assets is as follows: As of March 31, Gross Carrying Amount Accumulated Amortization Net Carrying Value Weighted Average Remaining Life (in millions except for years) 2024 2023 2024 2023 2024 2023 2024 2023 Patents & licenses $ 179 $ 178 $ 144 $ 169 $ 35 $ 9 5.6 1.5 Developed technology 157 155 156 151 1 4 0.1 1.1 Customer relationships 2 2 2 2 — — — — Computer software 329 293 214 168 115 125 2.8 2.7 Intangible assets subject to amortization 667 628 516 490 151 138 Intangible assets under development 1 — — — 1 — — — Total intangible assets $ 668 $ 628 $ 516 $ 490 $ 152 $ 138 Information regarding amortization expense for intangible assets is as follows: Fiscal Years Ended March 31, (in millions) 2024 2023 2022 Cost of sales $ 6 $ 4 $ 5 Research and development 57 53 50 Selling, general and administrative 23 36 39 Total amortization expense $ 86 $ 93 $ 94 The Company capitalized $0.0 million, $35.1 million and $11.0 million, and amortized $14.5 million, $22.5 million, and $26.5 million in development costs associated with internal use software in the fiscal years ended March 31, 2024, 2023, and 2022 , respectively. There was no impairment of intangible assets for the fiscal years ended March 31, 2024 and 2023. Impairment of intangible assets for the fiscal year ended March 31, 2022 was $5.0 million. The balance of capitalized costs related to internal use software, net of accumulated amortization was $32.3 million and $46.8 million, as of March 31, 2024 and 2023, respectively. Estimated future amortization of intangible assets subject to amortization is as follows: (in millions) As of March 31, 2024 2025 $ 64 2026 36 2027 26 2028 13 2029 5 2030 and thereafter 7 Total future amortization expense $ 151 |
Property and Equipment, Net
Property and Equipment, Net | 12 Months Ended |
Mar. 31, 2024 | |
Property, Plant and Equipment [Abstract] | |
Property and Equipment, Net | 8 - Property and Equipment, Net Information regarding property and equipment, net is as follows: As of March 31, (in millions) 2024 2023 Buildings $ — $ 75 Leasehold improvements 159 162 Equipment 388 368 Fixtures and motor vehicles 43 53 Construction in progress 16 — Total property and equipment, gross 606 658 Less: Accumulated depreciation (391) (473) Total property and equipment, net $ 215 $ 185 Depreciation expense for the fiscal years ended March 31, 2024, 2023, and 2022 , was $76.0 million, $77.2 million, and $82.5 million, respectively. There was no impairment of property and equipment for the fiscal years ended March 31, 2024 and 2023. Impairment of property and equipment for the fiscal year ended March 31, 2022 was $13.6 million. As of March 31, 2024 and 2023, the Company had ARO liabilities of $10.3 million and $10.0 million related to leasehold improvements, recorded in other current and other non-current liabilities on the Consolidated Balance Sheets. There was immaterial change in ARO liabilities in the fiscal years ended March 31, 2024 and 2023. As of March 31, 2024 and 2023 , the Company had $5.2 million and $5.4 million, respectively, of retirement assets recorded in property and equipment, net on the Consolidated Balance Sheets. |
Leases
Leases | 12 Months Ended |
Mar. 31, 2024 | |
Leases [Abstract] | |
Leases | 9 - Leases The Company’s lease obligations primarily consist of operating leases for property, IT and automobiles with lease terms expiring between calendar years 2024 and 2044 . The Company’s lease agreements do not contain residual value guarantees, material variable payment provisions or material restrictive covenants. The Company did not have material finance or short-term leases and did not incur any material variable lease expenses for all periods presented. For the fiscal years ended March 31, 2024, 2023, and 2022 , operating lease expense was $33.7 million , $34.3 million, and $40.0 million, respectively. For the fiscal year ended March 31, 2023, the Company recognized a loss on early termination of certain operating leases of $4.4 million. No material gains or losses were recognized on lease terminations in other periods presented. Supplemental disclosures of cash flow information related to operating leases are as follows: As of March 31, (in millions) 2024 2023 2022 Cash flows used for operating leases $ (35) $ (47) $ (42) Operating lease right-of-use assets obtained in exchange for lease obligations $ 28 $ 16 $ 3 The Company’s weighted average remaining lease term and discount rate for operating leases are as follows: As of March 31, 2024 2023 2022 Weighted average discount rate 2.85 % 2.58 % 2.42 % Weighted average remaining lease term (in years) 14.24 15.21 15.20 Maturity of total operating lease liabilities as of March 31, 2024 is as follows (in millions): Fiscal Year Total 2025 $ 33 2026 29 2027 23 2028 20 2029 15 Thereafter 141 Total minimum lease payments 261 Less imputed interest (40) Total operating lease liabilities 221 Less: current portion of operating lease liabilities 27 Non-current portion of operating lease liabilities $ 194 As of March 31, 2024, the Company had one lease signed but not yet commenced, with a lease value of approximately $15 million and a lease term expiring in 2036. Subsequent to March 31, 2024, the Company renewed two of the leases for its global headquarters with an approximate value of $19 million. |
Equity Investments
Equity Investments | 12 Months Ended |
Mar. 31, 2024 | |
Investments, All Other Investments [Abstract] | |
Equity Investments | 10 - Equity Investments A summary of the components of equity investments is as follows: As of March 31, (in millions) 2024 2023 Equity method investments under fair value option $ 573 $ 592 Equity method investments under equity method 11 9 Non-marketable equity securities 157 122 Total equity investments $ 741 $ 723 Income (loss) from equity investments, net is as follows: Fiscal Year Ended March 31, (in millions) 2024 2023 2022 Equity method investments (1) $ (17) $ (41) $ 112 Non-marketable equity securities (includes NAV) (3) (4) 29 Total loss from equity investments, net $ (20) $ (45) $ 141 (1) Includes equity method investments where the Company elected the fair value option, including those under the net asset value (“NAV”) practical expedient, along with investments accounted for under the equity method. Equity Method Investments Details of the Company’s equity method investments as of March 31, 2024 are as follows: Investments under equity method of accounting: Name Ownership Interest % Arm IOT Fund LP (Taiwan) 25.8% Accelerator Advisory Limited 32.1% HOPU-ARM Holding Company Limited 10.0% DeepTech Labs Fund 1 LP 42.9% (1) The Company’s investment in HOPU-ARM Holding Company Limited entitles the Company to a 10% equity interest in HOPU-ARM Holding Company Limited and representation on the board of directors by virtue of the right to appoint one of three members of the board of directors. Accordingly, the Company has the ability to exercise significant influence over the operating and financial policies of HOPU-ARM Holding Company Limited . Investments where fair value option elected (including those under the NAV practical expedient): Name Ownership Interest % Acetone Limited 10.0% Ampere Computing Holdings LLC (“Ampere”) 6.7% China Walden Ventures Investments II, L.P. —NAV 7.5% China Walden Ventures Investments III, L.P. —NAV 8.1% HOPU-ARM Innovation Fund, L.P. —NAV 5.1% Catapult Ventures I, L.P. —NAV 18.1% Investments in a limited liability company that maintains a specific ownership or limited partnerships which the Company has more than virtually no influence (i.e., at least 3% to 5% ownership) over the investee are accounted for using the equity method. The Company elected the fair value option to account for certain equity method investments in Acetone Limited and Ampere. See discussion below, along with Note 13 - Fair Value , for further information. For the fiscal years ended March 31, 2024, 2023 , and 2022 , income (loss) from equity method investments not accounted under the fair value option or the NAV practical expedient wa s immaterial. The Company holds equity method investments in funds accounted for under the fair value option that apply the NAV practical expedient. The estimated fair values of the Company’s equity securities at fair value that qualify for the NAV practical expedient were provided by the funds based on the indicated market values of the underlying assets or investment portfolios. As of March 31, 2024 and 2023, the carrying value of equity method investments under the fair value option measured at NAV was $106.2 million and $109.4 million, respectively. For the fiscal years ended March 31, 2024, 2023 , and 2022, the Company recognized losses from changes in fair value of $2.8 million, $1.7 million, and $40.0 million, respectively, for equity method investments accounted for under the NAV practical expedient. Changes in fair value are recorded through income (loss) from equity investments, net in the Consolidated Income Statements. Acetone Limited As of March 31, 2024 and 2023, the carrying value of the Company’s equity method investment in Acetone Limited was $76.5 million and $92.4 million, respectively. For the fiscal years ended March 31, 2024 and 2023, the Company recognized fair value losses of $15.9 million and $16.0 million, respectively, in income (loss) from equity investments, net in the Consolidated Income Statements . Fair value gains and losses for its retained interest in Acetone Limited were immaterial for the fiscal year ended March 31, 2022. Ampere As of March 31, 2024 and 2023 , the carrying value of the Company’s equity method investment in Ampere was $389.8 million. For the fiscal year ended March 31, 2024 , the Company did not recognize any changes in fair value in Ampere. For the fiscal year ended March 31, 2023, the Company recognized fair value losses of $26.3 million in income (loss) from equity investments, net in the Consolidated Income Statements. Fair value gains and losses for this investment were immaterial for the fiscal year ended March 31, 2022. As of March 31, 2024 and 2023 , the outstanding balance of the convertible promissory note with Ampere was $32.4 million and $30.9 million, respectively, in other non-current assets on the Consolidated Balance Sheets. The Company’s maximum exposure to loss is the amounts invested in, and advanced to, Ampere as of March 31, 2024. Non-marketable Equity Securities Non-marketable securities are those for which the Company does not have significant influence or control. These represent either direct or indirect, through a capital fund, investments in unlisted early-stage development enterprises which are generating value for shareholders through research and development activities. The Company holds equity interests in certain funds which are accounted for under the NAV practical expedient. As of March 31, 2024 and 2023 , the carrying value of assets measured at NAV was $17.8 million and $18.0 million, respectively. For the fiscal years ended March 31, 2024, 2023 and 2022 , the Company recognized gains of $0.5 million, losses of $10.5 million, and gains of $7.9 million, respectively, from changes in fair value for non-marketable securities accounted for under the NAV practical expedient. Historically, the Company had an unrecognized trade receivable with a customer given the collectability of substantially all of the consideration was not probable. In the fiscal years ended March 31, 2024 and 2023, the Company invested in non-marketable preferred stock from the customer in exchange for the conversion of the trade receivables for $4.6 million and $12.7 million, respectively. In the fiscal year ended March 31, 2023, the Company also acquired additional non-marketable preferred stock in exchange for a cash payment of $10.7 million. Currently, the Company does not recognize any revenue and receivables due to not meeting the collectability criterion under ASC 606, Revenue from Contracts with Customers. The Company does not have significant influence or control over the customer and elected to apply the measurement alternative for this investment. In June 2023, the Company entered into a subscription letter with a subsidiary of SoftBank Vision Fund L.P (“SoftBank Vision Fund”) and Kigen (UK) Limited (“Kigen”), an entity of which SoftBank Vision Fund indirectly owned 85% of the share capital on a fully diluted basis with the remainder comprising management incentives. Pursuant to the subscription letter, the Company and this subsidiary of SoftBank Vision Fund each invested $10.0 million paid in cash in exchange for preference shares of Kigen. The preference shares are convertible into common shares of Kigen and are entitled to full dividends, distribution and voting rights. The Company does not have significant influence or control over Kigen and elected to apply the measurement alternative for this investment. The Company elected to apply the measurement alternative to all other non-marketable equity securities. Under the measurement alternative, these equity securities are recorded at cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes in orderly transactions. The components of gains and (losses) which primarily include unrealized gains and losses on non-marketable securities inclusive of those measured under the NAV practical expedient are as follows: Fiscal Year Ended March 31, (in millions) 2024 2023 2022 Observable price adjustments on non-marketable equity securities (includes NAV) $ — $ 4 $ 31 Impairment of non-marketable equity securities (3) (8) (3) Sale of non-marketable equity securities — — 1 Total income (loss) from equity investments in non-marketable securities, net $ (3) $ (4) $ 29 All equity method investments held by the Company are considered long-term to enable ecosystem growth and are non-current assets. For the fiscal years ended March 31, 2024, 2023 and 2022, the Company recognized $5.2 million, $1.0 million, and $2.4 million, respectively, in dividends from equity investments measured using the NAV practical expedient. The total amount of financial commitments to existing investees of the Company not provided for in the consolidated financial statements was $19.9 million and $22.1 million as of March 31, 2024 and 2023, respectively . |
Financial Instruments
Financial Instruments | 12 Months Ended |
Mar. 31, 2024 | |
Receivables [Abstract] | |
Financial Instruments | 11 - Financial Instruments Loans and Other Receivables Loans and other receivables carried at amortized cost is as follows: As of March 31, (in millions) 2024 2023 Loans and other receivables carried at amortized cost Loans receivable $ 26 $ 25 Other receivables 12 18 Allowance for current expected credit losses (19) (22) Loans and other receivables carried at amortized cost, net $ 19 $ 21 The allowance for current expected credit losses reflects the Company’s best estimate of expected credit losses of the receivables portfolio determined on the basis of historical experience, current information, and forecasts of future economic conditions. Loans receivable As of March 31, 2024 and 2023, the Company had a loan receivable of $16.2 million and $19.2 million, respectively, with Arduino SA (“Arduino”), a related party, which was subject to impairment considerations and was fully impaired in prior periods. For the fiscal years ended March 31, 2024 and 2023, the Company reduced the allowance for expected credit losses given the change in collectability with a corresponding reversal of expense for the portion of the loan receivable that was repaid in exchange for Series B preferred stock in Arduino. As of March 31, 2024, the loan receivable from Arduino remained fully impaired. As of March 31, 2024 and 2023, the Company had a four-year loan of $3.1 million and $3.0 million, respectively, issued to Cerfe Labs, Inc, a related party, that remained fully impaired for the periods presented. The remaining balance of loans receivables as of March 31, 2024 comprised two five-year loans totaling $6.9 million and as of March 31, 2023 comprised a five-year loan of $3.1 million issued to Allia Limited . Other receivables As of March 31, 2023, balances included in other receivables comprised mainly of the $12.0 million receivable from the Company’s majority shareholder recorded in prepaid and other current assets on the Consolidated Balance Sheets related to the Company’s November 2021 sale of IoTP. In August 2023, the Company distributed its receivable related to the Company’s sale of IoTP to the majority shareholder of the Company, which represented a non-cash distribution of $12.0 million. See Note 5 - Discontinued Operations , for further details . The remaining balance as of March 31, 2024 and 2023, pertains to lease deposits and other receivables. Convertible Loans Receivable In December 2021, the Company acquired a $29.0 million principal balance convertible loan in Ampere. The Company elected the fair value option to measure this convertible loan receivable for which changes in fair value are recorded in other non-operating income (loss), net in the Consolidated Income Statements. For the fiscal years ended March 31, 2024, 2023, and |
Derivatives
Derivatives | 12 Months Ended |
Mar. 31, 2024 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Derivatives | 12 - Derivatives As of March 31, 2024 , the notional value of outstanding foreign currency forward contracts was £728.0 million and the fair value was $0.1 million. As of March 31, 2023, the notional value of outstanding foreign currency forward contracts was £340.0 million and the fair value was $9.3 million. The following table presents the notional amounts of the Company’s outstanding derivative instruments: As of March 31, (in millions) 2024 2023 Designated as cash flow hedges Foreign currency forward contracts $ 919 $ 411 The following table presents the fair value of the Company’s outstanding derivative instruments: Derivative Assets Derivative Liabilities As of March 31, As of March 31, (in millions) 2024 2023 2024 2023 Designated as cash flow hedges Foreign currency forward contracts $ 4 $ 10 $ 4 $ 1 Cash Flow Hedge Gains (Losses) The following table presents net gains (losses) on foreign currency forward contracts designated as cash flow hedges: Fiscal Year Ended March 31, (in millions) 2024 2023 2022 Consolidated Statements of Comprehensive Income: Gains (losses) reclassified in Accumulated other comprehensive income on cash flow hedge derivatives $ 8 $ 5 $ — (Gains) losses reclassified from Accumulated other comprehensive income into income (18) 5 — Income tax benefit (expense) on cash flow hedges 2 (2) — Net change in fair value of the effective portion of designated cash flow hedges, net of tax (1) $ (8) $ 8 $ — Consolidated Income Statements, before tax: Research and development $ 10 $ (3) $ — Selling, general and administrative expenses $ 8 $ (2) $ — (1) All amounts reported in accumulated other comprehensive income at the reporting date are expected to be reclassified into earnings within the next 12 months. For the fiscal years ended March 31, 2024 and 2023, the Company’s cash flow hedges were highly effective with immaterial amounts of ineffectiveness recorded in the Consolidated Income Statements for these designated cash flow hedges and all components of each derivative’s gain or loss were included in the assessment of hedge effectiveness. Non-designated Hedging Instrument Gains (Losses) The following table presents net gains (losses) on derivatives not designated as hedging instruments recorded in other non-operating income (loss), net in the Consolidated Income Statements: Fiscal Year Ended March 31, (in millions) 2024 2023 2022 Foreign currency forward contracts $ (1) $ (30) $ (17) The Company classifies foreign currency forward contracts as Level 2 fair value measurements pursuant to the fair value hierarchy. See Note 13 - Fair Value |
Fair Value
Fair Value | 12 Months Ended |
Mar. 31, 2024 | |
Fair Value Disclosures [Abstract] | |
Fair Value | 13 - Fair Value To provide an indication about the reliability of the inputs used in determining fair value, the Company classifies its fair value financial instruments into the three levels prescribed under GAAP. An explanation of each level follows the tables and qualitative disclosures below. There were no transfers between fair value measurement levels for any periods presented. The following table presents the Company’s fair value hierarchy for the liability measured and recognized at fair value on a recurring basis: As of March 31, 2024 As of March 31, 2023 (in millions) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Financial liabilities Foreign currency forward contracts $ — $ 4 $ — $ 4 $ — $ 1 $ — $ 1 Total financial liabilities $ — $ 4 $ — $ 4 $ — $ 1 $ — $ 1 The following table presents the Company’s fair value hierarchy for assets measured and recognized at fair value, excluding investments where the NAV practical expedient has been elected on a recurring basis: As of March 31, 2024 As of March 31, 2023 (in millions) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Financial assets Money market funds $ 1,744 $ — $ — $ 1,744 $ 1,383 $ — $ — $ 1,383 Short-term investments (1) 1,000 — — 1,000 661 — — 661 Equity method investments (2) — — 466 466 — — 482 482 Convertible loans receivable — — 32 32 — — 31 31 Foreign currency forward contracts — 4 — 4 — 10 — 10 Total financial assets $ 2,744 $ 4 $ 498 $ 3,246 $ 2,044 $ 10 $ 513 $ 2,567 (1) Short-term investments represent term deposits with banks with a maturity between 3 and 12 months. (2) In accordance with Accounting Standards Codification (“ ASC”) Subtopic 820-10, Fair Value Measurements, investments that are measured at fair value using the NAV practical expedient are not classified in the fair value hierarchy. The following tables summarize changes in the fair value, along with other activity associated with the Company’s Level 3 financial assets and liabilities: Equity Method Investments As of March 31, (in millions) 2024 2023 Fair value of financial assets at the beginning of the period $ 482 $ 524 Additions, net of contributions from shareholders of the Company — — Fair value losses recognized in the Consolidated Income Statements (16) (42) Distributions to shareholders of the Company — — Fair value at the end of the period $ 466 $ 482 Convertible Loans Receivable As of March 31, (in millions) 2024 2023 Fair value of financial assets at the beginning of the period $ 31 $ 29 Additions — — Converted into equity — — Fair value gains recognized in the income statement 1 2 Fair value at the end of the period $ 32 $ 31 See below for a description of the valuation techniques and inputs used in the fair value measurement of Level 3 investments including equity method investments, convertible loans receivable, and currency exchange contracts. Equity Method Investments The Company elected the fair value option in accordance with the guidance in ASC 825, Financial Instruments (“ASC 825”) for its investments in Acetone Limited and Ampere. The Company initially computed the fair value for its investments consistent with the methodology and assumptions that market participants would use in their estimates of fair value with the assistance of a third-party valuation specialist or based on inputs from the investee. The fair value computation is updated on a quarterly basis. The investments are classified within Level 3 in the fair value hierarchy because the Company estimates the fair value of the investments using the (i) the market-calibration approach based on the guideline public company method, (ii) subject to availability of sufficient information, the income approach based on the discounted cash flow method, or (iii) the probability-weighted, expected return (“PWER”) approach. The market-calibration approach considers valuation multiples that are calibrated to the valuation as of the prior valuation date (i.e., quarterly) based on: (a) changes in the broader market or industry; (b) changes in the guideline public companies; and (c) changes in the company’s operating and financial performance. The fair value computation under this approach includes a key assumption for the range of valuation multiples (i.e., enterprise value or revenue), which requires significant professional judgment by the valuation specialist and is based on observable inputs (e.g., market data) and unobservable inputs (e.g., market participant assumptions). The PWER approach is based on discrete future exit scenarios to determine the value of various equity securities. Under the PWER approach, the share value today is based on the probability-weighted, present value of expected future distributions, taking into account the rights and preferences of each debt and equity class. The Company considers an initial public offering scenario, a sale scenario, and a scenario assuming continued operation as a private entity for future exit scenarios. The fair value computation under this approach includes key assumptions for time to liquidity outcomes, discounted rate, and present value factors. The following tables provide quantitative information related to certain key assumptions utilized in the valuation of equity method investments accounted for under the fair value option: As of March 31, 2024 (in millions) Fair value Valuation Unobservable Inputs Range of Estimates Equity Method Investments $466 Acetone – Market-Calibration or discounted cash flow LTM Revenue Multiple 1.3x - 1.5x Ampere – PWER Probability of initial public offering, time to future exit scenario, discount rate Probability weighted – 100%, Time to future exit scenario - 1.5 years, Discount rate – 17.64% As of March 31, 2023 (in millions) Fair value Valuation Unobservable Inputs Range of Estimates Equity Method Investments $482 Acetone – Market-Calibration or discounted cash flow LTM Revenue Multiple 2.1x - 2.3x Ampere – PWER Probability of initial public offering, time to future exit scenario, discount rate Probability weighted – 100%, Time to future exit scenario - 1.3 years, Discount rate – 18.61% Convertible Loans Receivable—Ampere In December 2021, the Company acquired a $29.0 million convertible promissory note in Ampere, which is included in other non-current assets on the Consolidated Balance Sheets. As of March 31, 2024 and 2023, the Company’s maximum exposure to loss is the amounts invested in, and advanced to, Ampere. As of March 31, 2024 and 2023, the Company has not converted any of its convertible promissory note into equity. The fair value of the Ampere convertible loan is based upon significant unobservable inputs, including the use of a probability weighted discounted cash flows model, requiring the Company to develop its own assumptions. Therefore, the Company has categorized this asset as a Level 3 financial asset. Some of the more significant unobservable inputs used in the fair value measurement of the convertible loan include applicable discount rates, the likelihood and projected timing of repayment or conversion, and projected cash flows in support of the estimated enterprise value of Ampere. Changes in these assumptions, while holding other inputs constant, could result in a significant change in the fair value of the convertible loan. If the amortized cost of the convertible loan exceeds its estimated fair value, the security is deemed to be impaired, and must be evaluated for the recognition of credit losses. Impairment resulting fr om credit losses is recognized within earnings, while impairment resulting from other factors is recognized in other comprehensive income (loss). As of March 31, 2024 and 2023, the Company has not recognized any credit losses related to this convertible loan. The fair value calculated using significant unobservable inputs did not differ materially from the amortized cost basis as of March 31, 2024 and 2023. Currency Exchange Contracts |
Shareholders' Equity
Shareholders' Equity | 12 Months Ended |
Mar. 31, 2024 | |
Equity [Abstract] | |
Shareholders' Equity | 14 - Shareholders’ Equity Employee Benefit Trust In September 2023, the Company established the EBT, constituted by a trust deed entered into by the Company and a professional trustee, with the principal purpose to facilitate the efficient and flexible settlement of share-based compensation arrangements with employees. The Company has the power to appoint and remove the trustee and therefore, consolidates the trust. The EBT may acquire newly issued ordinary shares or ADSs at a nominal value or the trustee of the EBT has the power to acquire ordinary shares or ADSs of the Company in the open market, which purchases may be funded by one or more loans from the Company to the EBT or non-repayable gifts made by the Company to the EBT. As of March 31, 2024, the EBT held 603,450 of ADSs purchased from the Company at par value. The market value of ADSs held by EBT on March 31, 2024 is $75.4 million. These ADSs were expected to be transferred out of the EBT, in order to settle future vesting of share-based compensation for employees. As the EBT is consolidated by the Company, ordinary shares or ADSs held by the EBT are considered authorized and issued but not outstanding for the computation of earnings per share. Other Shareholder Distributions In June 2021, the Company distributed its ownership in Treasure Data to the immediate shareholders of the Company at a value of $44.2 million. See Note 5 - Discontinued Operations for further details. In March 2022, the Company distributed its ownership in Arm China to the immediate shareholders of the Company, which represented a non-cash distribution of $975.7 million. In the fiscal year ended March 31, 2024 , the Company distributed its receivable related to the Company’s sale of IoTP to the majority shareholder of the Company, which represented a non-cash distribution of $12.0 million. See Note 5 - Discontinued Operations for further details. |
Restructuring and Other
Restructuring and Other | 12 Months Ended |
Mar. 31, 2024 | |
Restructuring and Related Activities [Abstract] | |
Restructuring and Other | 15 - Restructuring and Other Restructuring In March 2022, the Company announced a restructuring plan to align its workforce with strategic business activities and to improve efficiencies in its operations. For the fiscal years ended March 31, 2023 and 2022, the Company recognized restructuring expenses of $1.5 million and $25.8 million in restructuring and related costs in the Consolidated Income Statements in connection with these activities. Restructuring activities were completed and the restructuring liability was settled in the fiscal year ended March 31, 2023. |
Share-based Compensation
Share-based Compensation | 12 Months Ended |
Mar. 31, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Share-based Compensation | 16 - Share-based Compensation The Company had the following share-based payment arrangements during the periods presented: Restricted Share Units—The Arm Limited All Employee Plan 2019 (“2019 AEP”) In December 2019, an RSU plan was established for all employees of the Company. Vesting of these RSUs under the 2019 AEP requires the continuous service of the employees through the vesting date, is subject to the achievement of a market condition target, and vesting occurs on the earliest of the following: (1) the occurrence of one of various events comprising a change in control of the Company, (2) an initial public offering, or (3) the passage of time with the date being March 9, 2026. The Company also maintains a subplan for employees of its subsidiary, Arm Israel, in which RSUs will be settled in cash at the vesting. Employees may elect not to participate in the 2019 AEP. For all periods presented prior to IPO, a change in control or an initial public offering is generally not considered probable until it has occurred. These awards were expected to be cash settled and therefore were liability-classified. Post-IPO, the 2019 AEP vested on the occurrence of an “exit event” to the extent that the relevant vesting hurdle was met or exceeded. As of October 25, 2023, the Company had determined that the market condition for the 2019 AEP had been met and, therefore, all awards under the 2019 AEP Plan vested at 100% in March 2024. The equity-classified awards were settled in ordinary shares of the Company at the vesting date and neither carry rights to dividends nor voting rights. The liability-classified awards for Arm Israel were settled in cash. The awards were forfeited if an employee left the Company before the RSUs vested. For all periods presented, the aggregate nominal amount of shares over which the Company’s Remuneration Committee may grant awards under the 2019 AEP was limited so that it does not exceed at any time an amount equal to 2.2 percent of the aggregate nominal amount of the Company’s fully diluted equity share capital. We did not grant further awards under this plan after IPO. As of March 31, 2024, all RSUs under this plan vested and were settled. As of March 31, 2023 and 2022, 11,601,185 and 13,507,360 RSUs were outstanding, respectively. For the fiscal years ended March 31, 2024, 2023 and 2022, the Company recognized $515.7 million, $56.0 million and $30.8 million of share-based compensation cost, respectively, and $114.1 million, $11.6 million and $5.4 million of tax benefit associated with these awards, respectively. As of March 31, 2023, $114.2 million was recognized as a liability for the liability-classified RSUs under the 2019 AEP in the non-current portion of accrued compensation and share-based compensation on the Consolidated Balance Sheets related to awards that were liability-classified pre-IPO. For the fiscal year ended March 31, 2024, the Company had $18.2 million payments arising from normal course vesting events for liability-classified share-based awards, representing the fair value of the vested RSUs. For the fiscal year ended March 31, 2023, liability-classified share-based awards paid were $15.9 million related to the RSUs that had vesting conditions accelerated pursuant to restructuring activities, of which $11.8 million of share-based compensation cost was recognized in the fiscal year ended March 31, 2023. The Company did not have any payments arising from normal course vesting events for liability-classified share-based awards for the fiscal years ended March 31, 2023 and 2022. The fair value of RSUs vested for the fiscal year ended March 31, 2023 was $16.2 million. In connection with the IPO, all RSUs previously issued under the 2019 AEP were modified to be settled in ordinary shares of the Company except for those awards granted to employees of Arm Israel. For those RSUs to be settled in ordinary shares, the Company accounted for this change as a modification in accordance with ASC 718, Compensation—Stock Compensation (“ASC 718”) and changed the classification of the awards from liability-classified to equity-classified. During the fiscal year ended March 31, 2024, as a result of the modification, the Company reclassified $306.6 million from the non-current portion of accrued compensation and share-based compensation to additional paid-in capital on the Consolidated Balance Sheets. The modification resulted in the incremental and accelerated share-based compensation cost of $217.2 million at the modification date which affected 5,251 employees. For the remaining RSUs granted to employees of Arm Israel, these awards remain liability-classified and the Company remeasured the RSUs at fair value at each reporting period through the date of settlement. During the period starting from May 2022 through June 2022, the Company’s remuneration committee modified the terms of the 2019 AEP to accelerate the vesting for approximately 435 employees affected by restructuring activities initiated in the fiscal year ended March 31, 2022. The affected participants of the plan were provided the option to i) settle all unvested RSUs for a cash payment equivalent to the product of (a) a fixed amount as determined by the Company’s Remuneration Committee (b) 50% of the number of RSUs held by the participant, or ii) retain the RSUs until they become vested pursuant to the original vesting terms. The Company accounted for this acceleration as a modification of vesting in connection with a settlement which resulted in the recognition of incremental share-based compensation cost. For the fiscal year ended March 31, 2023, the Company recognized incremental share-based compensation cost of $11.8 million related to the cash receipt option and $2.2 million related to the RSUs retention option. The table below identifies the award activity under the 2019 AEP: Awards Weighted Average Fair Value Per Award (1) Outstanding as of March 31, 2023 11,601,185 $ 54.47 Granted 2,603 $ 54.51 Vested (11,358,553) $ 55.43 Cancelled and forfeited (245,235) $ 54.51 Outstanding and expected to vest as of March 31, 2024 — $ — (1) As of March 31, 2023, 2019 AEP outstanding awards were liability-classified with a weighted average fair value per RSU of $23.33, representing total fair value of $270.7 million. For periods presented prior to the IPO, the average grant date fair value per award represents the modification fair value at IPO. For the periods prior to IPO, the weighted average fair value of the RSUs was measured using the Monte Carlo simulation model. The Monte Carlo methodology incorporates into the valuation all possible outcomes that could result in the vesting of the awards. Where relevant, the expected term used in the model has been adjusted based on the Company’s best estimate for the effects of non-transferability and exercise restrictions (including the probability of meeting market conditions attached to the RSUs). The following table presents the assumptions used for the RSUs under the 2019 AEP for the relevant periods: Fiscal Year Ended March 31, 2024 2023 2022 Weighted average share price $ 56.10 $ 41.51 $ 39.27 Expected volatility until liquidity event 40 % 40 % 35 % Time to liquidity event 0.5 0.5 1.0 Dividend yield 0.00 % 0.00 % 0.00 % Risk free interest rate 5.52 % 4.94 % 1.60 % Restricted Share Units—Executive IPO Plan (“2019 EIP”) In April 2020, a RSU plan was put in place for certain of our executive officers. The vesting of these RSUs under the 2019 EIP requires the continuous service of the employees through the vesting date, was originally subjected to the achievement of a market-condition target, and vesting occurs on the earliest of the following: (1) the occurrence of one of various events comprising a change in control of the Company, (2) an initial public offering, or (3) the passage of time with the date being March 9, 2026. At inception of the plan, the market condition target was tied to the valuation of the Company upon vesting. In September 2022, the Company modified the 2019 EIP to remove the market conditions. Employees may elect not to participate in the 2019 EIP. For all periods presented prior to IPO, a change in control or an initial public offering is generally not considered probable until it has occurred. These awards were expected to be cash settled and therefore were liability-classified. In connection with the IPO, the 2019 EIP awards vested and were settled in ordinary shares of the Company and neither carry rights to dividends nor voting rights. The awards were forfeited if an employee left the Company before the RSUs vested. For all periods presented, the aggregate nominal amount of shares over which the Company’s Remuneration Committee may grant awards under the 2019 EIP was limited so that it does not exceed at any time an amount equal to 0.3 percent of the aggregate nominal amount of the Company’s fully diluted equity share capital. We did not grant further awards under this plan after IPO. As of March 31, 2024, all RSUs under this plan vested and were settled. As of March 31, 2023 and 2022, 192,999 and 903,925 RSUs were outstanding, respectively. For the fiscal years ended March 31, 2024, 2023 and 2022, the Company recognized $6.2 million, $0.1 million and $(0.5) million, respectively, of share-based compensation cost (credit) associated with these awards. The share-based compensation cost decrease in the fiscal year ended March 31, 2023 was attributable to the replacement awards issued in December 2022 and executive departures. The share-based compensation credit for the fiscal year ended March 31, 2022 was attributable to executive departures. For the fiscal year ended March 31, 2024, the income tax benefit recorded in connection with awards under the 2019 EIP Plan was $1.6 million. For the fiscal year ended March 31, 2023, the income tax expense recorded in connection with awards under the 2019 EIP Plan was $0.4 million. For the fiscal year ended March 31, 2022, the Company did not record any income tax benefit or expense in connection with awards under the 2019 EIP. As of March 31, 2023, $3.6 million was recognized as a liability for the liability-classified RSUs under the 2019 EIP in the non-current portion of accrued compensation and share-based compensation on the Consolidated Balance Sheets related to awards that were liability-classified pre-IPO. The Company did not have any payments for liability-classified share-based awards under the 2019 EIP Plan for the fiscal years ended March 31, 2024, 2023 and 2022. In September 2022, the Company modified the 2019 EIP to remove the market conditions which were tied to the valuation of the Company upon the vesting of the RSUs. All other terms under the 2019 EIP remained unchanged as a result of this modification and the RSUs remained as liability-classified awards. The incremental share-based compensation cost was measured as the excess of the fair value of the modified RSUs over the fair value of the original RSUs immediately before their terms were modified at modification. As of the modification date, incremental share-based compensation cost recognized was $4.5 million. In December 2022, the Company’s Remuneration Committee approved the cancellation of 355,463 outstanding RSUs issued to an executive participant under the 2019 EIP in exchange for a fixed monetary $20.0 million special RSU award (“Special RSU Award”) issued under the 2022 Arm Limited RSU Award Plan. The incremental compensation cost of both the 2019 EIP and the Special RSU Award combined was measured by comparing the fair value of the award immediately before and after the modification. The Company accounted for this acceleration for the modification as a cumulative adjustment to the liability. As of the modification date, the net incremental compensation cost for the modified award was $4.1 million. In connection with the IPO, all RSUs previously issued under the 2019 EIP were modified to be settled in ordinary shares of the Company. The Company accounted for this change as a modification in accordance with ASC 718 and changed the classification of the awards from liability-classified to equity-classified. During the fiscal year ended March 31, 2024, as a result of the modification, the Company reclassified $5.7 million from non-current portion of accrued compensation and share-based compensation to additional paid-in capital on the Consolidated Balance Sheets. Upon the IPO, the awards under the 2019 EIP vested and the Company recognized accelerated share-based compensation cost of $4.1 million for awards outstanding prior to the IPO. The table below identifies the award activity under the 2019 EIP: Awards Weighted Average Fair Value Per Award (1) Outstanding as of March 31, 2023 192,999 $ 51.00 Vested (192,999) $ 51.00 Outstanding and expected to vest as of March 31, 2024 — $ — (1) As of March 31, 2023, 2019 EIP outstanding awards were liability-classified with a weighted average fair value per RSU of $37.43, representing total fair value of $7.2 million. For periods presented prior to the IPO, the average grant date fair value per award represents the modification fair value at IPO. For the fiscal year ended March 31, 2022, the weighted average fair value of the RSUs was measured using the Monte Carlo simulation model. The Monte Carlo methodology incorporates into the valuation all possible outcomes that could result in the vesting of the awards. Where relevant, the expected term used in the model has been adjusted based on Company’s best estimate for the effects of non-transferability and exercise restrictions (including the probability of meeting market conditions attached to the RSUs). The following table presents the assumptions used for the RSUs under the 2019 EIP for the fiscal year ended March 31, 2022: Weighted average share price $ 39.27 Expected volatility until liquidity event 35% Time to liquidity event 1.0 Dividend yield 0.00% Risk free interest rate 1.60% The inputs used for both the discounted cash flow approach and the Monte Carlo simulation model are the same as those used for the 2019 AEP for the fiscal year ended March 31, 2022. The fair value of the RSUs is adjusted for the different market conditions for each share-based plan for the fiscal year ended March 31, 2022. For the fiscal year ended March 31, 2023 and prior to the IPO in fiscal year ended March 31, 2024, the Company used the income approach and market-calibration approach based on comparable publicly traded companies in similar lines of businesses. Cash flow assumptions used in income approach considers historical and forecasted revenue, earnings before interest, taxes, depreciation and amortization (EBITDA) and other relevant factors. The following table presents the assumptions used for the RSUs under the 2019 EIP for the fiscal year ended March 31, 2023: Average share price $ 41.51 Transaction costs 2.50 % Time to liquidity event (in years) 0.5 Discount for lack of marketability 7.50 % Phantom Share Scheme (Cash-Settled) In April 2017, a cash-settled share-based payment plan was put in place for certain of our executive officers. Under this plan, the employees are granted a cash award annually on April 1, which vests over a three-year service period subject to continuous service and satisfaction of certain Company performance conditions. The cash amount which the employee is entitled to receive if employed at the end of the three-year period is directly linked to the share price of the Company’s ultimate parent, SoftBank Group. The number of Phantom Shares that vest is also linked to certain Company strategic performance conditions. The strategic performance conditions are non-market based vesting conditions and, as a result, the conditions do not affect the fair value of Phantom Shares at each reporting date. The strategic performance conditions are operational in nature and measure performance in areas such as product development, customer design wins and market share across different technologies and markets. The conditions are linked directly to the Company’s strategic objectives, rather than any financial or other measures. As of March 31, 2024 and 2023, there were no Phantom Shares outstanding. As of March 31, 2022, 64,862 Phantom Shares were outstanding. The Company recognized share-based compensation credit of $0.5 million and $3.1 million in connection with Phantom Shares for the fiscal years ended March 31, 2023 and 2022, respectively. The share-based compensation credit for the fiscal years ended March 31, 2023 and 2022 was attributable to executive departures. There was no tax expense or benefit recorded for the fiscal year ended March 31, 2023. The tax expense recorded for the Phantom Shares was $0.5 million for the fiscal year ended March 31, 2022. The Phantom Shares are required to be settled in cash and therefore are recorded on the Consolidated Balance Sheets as a liability until settled. For the fiscal years ended March 31, 2023 and 2022, liability-classified share-based awards paid totaled $1.5 million and $7.1 million, respectively. For the fiscal years ended March 31, 2023 and 2022, the total number of Phantom Shares vested were 27,503 and 32,198, respectively. The fair value of Phantom Shares measured at each reporting date was $38.84 and $39.83 for the fiscal years ended March 31, 2023 and 2022, respectively. The fair value of the Phantom Shares vested were $1.1 million and $1.5 million for the fiscal years ended March 31, 2023 and 2022, respectively. As of March 31, 2023, $1.1 million was recognized as a liability for the Phantom Shares in accrued compensation and benefits and share-based compensation on the Consolidated Balance Sheets. For the fiscal year ended March 31, 2024, the Company paid $0.9 million for vested Phantom Shares. The variance between the amount paid and accrued as of March 31, 2023 was driven by foreign exchange differences as participants were paid in foreign denominated currencies. As of March 31, 2024, the Company did not have any unpaid amounts in relation to vested Phantom Share awards. Restricted Share Units – 2022 Arm Limited RSU Award Plan (“2022 RSU Plan”) In June 2022, the 2022 RSU Plan was established to grant RSUs to all employees of the Company (“All Employee Awards”) and to grant two types of executive awards to certain of the Company’s executive officers (such awards, the “Annual Awards” and “Launch Awards” and collectively, the “Executive Awards”). The All Employee Awards and Executive Awards were historically disclosed separately due to pre-IPO presentation differences related to classification, but are now disclosed together as post-IPO all are equity-classified, as discussed in more detail below. The All Employee Awards vest in tranches, require continuous service through the vesting date, and are subject to graded vesting over time. At the time of issuance, the Company intended to settle the All Employee Awards in ordinary shares at the vesting date, and such RSU awards were accounted for as equity-classified awards. Launch Awards vest in tranches and require continuous service through the vesting dates and are subject to graded vesting over a period of three years. Annual Awards include a portion that vests over a three-year continuous service period and another portion that is subject to continuous service and satisfaction of certain Company performance conditions. The time-based portion of the Annual Awards vest over a three-year period. The Annual Awards that are subject to continuous service and satisfaction of certain Company performance conditions vest upon the satisfaction of performance metrics as established for each one-year performance period and have the potential to vest between 0% and 200% of the original fixed monetary amount of the award depending on the achievement of annual performance metrics. The 2022 RSU Plan allows for either cash or share settlement of the RSU awards by tranche at the discretion of the remuneration committee of the Company’s Board of Directors (the “Remuneration Committee”). For all periods presented, the aggregate nominal amount of shares over which the Company’s Remuneration Committee may grant awards under the 2022 RSU Plan will be limited so that it does not exceed at any time an amount equal to 4.0 percent of the aggregate nominal amount of the Company’s fully diluted equity share capital. We did not grant further awards under this plan after IPO. In November 2022, the Company issued Executive Awards under the 2022 RSU Plan. These entitled participants to a fixed amount of cash or, upon the occurrence of a change in control or an initial public offering, a variable number of ordinary shares of the Company equal to a fixed amount of cash, at the discretion of the Remuneration Committee. Executive Awards granted were originally accounted for as liability-classified awards and upon the IPO, each Executive Award was converted into a variable number of shares based on the closing ADS price of the Company at the IPO date. The table below shows the Company’s commitment for potential payments and the liability recognized as of March 31, 2023: Fiscal year ended March 31, 2023 Type of Executive Award (in millions) Potential Fixed Monetary Amount Accrued Liability (1) Launch Awards $ 80 $ 23 Annual Awards 15 9 Total $ 95 $ 32 (1) Includes the amount recorded for performance-based awards that were probable of achievement. In November 2022, the Company determined that it would settle the first tranche of the All Employee Awards outstanding that vested in March and May 2023 by paying cash instead of issuing shares. Other than the change in intent regarding form of settlement, no other terms or conditions regarding the RSUs were changed. The Company accounted for this change as a modification in accordance with ASC 718 and reclassified the affected portion of the award from equity to liability and remeasured the award at fair value at each reporting period through the date of settlement with consideration that total compensation cost cannot be less than the grant-date fair-value-based measure of the original award. As a result of the modification, the Company recognized $2.1 million of incremental share-based compensation cost at the time of the modification and recorded $31.7 million as a reclassification from equity to liability upon modification. 5,539 of employees were affected by this modification. The 2022 RSU Plan provides vesting schedules applicable prior to and after an IPO. Upon the IPO, the All Employee Awards under the 2022 RSU Plan were accounted for using the vesting schedules applicable after an IPO which resulted in an acceleration of compensation cost. The Company accounted for the changes as a modification in accordance with ASC 718 and recorded $17.7 million of accelerated share-based compensation cost at the modification date which affected 5,041 employees. In connection with the IPO, all Executive Awards previously issued under the 2022 RSU Plan were modified to be settled in ordinary shares of the Company. Given the awards were no longer expected to be settled in cash but rather expected to be settled in ordinary shares based on the IPO price of $51.00 per ADS, the modification resulted in a change to the classification of the Executive Awards from liability-classified to equity-classified. The Company accounted for this change as a modification in accordance with ASC 718. As a result of the modification, the Company reclassified $9.1 million and $20.2 million in current portion of accrued compensation and benefits and share-based compensation and non-current portion of accrued compensation and share-based compensation, respectively, to additional paid-in capital on the Consolidated Balance Sheets. The modification resulted in an issuance of 1,875,202 RSUs equal to the fixed monetary amount of all Executive Awards outstanding under the 2022 RSU Plan. Upon the occurrence of the IPO, the Company recognized accelerated share-based compensation cost of $9.8 million, for which the service-based vesting condition was satisfied or partially satisfied, at the modification date which affected 14 employees. As of March 31, 2024, all the 2022 RSU Plan awards were expected to be settled in ordinary shares at the vesting date. The table below identifies the award activity under the 2022 RSU Plan: Awards (1) Weighted Average Grant Date Fair Value Per Award (1) Outstanding as of March 31, 2023 11,129,734 $ 35.87 Executive Awards converted from liability awards 1,875,202 $ 51.00 Granted 17,134,484 $ 43.68 Vested (2) (6,751,502) $ 37.47 Cancelled and forfeited (631,500) $ 40.27 Outstanding and expected to vest as of March 31, 2024 22,756,418 $ 42.30 (1) Awards and weighted average grant date per share exclude shares related to Annual Awards that currently have no grant date as the future performance objectives have not yet been defined and/or communicated to participants of the plan. For periods presented prior to the IPO, the average grant date fair value per award represents the modification fair value at IPO. (2) Includes 351,022 liability-classified awards vested and settled in cash in the fiscal year ended March 31, 2024. As of March 31, 2023, the total liability-classified RSUs that are expected to vest were 284,036 with a weighted average fair value per RSU of $40.47. For the fiscal year ended March 31, 2024, the Company paid $269.0 million arising from the normal vesting of liability-classified share-based awards under the 2022 RSU Plan. All liability-classified awards under the 2022 RSU Plan were vested as of August 15, 2023 and were paid as of September 30, 2023. For the fiscal years ended March 31, 2024 and 2023, share-based compensation cost of $521.6 million and $267.0 million, respectively, was recognized in connection with all awards issued under the 2022 RSU Plan. Tax benefits recorded in connection with the 2022 RSU Plan for the fiscal years ended March 31, 2024 and 2023 were $89.2 million and $36.6 million, respectively. As of March 31, 2023, the Company recognized $1.9 million, $253.1 million, and $13.8 million in additional paid-in capital, accrued compensation and benefits and share-based compensation and non-current portion of accrued compensation and share-based compensation, respectively, on the Consolidated Balance Sheets. As of March 31, 2024, there was $693.9 million total unrecognized compensation expense related to all awards issued under the 2022 RSU Plan expected to be recognized over a weighted-average period of 0.8 years and there were no liability-classified RSUs under the 2022 RSU Plan. For the fiscal year ended March 31, 2023 and prior to the IPO in fiscal year ended March 31, 2024, the Company used the income approach and market-calibration approach based on comparable publicly traded companies in similar lines of businesses. Cash flow assumptions used in the income approach considers historical and forecasted revenue, earnings before interest, taxes, depreciation and amortization (EBITDA) and other relevant factors. The following table presents the assumptions used for the RSUs under the 2022 RSU Plan for the relevant periods: Fiscal Year Ended March 31, 2024 2023 Average share price $44.52 - $48.18 $35.16 - $39.67 Transaction costs 2.5 % 2.5 % Present value per RSU $43.40 - $46.98 $33.13 - $39.67 Time to liquidity event (in years) 0.5 - 1.0 0.5 - 0.9 Discount for lack of marketability 0.00% - 7.50% 0.00% - 7.50% The Arm Non-Executive Directors RSU Award Plan (“NED Plan”) In September 2022, the Company established the NED Plan for non-executive directors. The RSU awards issued under the NED Plan (the “NED Awards”) are subject to time-based vesting and continued service of the non-executive directors. The NED Plan allows for either cash or share settlement of the awards at the discretion of the Company’s Remuneration Committee. As of March 31, 2024, the Company accounted for the NED Awards as equity-classified awards. As of March 31, 2023, the Company accounted for the NED awards as liability-classified awards. The number of RSUs granted and outstanding for the fiscal years ended March 31, 2024 and 2023 was 31,806 and 13,340. For the fiscal year ended March 31, 2023, the share-based compensation cost and liability recognized was immaterial to the Consolidated Income Statements and Consolidated Balance Sheets, respectively. For the fiscal year ended March 31, 2024, the share-based compensation cost was immaterial to the Consolidated Income Statements and no liability was recognized on the Consolidated Balance Sheets as the awards are now equity-classified. Omnibus Incentive Plan In August 2023, the Company’s board of directors adopted the Omnibus Incentive Plan (the “Omnibus Incentive Plan”) which became effective in September 2023. The Omnibus Incentive Plan allows for the grant of incentive awards to employees, executive directors, and non-employees, including non-employee directors and consultants of the Company and its subsidiaries. Participants may elect not to participate in the plan. The types of incentive awards granted under the Omnibus Incentive Plan is determined by the Company’s board of directors and the Remuneration Committee, and the Omnibus Incentive Plan allows for the grant of stock options, share appreciation rights (“SARs”), restricted shares, RSUs, performance stock units (“PSUs”), other awards of cash, shares or other property (which may include a specified cash amount that is payable in cash or shares, or awards tied to the appreciation in the value of shares), dividends and dividend equivalents. Vesting conditions applicable to awards may be based on continued service, achievement of company, business unit or other performance objectives, or such other criteria as the Remuneration Committee may establish. The maximum number of ordinary shares that may be issued under the Omnibus Incentive Plan as approved at the time of adoption of the Omnibus Incentive Plan was equal to the sum of (i) 20,500,000 ordinary shares and (ii) an annual increase on April 1 of each year beginning on April 1, 2024 and ending on April 1, 2028, equal to the lesser of (A) 2% of the aggregate number of ordinary shares outstanding on March 31 of the immediately preceding fiscal year and (B) such smaller number of ordinary shares as determined by our Board of Directors or our Remuneration Committee. No more than 20,500,000 ordinary shares may be issued under the Omnibus Incentive Plan upon the exercise of incentive stock options. In October 2023, the Company started to grant RSUs and PSUs under the Omnibus Incentive Plan to employees, including executives of the Company. The RSUs and PSUs granted neither carry rights to dividends nor voting rights until the shares are issued or transferred to the recipient. The Omnibus Incentive Plan allows for either cash or share settlement of the awards by tranche, if applicable, at the discretion of the Remuneration Committee. At the time of issuance, the Company intended to settle the RSUs and PSUs in shares at the vesting date and such awards are accounted for as equity-classified awards. The RSUs were granted to existing employees and new hires of the Company and its subsidiaries, Arm Israel and Arm France SAS and vest in tranches, require continuous service through the vesting date and are subject to graded vesting over a period of three years. RSUs granted to employees and new hires of subsidiaries in Israel and France substantially share the same terms as the existing RSUs under the 2022 RSU Plan with differences limited to the vesting schedules. PSUs were awarded to executives of the Company and include a portion that vests over a three-year continuous service period and another portion that is subject to continuous service and satisfaction of certain Company performance conditions. The time-based portion of the PSUs vest over a three-year period. The PSUs that are subject to continuous service and satisfaction of certain Company performance conditions vest upon the satisfaction of performance metrics as established for each one-year performance period and have the potential to vest between 0% and 200% of the original award amount depending on the achievement of annual performance metrics. Except for performance awards with specific performance criteria, the Company recognizes share based compensation cost using the straight-line method over the requisite service period of the award, net of estimated forfeitures. Awards are forfeited if an employee leaves the Company before the awards vest. For all periods presented, the maximum number of ordinary shares that may be issued under the Omnibus Incentive Plan is e |
Income Taxes
Income Taxes | 12 Months Ended |
Mar. 31, 2024 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | 17 - Income Taxes The components of income before provision for income taxes are as follows: Fiscal Year Ended March 31, (in millions) 2024 2023 2022 United Kingdom $ 139 $ 427 $ 608 Foreign 73 244 178 Income from continuing operations before income taxes $ 212 $ 671 $ 786 The (expense) benefit for income taxes consists of the following: Fiscal Year Ended March 31, (in millions) 2024 2023 2022 Current: United Kingdom $ 2 $ (87) $ (44) Foreign (178) (94) (146) Total current tax (expense) benefit $ (176) $ (181) $ (190) Deferred: United Kingdom $ 114 $ 25 $ (53) Foreign 156 9 133 Total deferred tax (expense) benefit $ 270 $ 34 $ 80 Total income tax (expense) benefit $ 94 $ (147) $ (110) A reconciliation of the tax (expense) benefit at the United Kingdom statutory income tax rate to the actual tax (expense) benefit is as follows: Fiscal Year Ended March 31, (in millions) 2024 2023 2022 Income tax (expense) benefit at statutory rate $ (53) $ (127) $ (149) Foreign tax rate differential (14) (2) 8 Research and development tax credits 94 37 25 Change in valuation allowance (4) (5) 22 Non-deductible/non-taxable items (3) (3) 3 Patent box benefit (4) 25 69 Impact of U.K. rate change (3) (2) (64) Withholding tax (122) (72) (32) Gains exempt from U.K. tax (3) 2 8 Windfall tax benefit associated with share-based compensation 206 — — Income tax (expense) benefit $ 94 $ (147) $ (110) Income tax (expense) benefit reported in the Consolidated Income Statements 94 (147) (110) Income tax (expense) benefit attributable to discontinued operations — — (28) For the fiscal years ended March 31, 2024, 2023, and 2022, income tax (expense) benefit was $93.8 million, $(146.8) million, and $(109.7) million, respectively. For the fiscal years ended March 31, 2024, 2023, and 2022, the income tax (expense) benefit as a percentage of income before taxes was 44%, (22)%, and (14)%, respectively. The effective rate decreased compared to the same period last year primarily due to windfall tax benefits associated with share-based compensation arising in the last quarter of the fiscal year ended March 31, 2024. The significant components of deferred tax assets and liabilities is as follows: As of March 31, (in millions) 2024 2023 Lease liability $ 19 $ 13 Fixed assets 27 23 Tax losses and R&D tax credits 408 147 Equity investments 9 7 Share-based compensation 28 30 Reserves and other liabilities 23 27 Total gross deferred tax assets 514 247 Less: Valuation allowance (25) (21) Total deferred tax assets, net of valuation allowance 489 226 Right of use assets (18) (12) Acquired intangibles (5) (6) Outside basis differences (106) (110) Hedging reserve — (3) Contract liabilities (213) (218) Total deferred tax liabilities (342) (349) Net deferred tax assets (liabilities) $ 147 $ (123) As of March 31, 2024 , the Company had a United Kingdom corporate tax loss carryforward of $376.6 million ($94.2 million tax effected) and U.K. R&D Expenditure Credits of $70.6 million. These tax losses have no expiration date. The Company has U.S. federal net operating loss carryforwards of approximately $348.7 million ($73.2 million tax effected) of which $340.1 million has no expiration date and $8.7 million ($1.8 million tax effected) will expire between fiscal years 2033 and 2038 if not utilized. The Company also has a tax asset in respect of state net operating losses of $195.4 million ($12.5 million tax effected, net of federal benefit) which will expire by fiscal year 2044 if not utilized. The Company has U.S. Federal tax credit carryforwards of $120.5 million which will expire between 2033 and 2044. In addition, the Company has state tax credits of $59.9 million ($47.8 million net of federal benefit) of which $26.9 million has no expiration date and $33.0 million will expire between 2033 and 2044. As of March 31, 2024 , the Company has provided a valuation allowance on certain U.K. tax losses and U.S. State research and development tax credits. This is based on an analysis of historical taxable income, the projected reversal of deferred tax liabilities, projected taxable income and tax planning strategies. The Company believes, more likely than not, that it will have sufficient taxable income to utilize its remaining deferred tax assets. Utilization of the U.S. federal net operating loss and tax credit carryforwards may be subject to annual limitations due to the ownership change limitations provided by the U.S. Internal Revenue Code of 1986, as amended, and similar state provisions. Such annual limitations could result in the expiration of the net operating loss and tax credit carryforwards before their utilization. The events that may cause ownership changes include, but are not limited to, a cumulative stock ownership change of greater than 50% over a three-year period. The following table reflects changes in gross unrecognized tax benefits: Fiscal Year Ended March 31, (in millions) 2024 2023 2022 Gross unrecognized tax benefits—April 1 $ 62 $ 54 $ 75 Gross increases—tax positions in prior period 5 6 2 Gross decreases—tax positions in prior period (1) — — Gross increases—tax positions in current period 19 7 6 Settlements — (1) (28) Lapse of statute of limitations (1) (1) — Foreign exchange (1) (3) (1) Gross unrecognized tax benefits— March 31 $ 83 $ 62 $ 54 Included in the balance of unrecognized tax benefits as of March 31, 2024 , 2023 and 2022, are $71.9 million, $56.3 million, and $43.6 million, respectively, of tax benefits that, if recognized, would affect the effective tax rate. The Company recognizes interest accrued related to unrecognized tax benefits and penalties as income tax expense. The Company recognized expense of $1.8 million, $0.8 million, and $0.7 million for interest and penalties associated to income tax liabilities as of March 31, 2024 , 2023 and 2022 , respectively. As of March 31, 2024 , 2023 and 2022 , the Company had total accrued interest and penalties of $15.5 million, $14.2 million, and $15.8 million, respectively, which is included in other non-current liabilities on the Consolidated Balance Sheets. While the Company believes it has adequately provided for all tax positions, amounts asserted by tax authorities could be greater or less than the position. Accordingly, provisions on federal, state and foreign tax-related matters to be recorded in the future may change as revised estimates are made or the underlying matters are settled or otherwise resolved. As of March 31, 2024 , the Company has not identified any positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within the next twelve months. The Company is subject to taxation in the United Kingdom and various states and foreign jurisdictions. As of March 31, 2024 , the Company is no longer subject to examination by the United Kingdom tax authorities for the fiscal years ended March 31, 2018 or earlier. U.S. Federal returns for the calendar year ended December 31, 2003 and later periods are subject to audit with the exception of the calendar years ended December 31, 2010 to December 31, 2012, December 31, 2015 and December 31, 2016. |
Net Income (Loss) Per Share
Net Income (Loss) Per Share | 12 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
Net Income (Loss) Per Share | 18 - Net Income (Loss) Per Share The following table presents a reconciliation of basic and diluted earnings per share computations: Fiscal Years Ended March 31, (in millions, except shares and per share amounts) 2024 2023 2022 Income (loss) attributable to ordinary shareholders — basic and diluted Net income from continuing operations $ 306 $ 524 $ 676 Net loss from discontinued operations — — (127) Net income (loss) $ 306 $ 524 $ 549 Weighted average ordinary shares used to calculate income (loss) per share — basic (1) 1,027,443,122 1,025,234,000 1,025,234,000 Equity-classified shared-based awards 17,053,910 2,271,008 — Weighted average ordinary shares used to calculate income (loss) per share — diluted 1,044,497,032 1,027,505,008 1,025,234,000 Income (loss) per share attributable to ordinary shareholders — basic Net income from continuing operations $ 0.30 $ 0.51 $ 0.66 Net loss from discontinued operations — — (0.12) Net income (loss) per share - basic $ 0.30 $ 0.51 $ 0.54 Income (loss) per share attributable to ordinary shareholders — diluted Net income from continuing operations $ 0.29 $ 0.51 $ 0.66 Net loss from discontinued operations — — (0.12) Net income (loss) per share - diluted $ 0.29 $ 0.51 $ 0.54 (1) For the fiscal year ended March 31, 2024, includes weighted average ordinary shares for vested securities without restrictions that were not issued and outstanding as of the end of the reporting period. The following table presents securities that were excluded from the computation of diluted net income (loss) per ordinary share because the effect of including the securities would have been anti-dilutive: Fiscal Year Ended March 31, 2024 2023 2022 Restricted stock units (1) 254,189 16,870,903 14,230,025 Executive awards (2) — 546,262 — Total 254,189 17,417,165 14,230,025 (1) RSUs exclude certain awards which require cash settlement and do not allow for share settlement; however, for reporting periods prior to the IPO, RSUs include securities where change in control or the IPO was not probable to occur, and settlement was expected in cash upon the passage of time. (2) Executive awards include amounts associated with the Annual Awards and Launch Awards. Prior to the IPO, these awards entitled participants to fixed monetary amounts where the quantity of securities was calculated based on the total fixed monetary amount divided by the closing average market price of ordinary shares. Upon the IPO, these awards entitle participants to a fixed number of ordinary shares calculated based on the total fixed monetary amount divided by the IPO price. |
Commitments and Contingencies
Commitments and Contingencies | 12 Months Ended |
Mar. 31, 2024 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | 19 - Commitments and Contingencies Litigation From time to time, the Company is party to litigation and other legal proceedings in the ordinary course of business. Because the results of any litigation or other legal proceedings are uncertain, our financial position, results of operations or cash flows could be materially affected by an unfavorable resolution of one or more of these proceedings, claims, or demands. However, management does not currently believe the ultimate resolution of any pending legal matters is reasonably possible to have a material adverse effect on the Company’s financial position, results of operations or cash flows. The Company accrues for loss contingencies when it is both probable that it will incur the loss and when the Company can reasonably estimate the amount of the loss or range of loss. In the fiscal year ended March 31, 2023, the Company recorded a loss contingency related to an offer made by the Company to pay $40.0 million in respect of ongoing contractual disputes between the Company and a non-top five customer. That particular customer’s claims arose from a contract dating to a very early period in the Company’s history and that contract is both non-standard and significantly dissimilar from other customers’ contracts. On September 15, 2023, the Company reached an agreement, in which both parties resolved all contractual disputes and reached a mutual understanding of the contractual rights and obligations under the licensing arrangement. As a result, no amount of cash was paid by the Company to the customer with such agreement. The settlement agreement provided alignment of the rights and obligations which were previously agreed with the non-top five customer. In September 2023, the liability for litigation was reversed resulting in a reduction of selling, general and administrative by $40.0 million. No other material amounts related to litigation settlements were recognized in the fiscal years ended March 31, 2024, 2023 and 2022. Purchase Obligations In the normal course of business, we contract with various third-party service providers for systems and services to perform certain day-to-day business activities. During the fiscal year ended March 31, 2024 the Company entered into a non-cancelable purchase commitment with our cloud computing web services provider with a total purchase commitment of $340.0 million for the period from July 2023 through June 2029. As of March 31, 2024, the total remaining contractual obligations are approximately $298.0 million, of which $37.0 million is for the next 12 months. Kronos Guarantee from the Prior SoftBank Group Facility In March 2022, a wholly owned United Kingdom subsidiary of SoftBank Group Corp. (“SoftBank Group”), Kronos I (UK) Limited (“Kronos”), was created for the purpose of SoftBank Group arranging a non-recourse facility agreement (the “Facility Agreement”) with J.P. Morgan SE as Facility Agent to be secured by its equity interest in the Company. SoftBank Group pledged its ownership interest in the Company by transferring such interest to an entity that sits between Kronos and the Company, and SoftBank Group has no further obligation under the Facility Agreement. In September 2023, prior to the closing of the IPO, SoftBank Group paid the Facility Agreement and the Company’s associated terms, restrictions and guarantee were terminated. Arduino Guarantee The Company is guarantor for a $5.4 million credit facility available to Arduino. As of March 31, 2024 and 2023, no claims have been made against the guaranty. The guaranty expired in January 2024 and was extended by 12 months, expiring in January 2025. |
Retirement Benefits Plan
Retirement Benefits Plan | 12 Months Ended |
Mar. 31, 2024 | |
Retirement Benefits [Abstract] | |
Retirement Benefits Plan | 20 - Retirement Benefits Plans The Company contributes to defined contribution plans substantially covering all employees in Europe and the United States, and to government pension plans for employees in Japan, South Korea, Taiwan, Peoples Republic of China, Israel and India. The Company contributes to these plans based upon various fixed percentages of employee compensation, and such contributions are expensed as incurred. For the fiscal years ended March 31, 2024, 2023, and 2022 , $96.7 million, $78.4 million, and $77.0 million, respectively, was recorded in the Consolidated Income Statements related to contributions payable to these plans by the Company at rates specified in the rules of the plans. As of March 31, 2024 and 2023, $11.8 million and $9.6 million of contributions due had not been paid over to the plans and was recorded in accrued compensation and benefits and share-based compensation on the Consolidated Balance Sheets. |
Related Party Transactions
Related Party Transactions | 12 Months Ended |
Mar. 31, 2024 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | 21 - Related Party Transactions Arm China and Acetone Limited Following the restructuring of its direct investment in Arm China in the fiscal year ended March 31, 2022, the Company has a 10% non-voting ownership interest in Acetone Limited, whose primary asset is a 48.18% interest in Arm China. The Company has no direct material transactions with Acetone Limited. For the fiscal years ended March 31, 2024, 2023, and 2022, the Company recognized revenue of $670.8 million, $649.0 million, and $474.2 million, respectively, under the terms of the IPLA, and recognized expenses of $74.1 million, $64.1 million, and $63.5 million, respectively, under a service share arrangement with Arm China. In the fiscal year ended March 31, 2024, the Company recognized $5.5 million of contract termination costs in disposal, restructuring and other operating expenses, net in the Consolidated Income Statements due to a terminated agreement with Arm China for certain software engineering-related services, which was brought in-house. The Company leases certain assets to Arm China. For the fiscal years ended March 31, 2024, 2023, and 2022, the Company recognized rental income of $1.7 million, $2.0 million, and $1.6 million, respectively, from this lease arrangement. This income is included within the recognized revenue noted in the preceding paragraph. As of March 31, 2024, the Company had a net receivable of $175.8 million ($181.1 million receivable less $5.3 million payable) from Arm China. As of March 31, 2024, the Company had contract liabilities of $105.7 million relating to Arm China. As of March 31, 2023, the Company had a net receivable of $386.9 million ($400.7 million receivable less $13.9 million payable) from Arm China. As of March 31, 2023, the Company had contract liabilities of $103.4 million relating to Arm China. See Note 10 - Equity Investments , for further details of the impact of Acetone Limited on the Company’s results. Other Entities Related by Virtue of Common Control by SoftBank Group The Company had revenue transactions, along with accounts receivable and contract liabilities balances, with other entities by virtue of common control by SoftBank Group. For the fiscal years ended March 31, 2024, 2023, and 2022, the Company recognized revenue of $4.4 million, $1.3 million, and $1.5 million, respectively, from other entities controlled by SoftBank Group. As of March 31, 2024, the Company had accounts receivable of $0.8 million, contract assets of $3.1 million, and contract liabilities of $1.6 million. In the fiscal year ended March 31, 2024, the Company distributed its receivable related to the Company’s sale of IoTP to the majority shareholder of the Company, which represented a non-cash distribution of $12.0 million . As of March 31, 2023, the Company had accounts receivable, other receivables and contract liabilities of $0.5 million, $12.0 million, and $1.6 million, respectively, from other entities controlled by SoftBank Group. The Company also had an immaterial lease with a related party by virtue of common control by SoftBank Group which ended December 31, 2023. For the fiscal year ended March 31, 2022, from discontinued operations, the Company recognized revenue of $3.6 million and expenses of $0.2 million. Prior to the distribution of Treasure Data in June 2021, a loan of $50.0 million was issued by SoftBank Vision Fund II, a member of SoftBank Group to Treasure Data. Interest on this loan balance was charged at 2.0% per annum. The loan balance, including accrued interest, was included in the distribution to shareholders of the Company. Refer to Note 5 - Discontinued Operations , for discussion regarding the distribution of Treasure Data and the sale of IoTP by the Company to SoftBank Group Capital Limited in the fiscal year ended March 31, 2022. Kronos Guarantee from the Prior SoftBank Group Facility In March 2022, Kronos, an entity under common control of SoftBank, entered into the Facility Agreement which is secured by its interest in the Company. The Company also entered into the Undertaking to confirm and agree to comply with the terms of the Facility Agreement and a Guarantee of the obligations under the Facility Agreement owed by Kronos. Under the terms of the Guarantee, upon an Arm Guarantee Trigger Event, the Guarantee springs into effect, such that any future payment default by Kronos following such date may require performance by the Company if not settled by use of the share collateral or otherwise restructured. In September 2023, Softbank settled the Facility Agreement and the Company’s Undertaking and Guarantee were terminated. See Note 19 - Commitments and Contingencies , for further details on this Guarantee. Other Equity Investments The Company has revenue transactions, along with receivable, contract asset and contract liability balances for certain other equity investees, for which the Company has significant influence or, for investments in limited partnerships or certain limited liability companies that maintain a specific ownership account for each investor, for which the Company has more than virtually no influence (i.e., at least 3% to 5% ownership) (such investees, “Significant Influence Investees”). For the fiscal years ended March 31, 2024, 2023, and 2022, the Company recognized revenue of $49.3 million, $3.5 million, and $8.5 million, respectively, from Significant Influence Investees. The increased revenue during fiscal year ended March 31, 2024 is due to recognition of amounts associated with a large licensing contract that were previously required to be deferred. As of March 31, 2024, the Company had accounts receivable and contract assets of $0.2 million and $18.7 million, respectively, related to contracts with Significant Influence Investees. As of March 31, 2024, the Company did not have contract liabilities related to contracts with Significant Influence Investees. As of March 31, 2023, the Company had accounts receivable, contract assets and contract liabilities related to contracts with Significant Influence Investees of $0.5 million, $8.7 million and $30.2 million, respectively. For the fiscal years ended March 31, 2024, 2023, and 2022, the Company recognized aggregate distributions, dividends and returns of capital from certain equity investments of $6.9 million, $0.0 million, and $1.9 million, respectively. Linaro Limited Linaro Limited (“Linaro”) is a not-for-profit entity for which the Company is a member and exhibits significant influence. For the fiscal years ended March 31, 2024, 2023, and 2022, the Company incurred subscription and other costs of $10.6 million, $8.9 million, and $7.9 million, respectively, from Linaro. As of March 31, 2024 and 2023, $1.3 million and $0.3 million, respectively, was recorded in o ther current liabilities on the Consolidated Balance Sheets. In February 2023, the Company entered into an agreement with Linaro to sell certain net assets of the Company that meets the definition of a business in exchange for cash consideration of $4.0 million to be paid in equal annual installments over five years. As of March 31, 2024 and 2023, $3.2 million and $4.0 million total purchase consideration, respectively, remained unpaid and was recorded in prepaid expenses and other current assets and other non-current assets on the Consolidated Balance Sheets. As a result of the transaction, in the year ended March 31, 2023, the Company derecognized associated net assets and recognized a gain of $3.7 million in other non-operating income (loss), net in the Consolidated Income Statements. Loans to Related Parties As of March 31, 2024 and 2023, the Company had a loan receivable of $16.2 million and $19.2 million, respectively, with Arduino, a related party and a loan receivable of $3.1 million and $3.0 million, respectively, with Cerfe Labs, Inc, a related party, both of which remain fully impaired. See Note 11 - Financial Instruments , for further details regarding this loan. As of March 31, 2024 and 2023, the outstanding balance of the convertible promissory note with Ampere, a related party, was $32.4 million and $30.9 million, respectively. The Company’s maximum exposure to loss are the amounts invested in, and advanced to, Ampere as of March 31, 2024. See Note 10 - Equity Investments, for further details on Ampere. Other relationships The Company engaged Raine Securities LLC, a related party, for certain advisory services in connection with the IPO. For the fiscal year ended March 31, 2024, the Company incurred $10.7 million in expenses, of which $5.2 million was reimbursed by the underwriters for the IPO. For the fiscal year ended March 31, 2023, under a separate agreement with Raine Securities LLC, the Company incurred $2.5 million in expenses. As of March 31, 2023, the Company had recorded other current liabilities of $2.5 million. As of March 31, 2024 the Company has settled all liabilities with this related party. |
Segment and Geographic Informat
Segment and Geographic Information | 12 Months Ended |
Mar. 31, 2024 | |
Segment Reporting [Abstract] | |
Segment and Geographic Information | 22 - Segment and Geographic Information The Company has determined its Chief Executive Officer is its chief operating decision maker. The Company’s Chief Executive Officer reviews financial information presented on a consolidated basis for purposes of assessing performance and making resource allocation decisions. Accordingly, the Company has determined that it operates as a single operating and reportable segment. Refer to Note 4 - Revenue for r evenue by geographic region. Long-lived assets by geographic area are as follows: As of March 31, (in millions) 2024 2023 United Kingdom $ 287 $ 281 United States 90 78 Other countries 43 32 Total $ 420 $ 391 |
Subsequent Events
Subsequent Events | 12 Months Ended |
Mar. 31, 2024 | |
Subsequent Events [Abstract] | |
Subsequent Events | 23 - Subsequent Events On May 21 2024, Arm Technology Investments 2 Limited, an indirect wholly owned subsidiary of Arm, entered into a cornerstone investment agreement with Raspberry Pi Holdings plc (“Raspberry Pi”), which announced on May 15, 2024 its intention to conduct an initial public offering of its ordinary shares (“Raspberry Pi IPO”). Arm has agreed to purchase $35.0 million of Raspberry Pi’s ordinary shares in the Raspberry Pi IPO, subject to customary conditions. |
Description of Business and S_2
Description of Business and Summary of Significant Accounting Policies (Policies) | 12 Months Ended |
Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying consolidated financial statements have been prepared in conformity with accounting principles generally accepted in the U.S. (“GAAP”) and pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). The Company’s fiscal year ends on March 31st. |
Principles of Consolidation | Principles of Consolidation The accompanying financial statements include the accounts of the Company, its wholly owned subsidiaries and the Arm Employee Benefit Trust (the “EBT”). All intercompany balances and transactions have been eliminated in consolidation. The financial statements consolidate all of the Company’s affiliates, and the entities where the Company holds a controlling financial interest, because the Company holds a majority voting interest. The Company reevaluates whether there is a controlling financial interest in all entities when rights and interests change. |
Foreign Currency | Foreign Currency The accompanying consolidated financial statements are presented in U.S. dollar (“USD”), which is the Company’s functional and reporting currency. For most of the Company’s international operations, the local currency has been determined to be the functional currency of the respective entity. For transactions entered into in a currency other than its functional currency, monetary assets and liabilities are remeasured into the functional currency at end-of-period exchange rates. Non-monetary assets and liabilities, along with equity are remeasured at historical exchange rates. Income and expenses are remeasured at exchange rates in effect during each period, except for those expenses related to non-monetary balance sheet amounts, which are remeasured at historical exchange rates. Gains or losses from foreign currency remeasurement are included in other non-operating income (loss), net in the Consolidated Income Statements. The Company translates functional currency assets and liabilities to their USD equivalents at exchange rates in effect as of the balance sheet date and income and expense amounts at average exchange rates for the period. The USD effects that arise from changing translation rates are recorded in foreign currency translation adjustments on the Consolidated Statements of Comprehensive Income. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting periods. Significant items subject to such estimates include, but are not limited to, revenue recognition, allowance for expected credit losses, income taxes, share-based compensation, impairment considerations for long-lived assets, fair value estimates and impairment for investments. The Company evaluates these estimates on an ongoing basis and revises estimates as circumstances change. The Company bases its estimates on historical experience, anticipated results, trends, and other various assumptions that it believes are reasonable. Actual results could differ materially from the Company’s estimates. |
Concentration of Credit Risk | Concentrations of Credit Risk Credit risk is the risk of an unexpected loss if a customer or third-party to a financial instrument fails to meet its contractual obligations. Financial instruments that potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents, bank deposits, short-term investments, derivative financial instruments and accounts receivable. The Company’s maximum exposure to credit risk is limited to the carrying amount of these assets. The credit risk on liquid funds and derivative financial instruments is limited because the counterparties are banks with high credit ratings assigned by international credit rating agencies. The Company further manages its credit risk on liquid funds and derivative financial instruments through diversification of investment type and credit exposures. For accounts receivable, the credit risk is managed through the use of mitigating controls, including the use of credit checks and credit limits on customers. For financial assets (other than accounts receivable), the Company holds positions with an approved list of investment-grade rated counterparties and monitors the exposures and counterparty credit risk on a regular basis. The Company establishes reserves for potential credit losses and such losses have been within Management’s expectations. Credit losses are monitored on a regular basis and have not been material in any year presented. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include cash on hand, short-term deposits and money market funds with original maturities of three months or less that are readily convertible into known amounts of cash and are subject to insignificant risk of changes in value. Cash and cash equivalents are stated at cost, which approximates fair value because the short-term maturity of those instruments. |
Short-term Investments | Short-term Investments Short-term investments represent term deposits with banks with a maturity between three and 12 months. These investments are classified as held-to-maturity as the Company has the intent and ability to hold the investments to maturity. These investments are recorded at amortized cost, net of expected credit losses. Amortization of premiums or accretion of discounts are included in interest income, net in the Consolidated Income Statements. |
Equity Investments | Equity Investments The Company regularly invests in equity securities of public and private companies to promote business and strategic objectives. Equity investments are measured and recorded as follows: • Non-marketable equity securities are equity securities without readily determinable fair values and for which the Company does not have the ability to exercise significant influence. Non-marketable equity securities are recorded on the income statement either at fair value on a recurring basis with changes in fair value, whether realized or unrealized; or by election, measured and recorded using a measurement alternative that measures the securities at cost minus impairment, if any, plus or minus changes resulting from qualifying observable price changes. • Equity method investments are equity securities in investees in which the Company does not control but has the ability to exercise significant influence. Investments in limited partnerships or certain limited liability companies that maintain a specific ownership account for each investor are also accounted for using the equity method when the Company has more than virtually no influence (i.e., at least 3% to 5% ownership). The Company has elected to account for certain equity method investments under the fair value option. These investments are recorded at fair value with changes in fair value recorded on the income statement. Where the Company has not elected the fair value option, equity method investments are recorded at cost minus impairment, if any, plus or minus the Company’s share of the equity method investees’ income or loss recorded on the income statement. For certain non-marketable equity securities and equity method investments, the Company has elected to apply the net asset value (“NAV”) practical expedient, where NAV is the estimated fair value of the investments. For these securities estimated fair values are determined based on the indicated market values of the underlying assets or investment portfolios. Income statement activity for all equity investments is recorded in income from equity investments, net on the Consolidated Income Statements. The carrying values of non-marketable equity securities under the measurement alternative are adjusted for qualifying observable price changes resulting from the issuance of similar or identical securities in an orderly transaction by the same issuer. Determining whether an observed transaction is similar to a security within the Company’s portfolio requires judgment based on the rights and preferences of the securities. Recording upward and downward adjustments to the carrying values of equity securities as a result of observable price changes requires quantitative assessments of the fair values of the Company’s equity securities using various valuation methodologies and involves the use of estimates. Non-marketable equity securities under the measurement alternative and equity method investments not measured under the fair value option (collectively referred to as “non-marketable equity securities”) are also subject to periodic impairment analysis. The quarterly impairment analysis considers both qualitative and quantitative factors that may have a significant impact on the investee’s fair value. Qualitative factors considered include the investee’s financial condition and business outlook, industry and sector performance, market for technology, operational and financing cash flow activities, and other relevant events and factors affecting the investee. When indicators of impairment exist, the Company prepares quantitative assessments of the fair value of the non-marketable equity securities using both the market and income approaches, which require judgment and the use of estimates, including discount rates, investee revenue and costs, and comparable market data of private and public companies, among others. Non-marketable equity securities under the measurement alternative are tested for impairment using a qualitative model similar to the model used to test goodwill and other long-lived assets for impairment. Upon determining an impairment may exist, the security’s fair value is calculated and compared to its carrying value and an impairment is recognized immediately if the carrying value exceeds fair value. Equity method investments not measured under the fair value option are subject to periodic impairment reviews using the other-than-temporary impairment model, which considers the severity and duration of a decline in fair value below cost and the Company’s ability and intent to hold the investment for a sufficient period of time to allow for recovery. Equity Method Investments The Company elected the fair value option in accordance with the guidance in ASC 825, Financial Instruments (“ASC 825”) for its investments in Acetone Limited and Ampere. The Company initially computed the fair value for its investments consistent with the methodology and assumptions that market participants would use in their estimates of fair value with the assistance of a third-party valuation specialist or based on inputs from the investee. The fair value computation is updated on a quarterly basis. The investments are classified within Level 3 in the fair value hierarchy because the Company estimates the fair value of the investments using the (i) the market-calibration approach based on the guideline public company method, (ii) subject to availability of sufficient information, the income approach based on the discounted cash flow method, or (iii) the probability-weighted, expected return (“PWER”) approach. The market-calibration approach considers valuation multiples that are calibrated to the valuation as of the prior valuation date (i.e., quarterly) based on: (a) changes in the broader market or industry; (b) changes in the guideline public companies; and (c) changes in the company’s operating and financial performance. The fair value computation under this approach includes a key assumption for the range of valuation multiples (i.e., enterprise value or revenue), which requires significant professional judgment by the valuation specialist and is based on observable inputs (e.g., market data) and unobservable inputs (e.g., market participant assumptions). The PWER approach is based on discrete future exit scenarios to determine the value of various equity securities. Under the PWER approach, the share value today is based on the probability-weighted, present value of expected future distributions, taking into account the rights and preferences of each debt and equity class. The Company considers an initial public offering scenario, a sale scenario, and a scenario assuming continued operation as a private entity for future exit scenarios. The fair value computation under this approach includes key assumptions for time to liquidity outcomes, discounted rate, and present value factors. |
Loans Receivable and Convertible Loans Receivable | Loans Receivable Loans receivable consist of term loans to a related party and other entities. The term loans are recorded at amortized cost, net of allowances for loan losses. The Company maintains an allowance for current expected credit losses to reserve for potentially uncollectible loans receivable. The Company measures interest income for all loans receivable using the interest method, which is based on the effective yield of the loans rather than the stated coupon rate. The Company classifies loans receivable in other non-currents assets on the Consolidated Balance Sheets. Convertible Loans Receivable Convertible loans receivable consist of convertible loans to certain entities. The Company has elected to apply the fair value option to account for such convertible loans receivable. Under the fair value option, such convertible loans receivable are measured initially and subsequently at fair value with changes in fair value recorded in other non-operating income (loss), net in the Consolidated Income Statements. Convertible loans receivable are included in other non-current assets on the Consolidated Balance Sheets. |
Fair Value Measurement | Fair Value Measurement The Company measures certain assets and liabilities at fair value, either upon initial recognition or for subsequent accounting or reporting. Fair value is defined as the price that would be received to sell an asset or be paid to transfer a liability in an orderly transaction between market participants at the measurement date (exit price). When determining fair value, the Company considers the principal or most advantageous market in which the Company would transact, as well as assumptions that market participants would use when pricing the asset or liability. When estimating fair value, depending on the nature and complexity of the asset or liability, the Company may use one or all of the following techniques: • Income approach, which is based on the present value of a future stream of net cash flows. • Market approach, which is based on market prices and other information from market transactions involving identical or comparable assets or liabilities. • Cost approach, which is based on the cost to acquire or construct comparable assets, less an allowance for functional and/or economic obsolescence. Fair value disclosures are classified based on the fair value hierarchy, which prioritizes the inputs used in the valuation methodologies in measuring fair value: • Level 1 - Unadjusted quoted prices in active markets that are accessible at the measurement date for identical, unrestricted assets or liabilities. • Level 2 - Observable inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly, including quoted prices for similar assets and liabilities in active markets, quoted prices for identical or similar assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data by correlation or other means. • Level 3 - Prices or valuation techniques requiring inputs that are both significant to the fair value measurement and unobservable. |
Business Combinations | Business Combinations The Company uses the acquisition method of accounting for business combinations, which requires separate recognition of assets acquired and liabilities assumed from goodwill, based on their estimated fair values at the time of acquisition. Goodwill as of the acquisition date is measured as the excess of consideration transferred and the fair value of any non-controlling interests in the acquiree over the net of the estimated acquisition date fair values of the assets acquired and liabilities assumed. The estimates and assumptions used in valuing intangible assets include, but are not limited to, the amount and timing of projected future cash flows, discount rate used to determine the present value of these cash flows and the useful lives of the assets. Although the Company’s fair value estimates are based upon assumptions believed to be reasonable, these estimates and assumptions are inherently uncertain and subject to refinement. As a result, during the measurement period up to one year from the acquisition date, the Company may record adjustments to the assets acquired and liabilities assumed with the corresponding offset to goodwill. Upon conclusion of the measurement period or final determination of fair values of the purchase price of an acquisition, whichever comes first, any subsequent adjustments are recorded in earnings in the Consolidated Income Statements. Acquisition-related expenses are recognized separately from the business combination and expensed as incurred. |
Goodwill | Goodwill Goodwill represents the excess of cost over the fair value of net assets acquired in a business combination. Goodwill is tested for impairment annually during the fourth fiscal quarter or during interim periods whenever events and circumstances indicate an impairment may have occurred. The identification and measurement of goodwill impairment involves the estimation of fair value at the Company’s reporting unit level, which is the same or one level below the operating segment level. The Company determined it has one reporting unit. The Company has the option to assess qualitative factors first to determine whether it is necessary to perform the two-step test. If the Company believes, as a result of the qualitative assessment, that it is more-likely-than-not that the fair value of the reporting unit is less than its carrying amount, the two-step quantitative impairment test is required. Otherwise, no further testing is required. In the qualitative assessment, the Company considers primary factors such as industry and market considerations, overall financial performance of the reporting unit, and other specific information related to the operations. The Company completed its annual goodwill impairment test in the fourth fiscal quarter of the fiscal year ended March 31, 2024. It was determined, after performing a qualitative review, it was not more-likely-than-not that the fair value of the Company’s single reporting unit was less than its carrying amount. Accordingly, there was no indication of impairment. |
Intangible Assets, Net and Software Development Costs and Acquired Intangible Software | Intangible Assets, Net Intangible assets primarily represent acquired intangible assets including those acquired separately, such as computer software and purchased patents and licenses to use technology, as well as those acquired through business combination such as developed technology and customer relationship assets. The Company initially records intangible assets acquired in a business combination at their estimated fair value. Intangible assets are reported net of accumulated amortization and any accumulated impairment losses, and are amortized over their estimated useful lives at amortization rates that are proportionate to each asset’s estimated economic benefit. Amortization of intangible assets is recorded in either cost of sales, research & development or selling, general and administrative expenses in the Consolidated Income Statements depending on the nature of the underlying asset and uses by the Company. Software Development Costs and Acquired Intangible Software The Company has not historically capitalized software development costs for software to be sold, leased or otherwise marketed as the time and cost incurred between technological feasibility and product release has been determined to be immaterial. As such, these development costs are generally recognized as incurred in research and development expenses in the Consolidated Income Statements. The Company capitalizes certain development costs related to software acquired, developed or modified for internal use, along with certain costs incurred in connection with the implementation of internal use software. Costs related to certain application development activities are subject to capitalization. Costs related to preliminary project and post implementation activities are expensed as incurred. Amortization begins once the software is ready for its intended use, and amortization expense is generally recognized on a straight-line basis over the software’s estimated useful life between three Capitalized costs related to internal use software, net of accumulated amortization, are included in intangible assets, net on the Consolidated Balance Sheets and amortization expense is recognized in selling, general & administrative expenses in the Consolidated Income Statements. |
Property and Equipment, Net | Property and Equipment, Net Property and equipment are stated at cost net of accumulated depreciation and impairment losses. Cost comprises expenditures directly attributable to the purchase of the asset. Assets are depreciated to their estimated residual value, on a straight-line basis, over the estimated useful life of the underlying asset. Estimated useful lives and residual values are reviewed at each reporting date. Depreciation on property and equipment is recorded in cost of sales, research and development or selling, general & administrative expenses in the Consolidated Income Statements depending on the nature of the underlying asset and uses by the Company. An item of property or equipment is written off either upon disposal or when there is no expected future economic benefit from its continued use. Gain or loss on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying value of the asset) is included in the Consolidated Income Statements in the year the asset is derecognized. |
Impairment of Long-lived Assets Other than Goodwill | Impairment of Long-lived Assets Other than Goodwill The Company reviews long-lived assets other than goodwill for impairment when facts or circumstances indicate the carrying amount of an asset or asset group may not be recoverable. If impairment indicators are present and the estimated future undiscounted cash flows are less than the carrying value of the assets, the carrying values are reduced to the estimated fair value. Fair value is determined based on quoted market values, discounted cash flows, or external appraisals, as applicable. Impairment losses are recorded in impairment of long-lived assets in the Consolidated Income Statements. |
Leases | Leases The Company determines if an arrangement is or contains a lease at inception or modification of the arrangement. An arrangement is or contains a lease if there are identified assets and the right to control the use of an identified asset is conveyed for a period in exchange for consideration. Control over the use of the identified assets means the lessee has both the right to obtain substantially all of the economic benefits from the use of the asset and the right to direct the use of the asset. The Company recognizes right-of-use assets and operating lease liabilities for lessee operating leases other than those with a term of 12 months or less as the Company has elected to apply the short-term lease recognition exemption. Right-of-use assets represent the right to use an underlying asset for the lease term and lease liabilities represent an obligation to make lease payments over the lease term. Operating lease right-of-use assets and lease liabilities are measured at the lease commencement date based on the present value of the remaining lease payments over the lease term, discounted using the Company’s incremental borrowing rate, which approximates the interest rate at which the Company could borrow on a collateralized basis with similar terms and payments and in similar economic environments. Operating lease right-of-use assets also include initial direct costs incurred and prepaid lease payments, minus any lease incentives. Lease terms include options to extend or terminate the lease when it is reasonably certain that the option will be exercised. All lease and non-lease components, principally common area maintenance costs, are combined in determining operating lease right-of-use assets and lease liabilities. For operating leases, lease expense is recognized on a straight-line basis over the lease term. |
Asset Retirement Obligations | Asset Retirement Obligations An asset retirement obligation (“ARO”) is recorded as appropriate on assets for which the Company has a legal obligation to retire. The Company records a liability for an ARO and the associated asset retirement cost at the time the underlying asset is acquired and put into service. Subsequent to the initial measurement of the ARO, the obligation is adjusted at the end of each period to reflect the passage of time and changes in the estimated future cash flows underlying the obligation, if any. Over time, the liability is accreted to its present value and the capitalized cost is depreciated over the estimated useful life of the asset. The Company has recognized AROs for contractually mandated removal of leasehold improvements. |
Derivative Financial Instruments and Hedge Activities | Derivative Financial Instruments and Hedge Activities The Company uses derivative financial instruments, specifically foreign currency forward contracts, to mitigate exposure from certain foreign currency risk. Certain forecasted transactions, specifically British Pound Sterling (“GBP”) denominated cash flows in the form of payroll and selling, general and administrative expenses are exposed to foreign currency risk. The Company monitors foreign currency exposures on a monthly basis to maximize the economic effectiveness of foreign currency hedge positions. No derivatives were designated hedges prior to July 2022. All derivatives are recorded at fair value as either an asset or liability. For derivatives not designated as hedges, adjustments to reflect changes in the fair value of the derivatives are included in earnings in other non-operating income (loss), net in the Consolidated Income Statements. In July 2022, all foreign currency forward contracts were designated as cash flow hedges in designated hedging relationships with the forecasted foreign denominated cash flows as the hedged transactions. The maximum length of time over which the Company is hedging its exposure to the variability in future foreign denominated cash flows is one year. For cash flow hedges that qualify and are designated for hedge accounting, the change in fair value of the derivative is recorded in the net change in fair value of the effective portion of designated cash flow hedges on the Consolidated Statements of Comprehensive Income, and subsequently recognized in research and development and selling, general and administrative expenses in the Consolidated Income Statements when the hedged transaction affects earnings. The Company classifies all derivative assets and liabilities for designated and non-designated derivatives in prepaid expenses and other current assets and other current liabilities on the Consolidated Balance Sheets. The Company classifies cash flows from the settlement of effective cash flow hedges for designated and non-designated derivatives in the same category as the cash flows from the related hedged items in operating activities on the Consolidated Statements of Cash Flows. The foreign currency forward contracts are classified under Level 2 of the fair value hierarchy. See Note 13 - Fair Value. Currency Exchange Contracts |
Revenue Recognition | Revenue Recognition The Company recognizes revenues for the transfer of products or services to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those products or services. The principle is achieved through the following five-step approach: • Identification of the contract with the customer • Identification of the performance obligations • Determination of the transaction price • Allocation of the transaction price to the performance obligations in the contract • Recognition of revenue when, or as, the Company satisfies a performance obligation Revenue for the Company’s major product offerings consists of the following: License and Other Revenue • Intellectual property license — The Company generally licenses IP under non-exclusive license agreements that provide usage rights for specific applications for a finite or perpetual term. These licenses are made available electronically to address the customer-specific business requirements. These arrangements generally have distinct performance obligations that consist of transferring the licensed IPs, version extensions of architecture IP or releases of IPs, and support services. Support services consist of a stand-ready obligation to provide technical support, patches, and bug fixes over the support term. Revenue allocated to the IP license is recognized at a point in time upon the delivery or beginning of the license term, whichever is later. Revenue allocated to distinct version extensions of architecture IP or releases of IP, excluding when-and-if-available minor updates over the support term, are recognized at a point in time upon the delivery or beginning of license term, whichever is later. Certain license agreements provide customers with the right to access a library of current and future IPs on an unlimited basis over the contractual period depending on the terms of the applicable contract. These licensing arrangements represent stand-ready obligations in that timing of the delivery of the underlying IPs is within the control of the customer and the extent of use in any given period does not diminish the remaining performance obligation. The contract consideration related to these arrangements is recognized ratably over the term of the contract in line with when the control of the performance obligations is transferred. • Software sales, including development systems — Sales of software, including development systems, which are not specifically designed for a given license (such as off-the-shelf software), are recognized upon delivery when control has been transferred and customer can begin to use and benefit from the license. • Professional services — Services (such as training and professional and design services) that the Company provides, which are not essential to the functionality of the IP, are separately stated and priced in the contract and accounted for separately. Training revenue is recognized as services are performed. Revenue from professional and design services are recognized over time using the input method based on engineering labor hours expended to date relative to the estimated total effort required. For such professional and design services, the Company has an enforceable right to payment for performance completed to date, which includes a reasonable profit margin and the performance of such services do not create an asset with an alternative use. • Support and maintenance — Support and maintenance is a stand-ready obligation to the customer that is both provided and consumed simultaneously. Revenue is recognized on a straight-line basis over the period for which support and maintenance is contractually agreed pursuant to the license. Royalty Revenue For certain IP license agreements, royalties are collected on products that incorporate the Company’s IP. Royalties are recognized on an accrual basis in the quarter in which the customer ships their products, based on the Company’s technology that it contains. This estimation process for the royalty revenue accrual is based on a combination of methodologies, including the use of historical sales trends and macroeconomic factors for predictive analysis, the analysis of customer royalty reports and their sales trends and forecasts, as well as data and forecasts from third-party industry research providers. Data considered includes revenue, unit shipments, average selling price, product mix, market share and market penetration. Adjustments to revenues are required in subsequent periods to reflect changes in estimates as new information becomes available, primarily resulting from actual amounts subsequently reported by the licensees in the period following the accrual. Significant Judgments Identification of the Contract with the Customer The Company accounts for a contract as a revenue contract when all of the following criteria are met: • The contract has been approved (either in writing, orally or in accordance with other customary business practices) by the parties to the contract, and the parties are committed to perform their respective obligations. • The Company can identify each party’s rights regarding goods or services to be transferred. • The Company can identify the payment terms for the goods or services to be transferred; • Contracts have commercial substance; and • It is probable that the Company will collect the consideration to which it will be entitled to, in exchange for the goods or services to be transferred to the customer. The Company sometimes enters into multiple contracts with the same customer that are treated, for accounting purposes, as one contract if the contracts are entered into at, or near, the same time and are interrelated. Judgment is required in evaluating whether various contracts are interrelated, which includes considerations as to whether they were negotiated as a package with a single commercial objective, whether the amount of consideration on one contract is dependent on the performance of the other contract, or if some, or all, obligations in the contracts constitute a single performance obligation. New arrangements with existing customers can be based on either a new contract or the modification of prior contracts. The Company’s judgment in making this determination considers whether there is a connection between the new arrangement and the pre-existing contracts, whether the services under the new arrangement are highly interrelated with the products and services provided under prior contracts, and how the products and services under the new arrangement are priced. The Company sometimes enters into non-cancellable and non-refundable committed funds arrangement from customers, where the parties have ongoing negotiations. Judgment is required in evaluating whether all rights and obligations of the arrangement are determined and enforceable. Judgment is also required in determining whether collectability of substantially all of the consideration is probable. The Company assesses this through credit checks, past payment history or based on upfront payment prior to performance of the obligation(s). Identification of the Performance Obligations Customer contracts often include various products and services as outlined in the summary of major product groups above. Typically, these products and services qualify as separate performance obligations, and a portion of the contractual value is allocated to them. Judgment is required, however, in determining whether a good or service is considered a separate performance obligation. When selling licenses or services, the Company frequently grants customers the choice to acquire additional rights, goods or services (for example, renewals of offerings, version extensions through term renewals, additional future products, or additional volumes of purchased license). The Company also utilizes forward looking information such as product roadmaps and other marketing materials in identifying performance obligations for IPs or version extensions of architecture IP under development or future products, and in determining if implicit promises or material right exist in certain long-term contracts. In a typical licensing arrangement, the Company either licenses implementation IP or architecture IP. When implementation IP is licensed, the Company promises to provide all developed and undeveloped IP over the license term based on the subscription package selected by the customer. Products are delivered to the customer based on the Company’s product roadmap and each IP is generally identified as a separate performance obligation. The undeveloped IP in the contract also includes an implied promise to deliver implementation IP that will be developed and become available during the contract term but is not on the product roadmap at contract inception. When architecture IP is licensed, the Company promises to provide the available architecture IPs as well as all future version extensions of the architecture IP over the contract term which could range from 3 to 20 years. These version extensions may take one of two forms: • Specified version extensions that are expected to be released over the next 2-3 years and are identified in the Company’s product roadmap, or; • Implicit version extensions that the Company believes, based on historical data, will be developed in the period beyond the years covered by the product roadmap and will be delivered to the customer as and when released. These version extensions represent promises to deliver distinct products and have a discernable release pattern, based on the Company’s established practice every year over the license term. When version extensions of architecture IP are promised along with a license to available architecture IP, a portion of the overall transaction price is allocated to the available architecture license while the remaining portion relating to future extensions is deferred until those extensions are delivered and become available for use. Amounts allocated to the IP license including version extensions of an architecture license or releases of an implementation license are each recognized at a point in time upon the delivery or beginning of license term, whichever is later. Determination of Transaction Price The Company applies judgment when determining the amount of consideration it expects to be entitled to in exchange for transferring promised goods or services to a customer. This includes estimates as to whether, and to what extent, subsequent concessions or payments may be granted to customers, which release customers from their obligations to pay contractual fees. In this judgment, historical trends are considered with respect to both the specific customer and broader Company trends. The Company estimates the transaction price based on the amount expected to be received for transferring the promised goods or services in the contract. Consideration payable to a customer is accounted for as a reduction of the transaction price and, therefore, of revenue unless the payment to the customer is in exchange for a distinct good or service that the customer transfers to the Company. The transaction price also excludes amounts collected on behalf of third parties such as sales taxes. The Company’s revenue arrangements may include variable consideration, including royalties. Where minimum royalties are agreed with customers and there is no uncertainty of their receipt, the amount is allocated to performance obligations as a part of the transaction price. The Company considers relevant facts and circumstances in assessing whether a contract contains a significant financing component. The Company has not identified significant financing components in its material revenue arrangements executed during the financial year. Allocation of Transaction Price Judgment is required when estimating standalone selling prices (“SSPs”). There is also judgment involved in determining whether the pricing of certain performance obligations is highly variable or uncertain. Other than support and maintenance, SSPs are usually not directly observable for the Company’s products and services. because the Company generally does not sell its products or services on a standalone basis. When separately stated, contractual pricing is highly variable. The Company estimates the SSPs so that the Company allocates the transaction price to each performance obligation in an amount that depicts the amount of consideration to which the Company expects to be entitled in exchange for transferring the promised goods or services to the customer. The Company allocates royalties entirely to the licenses that give rise to them. When estimating a SSP, the Company considers available information and maximizes the use of observable inputs such as renewal pricing history for the Company’s standardized support and professional service offerings. For offerings that have highly variable or uncertain pricing and lack substantial direct costs to estimate based on a cost-plus margin approach, the transaction price is allocated by applying a residual approach. This is on the basis that the Company has identified SSP for other performance obligations in the same arrangement. If two or more goods or services in a contract have highly variable or uncertain pricing, then the Company applies a combination of methods to allocate transaction price, including utilizing list prices, contract prices, and engineering effort estimates to develop future IP, for initial allocation of residual amount of transaction price within such products. For Arm Total Access arrangements, the Company establishes a separate performance obligation for implicit rights of future products upon contract execution and allocates the total transaction price to each performance obligation based on the price roadmap. For customer agreements related to long-term licensing of architecture IP, the Company allocates the contract value to each of the performance obligations based on an estimate of the engineering efforts required to deliver the initial version of the IP as well as related future versions, including enhancements and upgrades. The SSPs of material rights depends on the probability of option exercise. In estimating these probabilities, judgment is utilized when considering historical exercise patterns. The SSPs are reviewed annually or whenever facts and circumstances significantly change. These changes are applied prospectively. Revenue from Arm China Arm Technology (China) Co. Limited (“Arm China”) acts as the Company’s exclusive IP distributor in the People’s Republic of China, which, for the purposes of these financial statements, includes the Hong Kong Special Administrative Region and the Macau Special Administrative Region, but excludes Taiwan (collectively referred to as the “PRC”), under the intellectual property licensing arrangement (“IPLA”) and subsequent amendments. Arm China directly contracts with end customers with discretion in establishing pricing to sublicense specified IP and Arm Total Access Packages. The Company’s responsibility under the IPLA is to facilitate delivery of a good or service to the end customer in accordance with detailed instructions and other specifications from Arm China. In these cases, Arm China is the customer for the Company. As such, revenue presented by the Company is the net amount calculated as a percentage of license and royalty fees earned by Arm China from sub-license arrangements entered into with end customers. The Company applies the royalty exception, under which revenue is recognized when the subsequent sale or usage occurs, assuming control of the license to which the royalty relates has transferred to the end customer. Where the revenue is derived as a percentage of the license fee of Arm China, the Company categorizes that portion as license revenue while the other portion, which represents the Company’s share of Arm China’s royalties, is categorized as royalties. Contract Balances and Receivables The Company recognizes accounts receivable in full when it has the contractual right to invoice the customer and begins satisfying the performance obligation over the term of the contract. Judgment is required to determine whether a right to consideration is unconditional and thus qualifies as a receivable. Contract assets are recognized as the performance obligations are satisfied and the Company does not have the contractual right to invoice. Typically, the Company invoices a portion of the fees for IP licenses up front on the effective date of the contract and satisfies a considerable portion of performance obligations. Accrued royalties are included in accounts receivable, net on the Consolidated Balance Sheets. Contract liabilities primarily reflect invoices due, or payments received, in advance of revenue recognition. Periodic fixed fees for software support services, and other multi-period agreements are typically invoiced in advance. Customer deposits primarily relate to payments received from customers which could be refundable pursuant to the terms of the contract and are in other current liabilities on the Consolidated Balance Sheets. Payment terms and conditions vary by contract type, although terms generally include a requirement of payment within 60 days. In instances where the timing of revenue recognition differs from the timing of invoicing, the Company has determined that its contracts generally do not include a significant financing component. The primary purpose of the Company’s invoicing terms is to provide customers with simplified and predictable ways of purchasing products and services, such as invoicing at the beginning of a license term with revenue recognized over the contract period, and not to receive financing from customers. All potential financing fees were considered insignificant in the context of the Company’s contracts. Allowance for Current Expected Credit Losses Trade receivables are stated at their net realizable value. The allowance for credit losses reflects the Company’s best estimate of expected credit losses of the receivable portfolio determined on the basis of historical experience, current information, and forecasts of future economic conditions. In developing the estimate for expected credit losses, accounts receivable is segmented into pools of assets depending on market (China versus international) and delinquency status, and fixed reserve percentages are established for each pool of accounts receivables. To determine the reserve percentages for each pool of accounts receivables, the Company considers its historical experience with certain customers and customer types, regulatory and legal environments, country and political risk, and other relevant current and future forecasted macroeconomic factors. These credit risk indicators are monitored on a quarterly basis to determine whether there are any changes in the economic environment that would indicate the established reserve percentages should be adjusted and are considered on a regional basis to reflect more geographic-specific metrics. Please refer to Note 4 - Revenue , for the summary of the movement in the allowance for current expected credit losses. Additionally, write-offs and recoveries of customer receivables are tracked against collections on a quarterly basis to determine whether the reserve percentages remain appropriate. When management becomes aware of certain customer-specific factors that impact credit risk, specific allowances for these known troubled accounts are recorded. Accounts receivables are written off after all reasonable means to collect the full amount (including litigation, where appropriate) are exhausted. For the fiscal years ended March 31, 2024, 2023, and 2022, write-offs and recoveries of customer receivables were immaterial to the consolidated financial statements. The Company recognizes an allowance for losses on contract assets based on a similar approach used for receivables under the current expected credit loss model. As of March 31, 2024 and 2023, the loss allowance for contract assets was immaterial. Remaining Performance Obligations Remaining performance obligations represent the transaction price allocated to performance obligations that are unsatisfied, or partially unsatisfied, which includes unearned revenue and amounts that will be invoiced and recognized as revenue in future periods. The Company has elected to exclude potential future royalty receipts from the disclosure of remaining performance obligations. In certain arrangements, the Company’s right to consideration may not correspond directly with the performance of obligations. Revenue recognition occurs upon delivery or beginning of license term, whichever is later. Accordingly, the analysis between time bands below has been estimated, but the final timing may differ from these estimates. In the absence of sufficient information, where the timing of satisfaction of the remaining performance obligations is dependent on a customer’s action, the transaction price allocated to such performance obligation is included in the outer-year time band unless contract or option expiration aligns with an earlier period or category. |
Share-based Compensation | Share-based Compensation Restricted share units (“RSU”) were granted to employees, certain of our executive officers, and non-executive directors of the Company and require continuous service through the vesting date. Phantom shares (“Phantom Shares”) were only granted to certain of our executive officers. In connection with the IPO on September 14, 2023, all RSUs previously issued under the Arm Limited All Employee Plan 2019 (“2019 AEP”), except for those 2019 AEP awards granted to employees of Arm Technology Israel Ltd., the Company’s Israeli subsidiary (“Arm Israel”), Executive IPO Plan (“2019 EIP”), and Executive Awards previously issued under the 2022 Arm Limited RSU Award Plan (“2022 RSU Plan”) were no longer expected to be settled in cash but rather expected to be settled in ordinary shares. This resulted in a change in classification of the RSUs from liability to equity which was accounted for as a modification. The number of RSUs that vest is determined by the achievement of market, performance and service conditions. The Company expenses share-based compensation over the requisite service period of the awards, which is generally equivalent to the vesting term. Compensation cost is recorded only for those awards expected to vest. The fair value of RSUs is determined on the date of grant for equity-classified awards, and at the end of each reporting period for liability-classified awards, using Monte Carlo simulations or the discounted cash flow approach. The fair value of Phantom Shares, which are subject to continuous service and vest upon meeting certain strategic performance conditions of the Company and are liability-classified, is determined on the date of grant and at the end of each reporting period based on the share price of the Company’s ultimate parent, SoftBank Group. The Company classifies those awards in which the Company has the option, pursuant to the plan terms, and intends to settle in cash or equity, as liability-classified or equity-classified awards, respectively. Phantom Shares and certain RSUs are liability-classified and are remeasured at the end of each reporting period through the date of settlement so that the expense recognized for each award is equivalent to the amount to be paid in cash. Changes in the fair value of liability-classified RSUs are recorded in the Consolidated Income Statements over the vesting period of the award. Expense associated with equity-classified RSUs are recognized using the straight-line method over the service period adjusted for estimated forfeitures. Prior to IPO, an initial public offering was not considered probable until it has occurred. Accordingly, as of March 31, 2023, those RSUs that were subject to vesting on the earliest of (1) change of control, (2) initial public offering, or (3) passage of time, were expected to vest and be settled in cash upon the passage of time. For liability-classified awards, the weighted average fair value of the RSUs was measured at each reporting date using the Monte Carlo simulation model or a discounted cash flow approach. Similarly, the fair value for equity-classified awards was measured at the grant date using the discounted cash flow approach. For the fiscal years ended March 31, 2023 and 2022, the Company used the Monte Carlo simulation model, the income approach and/or market-calibration approach based on comparable publicly traded companies in similar lines of businesses to measure the RSUs. The Monte Carlo simulation model simulates the Company’s equity value at an assumed listing exit event in order to determine the RSU vesting percentage. The model simulates the RSU vesting percentage over numerous iterations, and the average of all iterations is determined to be the fair value of an RSU. The model then discounts the future value of the RSU at the assumed listing exit event date back to the valuation date based on the relevant risk-free interest rate. The Monte Carlo simulation model incorporates various assumptions such as expected stock price volatility until a liquidity event, expected dividend yield, risk-free interest rate, and expected time to complete an initial public offering. Prior to IPO, at the grant date of the RSUs, the Company was private and its ordinary shares were not listed on a public stock exchange. Therefore, the Company’s Board of Directors exercised its reasonable judgment and considered numerous objective and subjective factors to determine the best estimate of fair value of the Company’s ordinary shares underlying share-based compensation awards, including: • contemporaneous independent third-party valuations of ordinary shares; • financial condition, results of operations, and capital resources; • the likelihood and timing of achieving a liquidity event, such as an initial public offering or sale of the company, given prevailing market conditions; • the lack of marketability of ordinary shares; • estimates of future financial performance; • market performance and valuations of comparable companies; • the hiring or loss of key personnel; • the status of the Company’s development, product introduction, and sales efforts; • industry outlook and other information, such as market growth and volume and macro-economic events; and • additional objective and subjective factors relating to the Company’s business. To determine the fair value of ordinary shares, the Company first estimated the enterprise value and then allocated that enterprise value to ordinary shares and ordinary share equivalents. The Company’s enterprise value was estimated using the income and market-calibration approaches. The income approach estimates enterprise value based on the estimated present value of future cash flows the business is expected to generate over its remaining life. The estimated present value is calculated using a discount rate reflective of the risks associated with an investment in a similar company in a similar industry or having a similar history of revenue growth. For each valuation, the Company prepared a financial forecast to be used in the computation of the value of invested capital for both the income approach and market-calibration approach. The financial forecast considered the Company’s past results and expected future financial performance. The risk associated with achieving this forecast was assessed in selecting the appropriate discount rate. There is inherent uncertainty in these estimates as the assumptions used are highly subjective and subject to changes as a result of new operating data and economic and other conditions that impact the business. The market-calibration approach analyzes the percent change in the enterprise values of peer companies between the prior valuation date and the current valuation date. Based on the observed market movement in the enterprise values of peer companies, a market movement factor is selected to represent the potential shift in enterprise value between the prior valuation date and the current valuation date. The selected market movement factor is applied to the indicated value as of the prior valuation date. Monte Carlo simulations incorporate highly subjective assumptions, such as stock price volatility and expected volatility until a liquidity event. Changes in highly subjective assumptions could significantly impact share-based compensation cost. Since the Company’s ordinary shares were not publicly traded, the computation of expected volatility was based on the average of historical and implied volatilities over the expected term of the awards of a representative peer group of publicly traded entities. Other assumptions included expected term, risk-free interest rate and dividend yield. The risk-free interest rate was based on zero-coupon U.S. Treasury bond rates corresponding to the expected term of the awards. Dividend assumptions were based on historical experience. The Company estimates forfeitures based on employee level, economic conditions, time remaining to vest and historical forfeiture experience. |
Cost of Sales | Cost of Sales Cost of sales expenses consist primarily of employee-related expenses and project costs associated with professional services and the provision of support and maintenance to customers, along with expenses related to license development services revenue, amortization of developed technology, and allocated overhead. Employee-related expenses include salaries, bonuses, share-based compensation, associated benefits, and employer taxes. |
Research and Development | Research and Development Research and development expenses consist primarily of employee-related expenses, including salaries, bonuses, share-based compensation, associated benefits, and employer taxes associated with employees in research and development functions, along with project materials costs, third-party fees paid to consultants, depreciation and amortization, allocated overhead, and other development expenses. |
Selling, General and Administrative | Selling, General and Administrative Selling, general and administrative expenses consist primarily of employee-related expenses, including salaries, bonuses, share-based compensation, associated benefits, and employer taxes associated with employees in sales and marketing, along with corporate and administrative functions, including accounting and legal professional services fees, depreciation and amortization, advertising expenses, allocated overhead, and other corporate-related expenses. |
Disposal, Restructuring and other Operating Expenses, Net | Disposal, Restructuring and Other Operating Expenses, Net Disposal expenses consist primarily of transaction costs, such as legal and professional fees, relating to various disposal activities. Restructuring and other operating expenses consist primarily of employee termination benefits. Recognition of costs for employee termination benefits depends on whether employees are required to render service beyond a minimum retention period in order to receive the termination benefits. If employees are required to render service beyond a minimum retention period in order to receive the termination benefits, costs are recognized ratably over the applicable future service period. Otherwise, costs are recognized when the Company has committed to a restructuring plan and has communicated those actions to employees. Employee termination benefits covered by existing benefit arrangements are recognized when the Company has committed to a restructuring plan and the termination benefits are probable and estimable. |
Government Grants | Government Grants The Company receives government grants to compensate for its research activities. GAAP does not contain authoritative guidance for incentives and grants provided by governmental entities to a for-profit entity. Absent authoritative guidance, interpretative guidance issued and commonly applied by financial statement preparers allows for the selection of accounting policies amongst acceptable alternatives. Based on facts and circumstances, the Company determined it most appropriate to account for the government grants received by analogy to International Accounting Standards 20, Accounting for Government Grants and Disclosure of Government Assistance (“IAS 20”). |
Income Taxes | Income Taxes The Company computes the provision for income taxes using the asset and liability method, under which deferred tax assets and liabilities are recognized for the expected future tax consequences of temporary differences between the financial reporting and tax bases of assets and liabilities, and for operating losses and tax credit carryforwards. Deferred tax assets and liabilities are measured using currently enacted tax rates that apply to taxable income in effect for the years in which those tax assets are expected to be realized or settled. If the Company determines it is more likely than not that it will not generate sufficient taxable income to realize the value of some or all deferred tax assets (net of deferred tax liabilities), the Company will establish a valuation allowance offsetting the amount it does not expect to realize. The Company performs this analysis each reporting period and reduces the measurement of deferred taxes if the likelihood the Company will realize them becomes uncertain. Deferred tax assets the Company records each period depend primarily on the ability to generate future taxable income. Each period, the Company evaluates the need for a valuation allowance against the deferred tax assets and, if necessary, adjusts the valuation allowance so that net deferred tax assets are recorded only to the extent the Company concludes it is more likely than not that these deferred tax assets will be realized. If the outlook for future taxable income changes significantly, the Company’s assessment of the need for, and the amount of, a valuation allowance may also change. The Company is also required to evaluate and quantify other sources of taxable income, such as the possible reversal of future deferred tax liabilities and the implementation of tax planning strategies. Evaluating and quantifying these amounts is difficult and involves significant judgment, based on all of the available evidence and assumptions about future activities. Tax benefits from uncertain tax positions are recognized only if (based on the technical merits of the position) it is more likely than not that the tax positions will be sustained on examination by the tax authority. The tax benefits recognized in the financial statements from such positions are measured based on the largest amount that is more than 50% likely to be realized upon ultimate settlement. Interest and penalties related to unrecognized tax benefits are recognized within income tax (expense) benefit in the Consolidated Income Statements. |
Net Income (Loss) Per Share Attributable to Ordinary Shareholders | Net Income (Loss) Per Share Attributable to Ordinary Shareholders Basic income (loss) per ordinary share is computed by dividing net income attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period. Diluted earnings per share is computed by dividing net income (loss) attributable to ordinary shareholders by the weighted average number of ordinary shares and potentially dilutive ordinary shares outstanding during the period. Potentially dilutive ordinary shares whose effect would have been antidilutive are excluded from the computation of diluted earnings per ordinary share. |
Discontinued Operations | Discontinued Operations A disposal is categorized as a discontinued operation if the disposal group is a component of an entity or group of components that meets the held for sale criteria, is disposed of by sale or other than by sale, and represents a strategic shift that has or will have a major effect on an entity’s operations and financial results. The results of disposals that qualify as a discontinued operation are presented as such for all reporting periods presented. Results of discontinued operations include all revenues and expenses directly derived from such disposal group; general corporate overhead is not allocated to a discontinued operation. For disposals other than by sale such as a distribution to shareholders of the Company, results of operations of a business would not be recorded as a discontinued operation until the period in which the business is actually disposed of other than by sale. Following a strategic decision to place greater focus on the Company’s core technology licensing business, a decision was made to distribute or sell certain components of the Company’s Internet of Things business. As a result, in June 2021, the Company completed a pro rata distribution of its controlling stake in Treasure Data, Inc. and its subsidiaries (“Treasure Data”) to the immediate shareholders of the Company. In November 2021, the Company sold 100% of its ownership in Pelion IOT Limited and its subsidiaries (“IoTP”) to SoftBank Group Capital Limited in exchange for $12.0 million in cash consideration. The distribution of Treasure Data and sale of IoTP were accounted for as discontinued operations. Revenue from IoTP and Treasure Data reported in loss on discontinued operations before income taxes in the Consolidated Income Statements relates to certain IP available through cloud-based infrastructure where the customer does not have the right to terminate the hosting contract. Under such arrangements, customers do not have the right to take possession of the software to run on their own IT infrastructure, nor do they have the right to engage a third-party provider to host and manage the software. Revenue for these arrangements is recognized over time as the services are performed. Unless specified otherwise, the accompanying notes to the consolidated financial statements exclude financial results of discontinued operations. |
Recent Accounting Pronouncements | 2 - Recent Accounting and Disclosure Pronouncements Recently issued accounting pronouncements not yet adopted Segment Reporting (Topic 280), Improvements to Reportable Segment Disclosures: In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07 which requires incremental reportable segment disclosures. The new standard requires that a public entity disclose significant segment expenses, the title and position of the CODM, and how the CODM uses the reported measures in assessing performance and deciding how to allocate resources. ASU 2023-07 is effective for annual periods beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15, 2024. Early adoption is permitted. Adoption of the ASU should be applied retrospectively to all prior periods presented in the financial statements. This ASU will result in additional required disclosures being included in our consolidated financial statements when adopted. The Company will adopt this standard for the fiscal year beginning April 1, 2024. Income Taxes (Topic 740), Improvements to Income Tax Disclosures: In December 2023, the FASB issued ASU 2023-09, which requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is permitted for annual financial statements that have not yet been issued or made available for issuance. This ASU will likely result in additional required disclosures being included in our consolidated financial statements when adopted. The Company is currently evaluating the provisions of this ASU. Recently issued Securities and Exchange Commission (“SEC”) final rules not yet adopted In March 2024, the SEC adopted final rules under SEC Release No. 33-11275, The Enhancement and Standardization of Climate-Related Disclosures for Investors , which requires registrants to disclose climate-related risks that are reasonably likely to have a material impact on a its business strategy, results of operations and financial condition. The rules include disclosures relating to climate-related risks and risk managements, registrant's governance of such risks, financial impact on the audited financial statements, and greenhouse gas emissions. The disclosures will be required prospectively, with information for prior periods required only to the extent it was previously disclosed in an SEC filing. The earliest adoption date starts from the registrant's fiscal year beginning calendar 2025, which is the Company's fiscal year ending March 31, 2026. On April 4, 2024, the SEC determined to voluntarily stay the final rules pending certain legal challenges. The Company is currently evaluating the impact of adoption of these final rules on its consolidated financial statements and disclosures. |
Description of Business and S_3
Description of Business and Summary of Significant Accounting Policies (Tables) | 12 Months Ended |
Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Finite-Lived Intangible Assets | The estimated useful lives of the Company’s intangible assets are as follows: Patents and licenses 3 – 11 years Computer software 3 – 5 years Developed technology 1 – 8 years Customer relationships 1 – 6 years Trade names 4 years Information related to intangible assets is as follows: As of March 31, Gross Carrying Amount Accumulated Amortization Net Carrying Value Weighted Average Remaining Life (in millions except for years) 2024 2023 2024 2023 2024 2023 2024 2023 Patents & licenses $ 179 $ 178 $ 144 $ 169 $ 35 $ 9 5.6 1.5 Developed technology 157 155 156 151 1 4 0.1 1.1 Customer relationships 2 2 2 2 — — — — Computer software 329 293 214 168 115 125 2.8 2.7 Intangible assets subject to amortization 667 628 516 490 151 138 Intangible assets under development 1 — — — 1 — — — Total intangible assets $ 668 $ 628 $ 516 $ 490 $ 152 $ 138 Information regarding amortization expense for intangible assets is as follows: Fiscal Years Ended March 31, (in millions) 2024 2023 2022 Cost of sales $ 6 $ 4 $ 5 Research and development 57 53 50 Selling, general and administrative 23 36 39 Total amortization expense $ 86 $ 93 $ 94 |
Schedule of Property and Equipment Useful Lives | Estimated useful lives of the Company’s property and equipment are as follows: Buildings 25 years Leasehold improvements Shorter of 5 – 10 years or the remaining lease term Equipment 3 – 6 years Fixtures and motor vehicles 3 – 5 years Information regarding property and equipment, net is as follows: As of March 31, (in millions) 2024 2023 Buildings $ — $ 75 Leasehold improvements 159 162 Equipment 388 368 Fixtures and motor vehicles 43 53 Construction in progress 16 — Total property and equipment, gross 606 658 Less: Accumulated depreciation (391) (473) Total property and equipment, net $ 215 $ 185 |
Balance Sheet Components (Table
Balance Sheet Components (Tables) | 12 Months Ended |
Mar. 31, 2024 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Schedule of Accrued Compensation and Benefits and Share-based Compensation | Accrued compensation and benefits and share-based compensation consist of: As of March 31, (in millions) 2024 2023 Accrued bonus, commissions, and cash awards $ 190 $ 257 Accrued vacation and sabbatical 83 66 Accrued salaries and fringe benefits 25 11 Share-based payment liabilities (1) — 255 Total accrued compensation and benefits and share-based compensation $ 298 $ 589 (1) As of March 31, 2024, all liability-classified share-based awards had been vested and settled. See Note 16 - Share-based Compensation in the Notes to the Consolidated Financial Statements. |
Schedule of Other Current Liabilities | Other current liabilities consist of: As of March 31, (in millions) 2024 2023 Employee related payroll taxes and payables (1) $ 674 $ 48 Accrued expenses and fees 83 119 Electronic design automation liabilities 40 35 Trade payables including payables to related parties of $7 and $17 as of March 31, 2024 and 2023, respectively 26 82 Customer deposits 7 7 Finance lease liabilities 5 2 Total other current liabilities $ 835 $ 293 (1) As of March 31, 2024, employee related payroll taxes and payables primarily relate to vested RSU to be paid in the subsequent quarter. |
Revenue (Tables)
Revenue (Tables) | 12 Months Ended |
Mar. 31, 2024 | |
Revenue from Contract with Customer [Abstract] | |
Disaggregation of Revenue | A summary of the Company’s disaggregated revenue is as follows: Fiscal Year Ended March 31, External Customers Related Parties Total (in millions) 2024 2023 2022 2024 2023 2022 2024 2023 2022 License and Other Revenue (1) $ 1,051 $ 569 $ 902 $ 380 $ 435 $ 239 $ 1,431 $ 1,004 $ 1,141 Royalty Revenue 1,458 1,456 1,317 344 219 245 1,802 1,675 1,562 $ 2,509 $ 2,025 $ 2,219 $ 724 $ 654 $ 484 $ 3,233 $ 2,679 $ 2,703 (1) Includes over-time revenue of $121 million, $100 million, and $102 million and point-in-time revenue of $1,310 million, $904 million, and $1,039 million for the fiscal years ended March 31, 2024, 2023, and 2022, respectively. |
Revenue from External Customers by Geographic Areas | The following table summarizes information pertaining to revenue from customers based on the principal headquarters address by geographic regions: Fiscal Year Ended March 31, (in millions) 2024 2023 2022 United States $ 1,413 $ 1,088 $ 1,243 PRC (1) 697 657 476 Taiwan 522 359 431 Republic of Korea 308 241 226 Other countries 293 334 327 Total $ 3,233 $ 2,679 $ 2,703 (1) “PRC” means the People’s Republic of China, including the Hong Kong Special Administrative Region and the Macau Special Administrative Region, but excluding Taiwan. |
Schedule of Accounts Receivable | A summary of the components of accounts receivable, net is as follows: As of March 31, (in millions) 2024 2023 Trade receivables $ 405 $ 625 Royalty receivables 379 377 Total gross receivables 784 1,002 Allowance for current expected credit losses (3) (3) Total accounts receivables, net $ 781 $ 999 |
Schedule of Allowance for Credit Losses | A summary of the movement in the allowance for current expected credit losses is as follows: (in millions) Total Balance as of April 1, 2021 $ 12 Additional provision 28 Balance as of March 31, 2022 $ 40 Reversal of provision (34) Amounts written off during the year as uncollectible (3) Balance as of March 31, 2023 $ 3 Additional provision — Balance as of March 31, 2024 $ 3 |
Reconciliation of Contract Liabilities | A reconciliation of the movement in contract liabilities is as follows: (in millions) Total Balance as of March 31, 2022 $ 1,126 Customer prepayment and billing in advance of performance 209 Revenue recognized in the period that was included in the contract liability balance at the beginning of the period (128) Revenue recognized in the period that was included in the contract liability balance during the period (105) Effect of disposal ( Note 21 - Related Party Transactions ) (2) Balance as of March 31, 2023 $ 1,100 Customer prepayment and billing in advance of performance 198 Revenue recognized in the period that was included in the contract liability balance at the beginning of the period (226) Revenue recognized in the period that was included in the contract liability balance during the period (157) Balance as of March 31, 2024 $ 915 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 12 Months Ended |
Mar. 31, 2024 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Schedule of Discontinued Operations | A summary of the major components of revenues and expenses from discontinued operations is as follows: Fiscal Year Ended March 31, (in millions) 2022 Revenue from external customers $ 41 Cost of sales (20) Research and development (44) Selling, general and administrative (53) Restructuring and related costs — Impairment of long-lived assets (23) Loss from discontinued operations before income taxes (99) Income tax (expense) benefit (28) Net loss from discontinued operations $ (127) A summary of significant non-cash items and capital expenditures from discontinued operations is as follows: Fiscal Year Ended March 31, (in millions) 2022 Amortization and depreciation expense $ 8 Other non-cash items $ 3 |
Intangible Assets, Net (Tables)
Intangible Assets, Net (Tables) | 12 Months Ended |
Mar. 31, 2024 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of Finite-Lived Intangible Assets | The estimated useful lives of the Company’s intangible assets are as follows: Patents and licenses 3 – 11 years Computer software 3 – 5 years Developed technology 1 – 8 years Customer relationships 1 – 6 years Trade names 4 years Information related to intangible assets is as follows: As of March 31, Gross Carrying Amount Accumulated Amortization Net Carrying Value Weighted Average Remaining Life (in millions except for years) 2024 2023 2024 2023 2024 2023 2024 2023 Patents & licenses $ 179 $ 178 $ 144 $ 169 $ 35 $ 9 5.6 1.5 Developed technology 157 155 156 151 1 4 0.1 1.1 Customer relationships 2 2 2 2 — — — — Computer software 329 293 214 168 115 125 2.8 2.7 Intangible assets subject to amortization 667 628 516 490 151 138 Intangible assets under development 1 — — — 1 — — — Total intangible assets $ 668 $ 628 $ 516 $ 490 $ 152 $ 138 Information regarding amortization expense for intangible assets is as follows: Fiscal Years Ended March 31, (in millions) 2024 2023 2022 Cost of sales $ 6 $ 4 $ 5 Research and development 57 53 50 Selling, general and administrative 23 36 39 Total amortization expense $ 86 $ 93 $ 94 |
Schedule of Finite-Lived Intangible Assets, Future Amortization Expense | Estimated future amortization of intangible assets subject to amortization is as follows: (in millions) As of March 31, 2024 2025 $ 64 2026 36 2027 26 2028 13 2029 5 2030 and thereafter 7 Total future amortization expense $ 151 |
Schedule of Indefinite-Lived Intangible Assets | Information related to intangible assets is as follows: As of March 31, Gross Carrying Amount Accumulated Amortization Net Carrying Value Weighted Average Remaining Life (in millions except for years) 2024 2023 2024 2023 2024 2023 2024 2023 Patents & licenses $ 179 $ 178 $ 144 $ 169 $ 35 $ 9 5.6 1.5 Developed technology 157 155 156 151 1 4 0.1 1.1 Customer relationships 2 2 2 2 — — — — Computer software 329 293 214 168 115 125 2.8 2.7 Intangible assets subject to amortization 667 628 516 490 151 138 Intangible assets under development 1 — — — 1 — — — Total intangible assets $ 668 $ 628 $ 516 $ 490 $ 152 $ 138 Information regarding amortization expense for intangible assets is as follows: Fiscal Years Ended March 31, (in millions) 2024 2023 2022 Cost of sales $ 6 $ 4 $ 5 Research and development 57 53 50 Selling, general and administrative 23 36 39 Total amortization expense $ 86 $ 93 $ 94 |
Property and Equipment, Net (Ta
Property and Equipment, Net (Tables) | 12 Months Ended |
Mar. 31, 2024 | |
Property, Plant and Equipment [Abstract] | |
Property, Plant and Equipment | Estimated useful lives of the Company’s property and equipment are as follows: Buildings 25 years Leasehold improvements Shorter of 5 – 10 years or the remaining lease term Equipment 3 – 6 years Fixtures and motor vehicles 3 – 5 years Information regarding property and equipment, net is as follows: As of March 31, (in millions) 2024 2023 Buildings $ — $ 75 Leasehold improvements 159 162 Equipment 388 368 Fixtures and motor vehicles 43 53 Construction in progress 16 — Total property and equipment, gross 606 658 Less: Accumulated depreciation (391) (473) Total property and equipment, net $ 215 $ 185 |
Leases (Tables)
Leases (Tables) | 12 Months Ended |
Mar. 31, 2024 | |
Leases [Abstract] | |
Schedule of Supplemental Cash Flow Disclosures | Supplemental disclosures of cash flow information related to operating leases are as follows: As of March 31, (in millions) 2024 2023 2022 Cash flows used for operating leases $ (35) $ (47) $ (42) Operating lease right-of-use assets obtained in exchange for lease obligations $ 28 $ 16 $ 3 The Company’s weighted average remaining lease term and discount rate for operating leases are as follows: As of March 31, 2024 2023 2022 Weighted average discount rate 2.85 % 2.58 % 2.42 % Weighted average remaining lease term (in years) 14.24 15.21 15.20 |
Schedule of Operating Lease Liability Maturity | Maturity of total operating lease liabilities as of March 31, 2024 is as follows (in millions): Fiscal Year Total 2025 $ 33 2026 29 2027 23 2028 20 2029 15 Thereafter 141 Total minimum lease payments 261 Less imputed interest (40) Total operating lease liabilities 221 Less: current portion of operating lease liabilities 27 Non-current portion of operating lease liabilities $ 194 |
Equity Investments (Tables)
Equity Investments (Tables) | 12 Months Ended |
Mar. 31, 2024 | |
Investments, All Other Investments [Abstract] | |
Equity Investments | A summary of the components of equity investments is as follows: As of March 31, (in millions) 2024 2023 Equity method investments under fair value option $ 573 $ 592 Equity method investments under equity method 11 9 Non-marketable equity securities 157 122 Total equity investments $ 741 $ 723 Income (loss) from equity investments, net is as follows: Fiscal Year Ended March 31, (in millions) 2024 2023 2022 Equity method investments (1) $ (17) $ (41) $ 112 Non-marketable equity securities (includes NAV) (3) (4) 29 Total loss from equity investments, net $ (20) $ (45) $ 141 (1) Includes equity method investments where the Company elected the fair value option, including those under the net asset value (“NAV”) practical expedient, along with investments accounted for under the equity method. |
Equity Method Investments | Details of the Company’s equity method investments as of March 31, 2024 are as follows: Investments under equity method of accounting: Name Ownership Interest % Arm IOT Fund LP (Taiwan) 25.8% Accelerator Advisory Limited 32.1% HOPU-ARM Holding Company Limited 10.0% DeepTech Labs Fund 1 LP 42.9% (1) The Company’s investment in HOPU-ARM Holding Company Limited entitles the Company to a 10% equity interest in HOPU-ARM Holding Company Limited and representation on the board of directors by virtue of the right to appoint one of three members of the board of directors. Accordingly, the Company has the ability to exercise significant influence over the operating and financial policies of HOPU-ARM Holding Company Limited . Investments where fair value option elected (including those under the NAV practical expedient): Name Ownership Interest % Acetone Limited 10.0% Ampere Computing Holdings LLC (“Ampere”) 6.7% China Walden Ventures Investments II, L.P. —NAV 7.5% China Walden Ventures Investments III, L.P. —NAV 8.1% HOPU-ARM Innovation Fund, L.P. —NAV 5.1% Catapult Ventures I, L.P. —NAV 18.1% |
Unrealized Gain (Loss) on Investments | The components of gains and (losses) which primarily include unrealized gains and losses on non-marketable securities inclusive of those measured under the NAV practical expedient are as follows: Fiscal Year Ended March 31, (in millions) 2024 2023 2022 Observable price adjustments on non-marketable equity securities (includes NAV) $ — $ 4 $ 31 Impairment of non-marketable equity securities (3) (8) (3) Sale of non-marketable equity securities — — 1 Total income (loss) from equity investments in non-marketable securities, net $ (3) $ (4) $ 29 |
Realized Gain (Loss) on Investments | The components of gains and (losses) which primarily include unrealized gains and losses on non-marketable securities inclusive of those measured under the NAV practical expedient are as follows: Fiscal Year Ended March 31, (in millions) 2024 2023 2022 Observable price adjustments on non-marketable equity securities (includes NAV) $ — $ 4 $ 31 Impairment of non-marketable equity securities (3) (8) (3) Sale of non-marketable equity securities — — 1 Total income (loss) from equity investments in non-marketable securities, net $ (3) $ (4) $ 29 |
Financial Instruments (Tables)
Financial Instruments (Tables) | 12 Months Ended |
Mar. 31, 2024 | |
Receivables [Abstract] | |
Loans and Other Receivables Carried at Amortized Cost | Loans and other receivables carried at amortized cost is as follows: As of March 31, (in millions) 2024 2023 Loans and other receivables carried at amortized cost Loans receivable $ 26 $ 25 Other receivables 12 18 Allowance for current expected credit losses (19) (22) Loans and other receivables carried at amortized cost, net $ 19 $ 21 |
Derivatives (Tables)
Derivatives (Tables) | 12 Months Ended |
Mar. 31, 2024 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |
Schedule of Derivative Instruments | The following table presents the notional amounts of the Company’s outstanding derivative instruments: As of March 31, (in millions) 2024 2023 Designated as cash flow hedges Foreign currency forward contracts $ 919 $ 411 |
Schedule of Derivative Instruments in Statement of Financial Position, Fair Value | The following table presents the fair value of the Company’s outstanding derivative instruments: Derivative Assets Derivative Liabilities As of March 31, As of March 31, (in millions) 2024 2023 2024 2023 Designated as cash flow hedges Foreign currency forward contracts $ 4 $ 10 $ 4 $ 1 |
Schedule of Cash Flow Hedging Instruments, Statements of Financial Performance and Financial Position, Location | The following table presents net gains (losses) on foreign currency forward contracts designated as cash flow hedges: Fiscal Year Ended March 31, (in millions) 2024 2023 2022 Consolidated Statements of Comprehensive Income: Gains (losses) reclassified in Accumulated other comprehensive income on cash flow hedge derivatives $ 8 $ 5 $ — (Gains) losses reclassified from Accumulated other comprehensive income into income (18) 5 — Income tax benefit (expense) on cash flow hedges 2 (2) — Net change in fair value of the effective portion of designated cash flow hedges, net of tax (1) $ (8) $ 8 $ — Consolidated Income Statements, before tax: Research and development $ 10 $ (3) $ — Selling, general and administrative expenses $ 8 $ (2) $ — (1) All amounts reported in accumulated other comprehensive income at the reporting date are expected to be reclassified into earnings within the next 12 months. |
Derivatives Not Designated as Hedging Instruments | The following table presents net gains (losses) on derivatives not designated as hedging instruments recorded in other non-operating income (loss), net in the Consolidated Income Statements: Fiscal Year Ended March 31, (in millions) 2024 2023 2022 Foreign currency forward contracts $ (1) $ (30) $ (17) |
Fair Value (Tables)
Fair Value (Tables) | 12 Months Ended |
Mar. 31, 2024 | |
Fair Value Disclosures [Abstract] | |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table presents the Company’s fair value hierarchy for the liability measured and recognized at fair value on a recurring basis: As of March 31, 2024 As of March 31, 2023 (in millions) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Financial liabilities Foreign currency forward contracts $ — $ 4 $ — $ 4 $ — $ 1 $ — $ 1 Total financial liabilities $ — $ 4 $ — $ 4 $ — $ 1 $ — $ 1 The following table presents the Company’s fair value hierarchy for assets measured and recognized at fair value, excluding investments where the NAV practical expedient has been elected on a recurring basis: As of March 31, 2024 As of March 31, 2023 (in millions) Level 1 Level 2 Level 3 Total Level 1 Level 2 Level 3 Total Financial assets Money market funds $ 1,744 $ — $ — $ 1,744 $ 1,383 $ — $ — $ 1,383 Short-term investments (1) 1,000 — — 1,000 661 — — 661 Equity method investments (2) — — 466 466 — — 482 482 Convertible loans receivable — — 32 32 — — 31 31 Foreign currency forward contracts — 4 — 4 — 10 — 10 Total financial assets $ 2,744 $ 4 $ 498 $ 3,246 $ 2,044 $ 10 $ 513 $ 2,567 (1) Short-term investments represent term deposits with banks with a maturity between 3 and 12 months. (2) In accordance with Accounting Standards Codification (“ ASC”) Subtopic 820-10, Fair Value Measurements, investments that are measured at fair value using the NAV practical expedient are not classified in the fair value hierarchy. |
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation | The following tables summarize changes in the fair value, along with other activity associated with the Company’s Level 3 financial assets and liabilities: Equity Method Investments As of March 31, (in millions) 2024 2023 Fair value of financial assets at the beginning of the period $ 482 $ 524 Additions, net of contributions from shareholders of the Company — — Fair value losses recognized in the Consolidated Income Statements (16) (42) Distributions to shareholders of the Company — — Fair value at the end of the period $ 466 $ 482 Convertible Loans Receivable As of March 31, (in millions) 2024 2023 Fair value of financial assets at the beginning of the period $ 31 $ 29 Additions — — Converted into equity — — Fair value gains recognized in the income statement 1 2 Fair value at the end of the period $ 32 $ 31 |
Fair Value Measurement Inputs and Valuation Techniques | The following tables provide quantitative information related to certain key assumptions utilized in the valuation of equity method investments accounted for under the fair value option: As of March 31, 2024 (in millions) Fair value Valuation Unobservable Inputs Range of Estimates Equity Method Investments $466 Acetone – Market-Calibration or discounted cash flow LTM Revenue Multiple 1.3x - 1.5x Ampere – PWER Probability of initial public offering, time to future exit scenario, discount rate Probability weighted – 100%, Time to future exit scenario - 1.5 years, Discount rate – 17.64% As of March 31, 2023 (in millions) Fair value Valuation Unobservable Inputs Range of Estimates Equity Method Investments $482 Acetone – Market-Calibration or discounted cash flow LTM Revenue Multiple 2.1x - 2.3x Ampere – PWER Probability of initial public offering, time to future exit scenario, discount rate Probability weighted – 100%, Time to future exit scenario - 1.3 years, Discount rate – 18.61% |
Share-based Compensation (Table
Share-based Compensation (Tables) | 12 Months Ended |
Mar. 31, 2024 | |
Share-Based Payment Arrangement [Abstract] | |
Share-Based Payment Arrangement, Restricted Stock and Restricted Stock Unit, Activity | The table below identifies the award activity under the 2019 AEP: Awards Weighted Average Fair Value Per Award (1) Outstanding as of March 31, 2023 11,601,185 $ 54.47 Granted 2,603 $ 54.51 Vested (11,358,553) $ 55.43 Cancelled and forfeited (245,235) $ 54.51 Outstanding and expected to vest as of March 31, 2024 — $ — (1) As of March 31, 2023, 2019 AEP outstanding awards were liability-classified with a weighted average fair value per RSU of $23.33, representing total fair value of $270.7 million. For periods presented prior to the IPO, the average grant date fair value per award represents the modification fair value at IPO. The table below identifies the award activity under the 2019 EIP: Awards Weighted Average Fair Value Per Award (1) Outstanding as of March 31, 2023 192,999 $ 51.00 Vested (192,999) $ 51.00 Outstanding and expected to vest as of March 31, 2024 — $ — (1) As of March 31, 2023, 2019 EIP outstanding awards were liability-classified with a weighted average fair value per RSU of $37.43, representing total fair value of $7.2 million. For periods presented prior to the IPO, the average grant date fair value per award represents the modification fair value at IPO. The table below identifies the award activity under the 2022 RSU Plan: Awards (1) Weighted Average Grant Date Fair Value Per Award (1) Outstanding as of March 31, 2023 11,129,734 $ 35.87 Executive Awards converted from liability awards 1,875,202 $ 51.00 Granted 17,134,484 $ 43.68 Vested (2) (6,751,502) $ 37.47 Cancelled and forfeited (631,500) $ 40.27 Outstanding and expected to vest as of March 31, 2024 22,756,418 $ 42.30 (1) Awards and weighted average grant date per share exclude shares related to Annual Awards that currently have no grant date as the future performance objectives have not yet been defined and/or communicated to participants of the plan. For periods presented prior to the IPO, the average grant date fair value per award represents the modification fair value at IPO. (2) Includes 351,022 liability-classified awards vested and settled in cash in the fiscal year ended March 31, 2024. |
Disclosure of Share-Based Compensation Arrangements by Share-Based Payment Award | The following table presents the assumptions used for the RSUs under the 2019 AEP for the relevant periods: Fiscal Year Ended March 31, 2024 2023 2022 Weighted average share price $ 56.10 $ 41.51 $ 39.27 Expected volatility until liquidity event 40 % 40 % 35 % Time to liquidity event 0.5 0.5 1.0 Dividend yield 0.00 % 0.00 % 0.00 % Risk free interest rate 5.52 % 4.94 % 1.60 % The following table presents the assumptions used for the RSUs under the 2019 EIP for the fiscal year ended March 31, 2022: Weighted average share price $ 39.27 Expected volatility until liquidity event 35% Time to liquidity event 1.0 Dividend yield 0.00% Risk free interest rate 1.60% The following table presents the assumptions used for the RSUs under the 2019 EIP for the fiscal year ended March 31, 2023: Average share price $ 41.51 Transaction costs 2.50 % Time to liquidity event (in years) 0.5 Discount for lack of marketability 7.50 % The following table presents the assumptions used for the RSUs under the 2022 RSU Plan for the relevant periods: Fiscal Year Ended March 31, 2024 2023 Average share price $44.52 - $48.18 $35.16 - $39.67 Transaction costs 2.5 % 2.5 % Present value per RSU $43.40 - $46.98 $33.13 - $39.67 Time to liquidity event (in years) 0.5 - 1.0 0.5 - 0.9 Discount for lack of marketability 0.00% - 7.50% 0.00% - 7.50% |
Share-Based Payment Arrangement, Restricted Stock Units And Performance Shares, Activity | The table below identifies all award activity under the Omnibus Incentive Plan: Awards (1) Weighted Average Grant Date Fair Value Per Award (1) Outstanding as of March 31, 2023 — $ — Granted 1,941,165 $ 68.14 Vested (50,784) $ 71.03 Cancelled and forfeited (11,105) $ 57.01 Outstanding and expected to vest as of March 31, 2024 1,879,276 $ 68.13 (1) Awards and weighted average grant date per share exclude shares related to PSUs that currently have no grant date as the future performance objectives have not yet been defined and/or communicated to participants of the plan. |
Share-Based Payment Arrangement, Expensed and Capitalized, Amount | A summary of share-based compensation cost recognized in the Consolidated Income Statements is as follows: Fiscal Year Ended March 31, (in millions) 2024 2022 2022 Cost of sales $ 41 $ 12 $ 1 Research and development 728 212 18 Selling, general and administrative 301 102 7 Total $ 1,070 $ 326 $ 26 |
Schedule Of Share-Based Payment Arrangement Commitment For Potential Payments And Liability Recognized | The table below shows the Company’s commitment for potential payments and the liability recognized as of March 31, 2023: Fiscal year ended March 31, 2023 Type of Executive Award (in millions) Potential Fixed Monetary Amount Accrued Liability (1) Launch Awards $ 80 $ 23 Annual Awards 15 9 Total $ 95 $ 32 (1) Includes the amount recorded for performance-based awards that were probable of achievement. |
Income Taxes (Tables)
Income Taxes (Tables) | 12 Months Ended |
Mar. 31, 2024 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income before Income Tax, Domestic and Foreign | The components of income before provision for income taxes are as follows: Fiscal Year Ended March 31, (in millions) 2024 2023 2022 United Kingdom $ 139 $ 427 $ 608 Foreign 73 244 178 Income from continuing operations before income taxes $ 212 $ 671 $ 786 |
Schedule of Components of Income Tax Expense (Benefit) | The (expense) benefit for income taxes consists of the following: Fiscal Year Ended March 31, (in millions) 2024 2023 2022 Current: United Kingdom $ 2 $ (87) $ (44) Foreign (178) (94) (146) Total current tax (expense) benefit $ (176) $ (181) $ (190) Deferred: United Kingdom $ 114 $ 25 $ (53) Foreign 156 9 133 Total deferred tax (expense) benefit $ 270 $ 34 $ 80 Total income tax (expense) benefit $ 94 $ (147) $ (110) |
Schedule of Effective Income Tax Rate Reconciliation | A reconciliation of the tax (expense) benefit at the United Kingdom statutory income tax rate to the actual tax (expense) benefit is as follows: Fiscal Year Ended March 31, (in millions) 2024 2023 2022 Income tax (expense) benefit at statutory rate $ (53) $ (127) $ (149) Foreign tax rate differential (14) (2) 8 Research and development tax credits 94 37 25 Change in valuation allowance (4) (5) 22 Non-deductible/non-taxable items (3) (3) 3 Patent box benefit (4) 25 69 Impact of U.K. rate change (3) (2) (64) Withholding tax (122) (72) (32) Gains exempt from U.K. tax (3) 2 8 Windfall tax benefit associated with share-based compensation 206 — — Income tax (expense) benefit $ 94 $ (147) $ (110) Income tax (expense) benefit reported in the Consolidated Income Statements 94 (147) (110) Income tax (expense) benefit attributable to discontinued operations — — (28) |
Schedule of Deferred Tax Assets and Liabilities | The significant components of deferred tax assets and liabilities is as follows: As of March 31, (in millions) 2024 2023 Lease liability $ 19 $ 13 Fixed assets 27 23 Tax losses and R&D tax credits 408 147 Equity investments 9 7 Share-based compensation 28 30 Reserves and other liabilities 23 27 Total gross deferred tax assets 514 247 Less: Valuation allowance (25) (21) Total deferred tax assets, net of valuation allowance 489 226 Right of use assets (18) (12) Acquired intangibles (5) (6) Outside basis differences (106) (110) Hedging reserve — (3) Contract liabilities (213) (218) Total deferred tax liabilities (342) (349) Net deferred tax assets (liabilities) $ 147 $ (123) |
Schedule of Unrecognized Tax Benefits Roll Forward | The following table reflects changes in gross unrecognized tax benefits: Fiscal Year Ended March 31, (in millions) 2024 2023 2022 Gross unrecognized tax benefits—April 1 $ 62 $ 54 $ 75 Gross increases—tax positions in prior period 5 6 2 Gross decreases—tax positions in prior period (1) — — Gross increases—tax positions in current period 19 7 6 Settlements — (1) (28) Lapse of statute of limitations (1) (1) — Foreign exchange (1) (3) (1) Gross unrecognized tax benefits— March 31 $ 83 $ 62 $ 54 |
Net Income (Loss) Per Share (Ta
Net Income (Loss) Per Share (Tables) | 12 Months Ended |
Mar. 31, 2024 | |
Earnings Per Share [Abstract] | |
Schedule of Earnings Per Share, Basic and Diluted | The following table presents a reconciliation of basic and diluted earnings per share computations: Fiscal Years Ended March 31, (in millions, except shares and per share amounts) 2024 2023 2022 Income (loss) attributable to ordinary shareholders — basic and diluted Net income from continuing operations $ 306 $ 524 $ 676 Net loss from discontinued operations — — (127) Net income (loss) $ 306 $ 524 $ 549 Weighted average ordinary shares used to calculate income (loss) per share — basic (1) 1,027,443,122 1,025,234,000 1,025,234,000 Equity-classified shared-based awards 17,053,910 2,271,008 — Weighted average ordinary shares used to calculate income (loss) per share — diluted 1,044,497,032 1,027,505,008 1,025,234,000 Income (loss) per share attributable to ordinary shareholders — basic Net income from continuing operations $ 0.30 $ 0.51 $ 0.66 Net loss from discontinued operations — — (0.12) Net income (loss) per share - basic $ 0.30 $ 0.51 $ 0.54 Income (loss) per share attributable to ordinary shareholders — diluted Net income from continuing operations $ 0.29 $ 0.51 $ 0.66 Net loss from discontinued operations — — (0.12) Net income (loss) per share - diluted $ 0.29 $ 0.51 $ 0.54 (1) For the fiscal year ended March 31, 2024, includes weighted average ordinary shares for vested securities without restrictions that were not issued and outstanding as of the end of the reporting period. |
Schedule of Antidilutive Securities Excluded from Computation of Earnings Per Share | The following table presents securities that were excluded from the computation of diluted net income (loss) per ordinary share because the effect of including the securities would have been anti-dilutive: Fiscal Year Ended March 31, 2024 2023 2022 Restricted stock units (1) 254,189 16,870,903 14,230,025 Executive awards (2) — 546,262 — Total 254,189 17,417,165 14,230,025 (1) RSUs exclude certain awards which require cash settlement and do not allow for share settlement; however, for reporting periods prior to the IPO, RSUs include securities where change in control or the IPO was not probable to occur, and settlement was expected in cash upon the passage of time. (2) Executive awards include amounts associated with the Annual Awards and Launch Awards. Prior to the IPO, these awards entitled participants to fixed monetary amounts where the quantity of securities was calculated based on the total fixed monetary amount divided by the closing average market price of ordinary shares. Upon the IPO, these awards entitle participants to a fixed number of ordinary shares calculated based on the total fixed monetary amount divided by the IPO price. |
Segment and Geographic Inform_2
Segment and Geographic Information (Tables) | 12 Months Ended |
Mar. 31, 2024 | |
Segment Reporting [Abstract] | |
Schedule of Long-Lived Assets by Geographic Area | Long-lived assets by geographic area are as follows: As of March 31, (in millions) 2024 2023 United Kingdom $ 287 $ 281 United States 90 78 Other countries 43 32 Total $ 420 $ 391 |
Description of Business and S_4
Description of Business and Summary of Significant Accounting Policies - Narrative (Details) | 1 Months Ended | 12 Months Ended | |||
Sep. 18, 2023 $ / shares shares | Nov. 30, 2021 USD ($) | Mar. 31, 2024 USD ($) reporting_unit | Mar. 31, 2023 USD ($) | Mar. 31, 2022 USD ($) | |
Subsidiary, Sale of Stock [Line Items] | |||||
Number of reporting units | reporting_unit | 1 | ||||
Goodwill impairment | $ 0 | $ 0 | |||
Contract with customer, payment required | 60 days | ||||
Government grants recognized | $ (138,200,000) | (83,000,000) | $ (84,300,000) | ||
Government grants, research and development expenses, offset | 0 | 2,600,000 | 15,300,000 | ||
Government grant maximum contract | 41,000,000 | ||||
Research and development expenditure credit (RDEC) | $ (121,200,000) | $ (64,000,000) | $ (54,400,000) | ||
IoTP | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Ownership percentage disposed | 100% | ||||
Proceeds from disposal of investment | $ 12,000,000 | ||||
Minimum | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
License arrangement term | 3 years | ||||
Version extension release period | 2 years | ||||
Minimum | Computer software | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Intangible assets, useful lives | 3 years | ||||
Maximum | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
License arrangement term | 20 years | ||||
Version extension release period | 3 years | ||||
Maximum | Computer software | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Intangible assets, useful lives | 5 years | ||||
IPO | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Shares issued in transaction (in shares) | shares | 102,500,000 | ||||
Sale of stock (in dollars per share) | $ / shares | $ 51 | ||||
Over-Allotment Option | |||||
Subsidiary, Sale of Stock [Line Items] | |||||
Shares issued in transaction (in shares) | shares | 7,000,000 |
Description of Business and S_5
Description of Business and Summary of Significant Accounting Policies - Schedule of Intangible Asset Useful Lives (Details) | Mar. 31, 2024 |
Patents & licenses | Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, useful lives | 3 years |
Patents & licenses | Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, useful lives | 11 years |
Computer software | Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, useful lives | 3 years |
Computer software | Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, useful lives | 5 years |
Developed technology | Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, useful lives | 1 year |
Developed technology | Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, useful lives | 8 years |
Customer relationships | Minimum | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, useful lives | 1 year |
Customer relationships | Maximum | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, useful lives | 6 years |
Trade Names | |
Finite-Lived Intangible Assets [Line Items] | |
Intangible assets, useful lives | 4 years |
Description of Business and S_6
Description of Business and Summary of Significant Accounting Policies - Schedule of Property and Equipment Useful Lives (Details) | Mar. 31, 2024 |
Buildings | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful lives | 25 years |
Leasehold improvements | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful lives | 5 years |
Leasehold improvements | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful lives | 10 years |
Equipment | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful lives | 3 years |
Equipment | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful lives | 6 years |
Fixtures and motor vehicles | Minimum | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful lives | 3 years |
Fixtures and motor vehicles | Maximum | |
Property, Plant and Equipment [Line Items] | |
Property and equipment, useful lives | 5 years |
Balance Sheet Components - Sche
Balance Sheet Components - Schedule of Accrued Compensation and Benefits and Share-based Compensation (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Mar. 31, 2023 |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Accrued bonus, commissions, and cash awards | $ 190 | $ 257 |
Accrued vacation and sabbatical | 83 | 66 |
Accrued salaries and fringe benefits | 25 | 11 |
Share-based payment liabilities | 0 | 255 |
Accrued compensation and benefits and share-based compensation | $ 298 | 589 |
2022 RSU Plan | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Accrued compensation and benefits and share-based compensation | $ 32 |
Balance Sheet Components - Sc_2
Balance Sheet Components - Schedule of Other Current Liabilities (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Mar. 31, 2023 |
Other Current Liabilities [Line Items] | ||
Employee related payroll taxes and payables | $ 674 | $ 48 |
Accrued expenses and fees | 83 | 119 |
Electronic design automation liabilities | 40 | 35 |
Trade payables | 26 | 82 |
Customer deposits | $ 7 | $ 7 |
Finance Lease, Liability, Current, Statement of Financial Position [Extensible Enumeration] | Total other current liabilities | Total other current liabilities |
Finance lease liabilities | $ 5 | $ 2 |
Total other current liabilities | 835 | 293 |
Related Party | ||
Other Current Liabilities [Line Items] | ||
Trade payables | 7 | 17 |
Total other current liabilities | $ 7 | $ 17 |
Revenue - Schedule of Disaggreg
Revenue - Schedule of Disaggregation of Revenue (Details) - USD ($) $ in Millions | 12 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2021 | |
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 3,233 | $ 2,679 | $ 2,703 | |
Over-time revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 121 | 100 | $ 102 | |
Point-in-time revenues | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 1,310 | 904 | 1,039 | |
External Customers | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 2,509 | 2,025 | 2,219 | |
Related Party | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 724 | 654 | 484 | |
License and Other Revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 1,431 | 1,004 | 1,141 | |
License and Other Revenue | External Customers | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 1,051 | 569 | 902 | |
License and Other Revenue | Related Party | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 380 | 435 | 239 | |
Royalty Revenue | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 1,802 | 1,675 | 1,562 | |
Royalty Revenue | External Customers | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | 1,458 | 1,456 | 1,317 | |
Royalty Revenue | Related Party | ||||
Disaggregation of Revenue [Line Items] | ||||
Revenue | $ 344 | $ 219 | $ 245 |
Revenue - Schedule of Revenue b
Revenue - Schedule of Revenue by Geographical Location (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | |
Disaggregation of Revenue [Line Items] | |||
Revenue | $ 3,233 | $ 2,679 | $ 2,703 |
United States | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 1,413 | 1,088 | 1,243 |
PRC | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 697 | 657 | 476 |
Taiwan | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 522 | 359 | 431 |
Republic of Korea | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | 308 | 241 | 226 |
Other countries | |||
Disaggregation of Revenue [Line Items] | |||
Revenue | $ 293 | $ 334 | $ 327 |
Revenue - Narrative (Details)
Revenue - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | |
Disaggregation of Revenue [Line Items] | |||
Increase in contract with customer, asset | $ 663.9 | $ 254.1 | |
Contract assets, transfer to accounts receivable | 357.4 | 250.7 | |
Performance obligation satisfied in previous period | 1,866.6 | $ 1,705 | $ 1,562 |
Remaining performance obligations, amount | 2,484.4 | ||
Non-Cancellable And Non-Refundable Committed Funds | |||
Disaggregation of Revenue [Line Items] | |||
Remaining performance obligations, amount | $ 0.8 | ||
Three Largest Customers | Revenue from Contract with Customer Benchmark | Customer Concentration Risk | |||
Disaggregation of Revenue [Line Items] | |||
Concentration risk | 42% | 44% | 42% |
Largest Customer | Revenue from Contract with Customer Benchmark | Customer Concentration Risk | |||
Disaggregation of Revenue [Line Items] | |||
Concentration risk | 21% | 24% | 18% |
Largest Customer | Accounts Receivable | Customer Concentration Risk | |||
Disaggregation of Revenue [Line Items] | |||
Concentration risk | 23% | 40% | |
Second Largest Customer | Revenue from Contract with Customer Benchmark | Customer Concentration Risk | |||
Disaggregation of Revenue [Line Items] | |||
Concentration risk | 11% | 11% | 12% |
Second Largest Customer | Accounts Receivable | Customer Concentration Risk | |||
Disaggregation of Revenue [Line Items] | |||
Concentration risk | 13% | ||
Third Largest Customer | Revenue from Contract with Customer Benchmark | Customer Concentration Risk | |||
Disaggregation of Revenue [Line Items] | |||
Concentration risk | 10% | 9% | 12% |
Third Largest Customer | Accounts Receivable | Customer Concentration Risk | |||
Disaggregation of Revenue [Line Items] | |||
Concentration risk | 11% | ||
Fourth Largest Customer | Accounts Receivable | Customer Concentration Risk | |||
Disaggregation of Revenue [Line Items] | |||
Concentration risk | 10% |
Revenue - Schedule of Accounts
Revenue - Schedule of Accounts Receivable (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2021 |
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Total gross receivables | $ 784 | $ 1,002 | ||
Allowance for current expected credit losses | (3) | (3) | $ (40) | $ (12) |
Total accounts receivables, net | 781 | 999 | ||
Trade receivables | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Total gross receivables | 405 | 625 | ||
Royalty receivables | ||||
Accounts, Notes, Loans and Financing Receivable [Line Items] | ||||
Total gross receivables | $ 379 | $ 377 |
Revenue - Schedule of Account_2
Revenue - Schedule of Accounts Receivable, Credit Loss (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | |
Accounts Receivable, Allowance for Credit Loss [Roll Forward] | |||
Beginning balance | $ 3 | $ 40 | $ 12 |
Additional provision (reversal) | 0 | (34) | 28 |
Amounts written off during the year as uncollectible | (3) | ||
Ending balance | $ 3 | $ 3 | $ 40 |
Revenue - Schedule of Contract
Revenue - Schedule of Contract Liabilities (Details) - USD ($) $ in Millions | 12 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Contract With Customers, Liability [Roll Forward] | ||
Beginning balance | $ 1,100 | $ 1,126 |
Customer prepayment and billing in advance of performance | 198 | 209 |
Revenue recognized in the period that was included in the contract liability balance at the beginning of the period | (226) | (128) |
Revenue recognized in the period that was included in the contract liability balance during the period | (157) | (105) |
Effect of disposal | (2) | |
Ending balance | $ 915 | $ 1,100 |
Revenue - Remaining Performance
Revenue - Remaining Performance Obligations (Details) $ in Millions | Mar. 31, 2024 USD ($) |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligations, amount | $ 2,484.4 |
Non-Cancellable And Non-Refundable Committed Funds | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligations, amount | $ 0.8 |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2024-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation, percent | 28% |
Remaining performance obligation, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2025-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation, percent | 14% |
Remaining performance obligation, period | 1 year |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction, Start Date [Axis]: 2026-04-01 | |
Revenue, Remaining Performance Obligation, Expected Timing of Satisfaction [Line Items] | |
Remaining performance obligation, period |
Discontinued Operations - Narra
Discontinued Operations - Narrative (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | |||||
Oct. 31, 2021 | Aug. 31, 2023 | Nov. 30, 2021 | Mar. 31, 2022 | Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | Jun. 30, 2021 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Non-cash distribution, disposal of investment | $ 0 | $ 0 | $ 980,000,000 | |||||
Reduction to retained earnings | (2,751,000,000) | (2,457,000,000) | ||||||
Impairment of long-lived assets | $ 23,500,000 | $ 13,600,000 | 0 | $ 0 | $ 21,000,000 | |||
Treasure Data | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Reduction to retained earnings | $ 44,200,000 | |||||||
IoTP | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Ownership percentage disposed | 100% | |||||||
Proceeds from disposal of investment | $ 12,000,000 | |||||||
IoTP | ||||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||||
Non-cash distribution, disposal of investment | $ 12,000,000 | $ 12,000,000 |
Discontinued Operations - Sched
Discontinued Operations - Schedule of Discontinued Operations (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | |
Discontinued Operations and Disposal Groups [Abstract] | |||
Revenue from external customers | $ 41 | ||
Cost of sales | (20) | ||
Research and development | (44) | ||
Selling, general and administrative | (53) | ||
Restructuring and related costs | 0 | ||
Impairment of long-lived assets | (23) | ||
Net loss from discontinued operations | $ 0 | $ 0 | (99) |
Income tax benefit (expense) from discontinued operations | 0 | 0 | (28) |
Net loss from discontinued operations | $ 0 | $ 0 | $ (127) |
Discontinued Operations - Sch_2
Discontinued Operations - Schedule of Non-Cash and Capital Expenditures from Discontinued Operations (Details) $ in Millions | 12 Months Ended |
Mar. 31, 2022 USD ($) | |
Discontinued Operations and Disposal Groups [Abstract] | |
Amortization and depreciation expense | $ 8 |
Other non-cash items | $ 3 |
Goodwill (Details)
Goodwill (Details) - USD ($) | 12 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
Goodwill | $ 1,625,000,000 | $ 1,620,000,000 |
Goodwill impairment | $ 0 | $ 0 |
Intangible Assets, Net - Schedu
Intangible Assets, Net - Schedule of Intangible Assets (Details) - USD ($) $ in Millions | 3 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | $ 667 | $ 628 |
Accumulated Amortization | 516 | 490 |
Net Carrying Value | 151 | 138 |
Indefinite lived intangible assets | ||
Intangible assets under development | 1 | 0 |
Total intangible assets | ||
Total intangible asset, Gross Carrying Amount | 668 | 628 |
Total intangible asset, Accumulated Amortization | 516 | 490 |
Total Intangible Asset, Net Carrying Value | 152 | 138 |
Patents & licenses | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 179 | 178 |
Accumulated Amortization | 144 | 169 |
Net Carrying Value | $ 35 | $ 9 |
Weighted Average Remaining Life | 5 years 7 months 6 days | 1 year 6 months |
Total intangible assets | ||
Total intangible asset, Accumulated Amortization | $ 144 | $ 169 |
Developed technology | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 157 | 155 |
Accumulated Amortization | 156 | 151 |
Net Carrying Value | $ 1 | $ 4 |
Weighted Average Remaining Life | 1 month 6 days | 1 year 1 month 6 days |
Total intangible assets | ||
Total intangible asset, Accumulated Amortization | $ 156 | $ 151 |
Customer relationships | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 2 | 2 |
Accumulated Amortization | 2 | 2 |
Net Carrying Value | 0 | 0 |
Total intangible assets | ||
Total intangible asset, Accumulated Amortization | 2 | 2 |
Computer software | ||
Finite-Lived Intangible Assets [Line Items] | ||
Gross Carrying Amount | 329 | 293 |
Accumulated Amortization | 214 | 168 |
Net Carrying Value | $ 115 | $ 125 |
Weighted Average Remaining Life | 2 years 9 months 18 days | 2 years 8 months 12 days |
Total intangible assets | ||
Total intangible asset, Accumulated Amortization | $ 214 | $ 168 |
Intangible Assets, Net - Sche_2
Intangible Assets, Net - Schedule of Amortization Expense (Details) - USD ($) $ in Millions | 3 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | |
Finite-Lived Intangible Assets [Line Items] | |||
Total amortization expense | $ 86 | $ 93 | $ 94 |
Cost of sales | |||
Finite-Lived Intangible Assets [Line Items] | |||
Total amortization expense | 6 | 4 | 5 |
Research and development | |||
Finite-Lived Intangible Assets [Line Items] | |||
Total amortization expense | 57 | 53 | 50 |
Selling, general and administrative | |||
Finite-Lived Intangible Assets [Line Items] | |||
Total amortization expense | $ 23 | $ 36 | $ 39 |
Intangible Assets, Net - Narrat
Intangible Assets, Net - Narrative (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2024 | Mar. 31, 2023 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |||||
Capitalized computer software | $ 0 | $ 35,100,000 | $ 11,000,000 | ||
Capitalized computer software, amortization | 14,500,000 | 22,500,000 | 26,500,000 | ||
Impairment of intangible assets | $ 5,000,000 | $ 0 | $ 0 | ||
Capitalized computer software, net | $ 32,300,000 | $ 46,800,000 | $ 32,300,000 | $ 46,800,000 |
Intangible Assets, Net - Sche_3
Intangible Assets, Net - Schedule of Future Amortization (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Mar. 31, 2023 |
Goodwill and Intangible Assets Disclosure [Abstract] | ||
2025 | $ 64 | |
2026 | 36 | |
2027 | 26 | |
2028 | 13 | |
2029 | 5 | |
2030 and thereafter | 7 | |
Net Carrying Value | $ 151 | $ 138 |
Property and Equipment, Net - S
Property and Equipment, Net - Schedule of Property and Equipment (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Mar. 31, 2023 |
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 606 | $ 658 |
Less: Accumulated depreciation | (391) | (473) |
Total property and equipment, net | 215 | 185 |
Buildings | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 0 | 75 |
Leasehold improvements | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 159 | 162 |
Equipment | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 388 | 368 |
Fixtures and motor vehicles | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | 43 | 53 |
Construction in progress | ||
Property, Plant and Equipment [Line Items] | ||
Property and equipment, gross | $ 16 | $ 0 |
Property and Equipment, Net - N
Property and Equipment, Net - Narrative (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |||||
Oct. 31, 2021 | Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | |
Property, Plant and Equipment [Line Items] | |||||||
Depreciation | $ 76,000,000 | $ 77,200,000 | $ 82,500,000 | ||||
Impairment of long-lived assets | $ 23,500,000 | $ 13,600,000 | $ 0 | $ 0 | $ 21,000,000 | ||
Asset retirement obligation | 10,300,000 | 10,000,000 | 10,300,000 | 10,000,000 | |||
Total property and equipment, net | 215,000,000 | 185,000,000 | 215,000,000 | 185,000,000 | |||
Retirement Assets | |||||||
Property, Plant and Equipment [Line Items] | |||||||
Total property and equipment, net | $ 5,200,000 | $ 5,400,000 | $ 5,200,000 | $ 5,400,000 |
Leases - Narrative (Details)
Leases - Narrative (Details) | 2 Months Ended | 12 Months Ended | ||
May 28, 2024 USD ($) lease | Mar. 31, 2024 USD ($) lease | Mar. 31, 2023 USD ($) | Mar. 31, 2022 USD ($) | |
Lessee, Lease, Description [Line Items] | ||||
Operating lease expense | $ 33,700,000 | $ 34,300,000 | $ 40,000,000 | |
Loss on early termination of operating leases | $ 0 | $ 4,400,000 | $ 0 | |
Number of leases signed but not yet commenced | lease | 1 | |||
Approximate lease value | $ 15,000,000 | |||
Lease liability | $ 221,000,000 | |||
Subsequent Event | ||||
Lessee, Lease, Description [Line Items] | ||||
Number of leases renewed | lease | 2 | |||
Lease liability | $ 19,000,000 |
Leases - Schedule of Supplement
Leases - Schedule of Supplemental Lease Disclosures (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | |
Leases [Abstract] | |||
Cash flows used for operating leases | $ (35) | $ (47) | $ (42) |
Non-cash additions in operating lease right-of-use assets | $ 28 | $ 16 | $ 3 |
Weighted average discount rate | 2.85% | 2.58% | 2.42% |
Weighted average remaining lease term (in years) | 14 years 2 months 26 days | 15 years 2 months 15 days | 15 years 2 months 12 days |
Leases - Schedule of Lease Matu
Leases - Schedule of Lease Maturity (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Mar. 31, 2023 |
Leases [Abstract] | ||
2025 | $ 33 | |
2026 | 29 | |
2027 | 23 | |
2028 | 20 | |
2029 | 15 | |
Thereafter | 141 | |
Total minimum lease payments | 261 | |
Less imputed interest | (40) | |
Total operating lease liabilities | 221 | |
Operating lease liabilities | 27 | $ 26 |
Non-current portion of operating lease liabilities | $ 194 | $ 193 |
Equity Investments - Schedule o
Equity Investments - Schedule of Equity Investments (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Mar. 31, 2023 |
Investments, All Other Investments [Abstract] | ||
Equity method investments under fair value option | $ 573 | $ 592 |
Equity method investments under equity method | 11 | 9 |
Non-marketable equity securities | 157 | 122 |
Total equity investments | $ 741 | $ 723 |
Equity Investments - Schedule_2
Equity Investments - Schedule of Equity Method Investments (Details) - board_member | 12 Months Ended | |
Mar. 31, 2024 | Sep. 30, 2022 | |
Arm IOT Fund LP (Taiwan) | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 25.80% | |
Accelerator Advisory Limited | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 32.10% | |
HOPU-ARM Holding Company Limited | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 10% | |
Appointments To Board | 1 | |
DeepTech Labs Fund 1 LP | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 42.90% | |
Acetone Limited | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 10% | |
Fair Value Measured at Net Asset Value Per Share | Acetone Limited | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 10% | |
Fair Value Measured at Net Asset Value Per Share | Ampere Computing Holdings LLC (“Ampere”) | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 6.70% | |
Fair Value Measured at Net Asset Value Per Share | China Walden Ventures Investments II, L.P. —NAV | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 7.50% | |
Fair Value Measured at Net Asset Value Per Share | China Walden Ventures Investments III, L.P. —NAV | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 8.10% | |
Fair Value Measured at Net Asset Value Per Share | HOPU-ARM Innovation Fund, L.P. —NAV | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 5.10% | |
Fair Value Measured at Net Asset Value Per Share | Catapult Ventures I, L.P. —NAV | ||
Schedule of Equity Method Investments [Line Items] | ||
Ownership percentage | 18.10% |
Equity Investments - Schedule_3
Equity Investments - Schedule of Income (Loss) from Equity Investments (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | |
Investments, All Other Investments [Abstract] | |||
Equity method investments | $ (17) | $ (41) | $ 112 |
Non-marketable equity securities (includes NAV) | (3) | (4) | 29 |
Total loss from equity investments, net | $ (20) | $ (45) | $ 141 |
Equity Investments - Narrative
Equity Investments - Narrative (Details) - USD ($) | 1 Months Ended | 3 Months Ended | 12 Months Ended | ||
Jun. 30, 2023 | Mar. 31, 2024 | Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | |
Schedule of Equity Method Investments [Line Items] | |||||
Equity method investments under fair value option | $ 573,000,000 | $ 573,000,000 | $ 592,000,000 | ||
Gains (losses) on equity method investments | (17,000,000) | (41,000,000) | $ 112,000,000 | ||
Equity method investments under equity method | 11,000,000 | 11,000,000 | 9,000,000 | ||
Other non-current assets | 270,000,000 | 270,000,000 | 202,000,000 | ||
Non-marketable equity securities | 157,000,000 | 157,000,000 | 122,000,000 | ||
(Losses) gains from non-marketable equity securities | (3,000,000) | (4,000,000) | 29,000,000 | ||
Investment in non-marketable preferred stock, in exchange for trade receivables | 4,600,000 | 12,700,000 | |||
Investment in non-marketable preferred stock, in exchange for cash payment | 10,700,000 | ||||
Payments to acquire non-marketable preferred stock | 32,000,000 | 15,000,000 | 8,000,000 | ||
Dividends from equity investments | 5,200,000 | 1,000,000 | 2,400,000 | ||
Financial commitments to investees, off balance sheet | 19,900,000 | 19,900,000 | 22,100,000 | ||
Kigen (UK) Limited | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Payments to acquire non-marketable preferred stock | $ 10,000,000 | ||||
SoftBank Vision Fund | Kigen (UK) Limited | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Ownership percentage | 85% | ||||
Ampere | Loans receivable | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Other non-current assets | 32,400,000 | 32,400,000 | 30,900,000 | ||
Acetone Limited | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Gains (losses) on equity method investments | (15,900,000) | (16,000,000) | |||
Equity method investments under equity method | 76,500,000 | 76,500,000 | 92,400,000 | ||
Ampere | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Gains (losses) on equity method investments | 0 | 0 | (26,300,000) | ||
Equity method investments under equity method | 389,800,000 | 389,800,000 | 389,800,000 | ||
Fair Value Measured at Net Asset Value Per Share | |||||
Schedule of Equity Method Investments [Line Items] | |||||
Equity method investments under fair value option | 106,200,000 | 106,200,000 | 109,400,000 | ||
Gains (losses) on equity method investments | (2,800,000) | 1,700,000 | 40,000,000 | ||
Non-marketable equity securities | $ 18,000,000 | 18,000,000 | 17,800,000 | ||
(Losses) gains from non-marketable equity securities | $ 500,000 | $ (10,500,000) | $ 7,900,000 |
Equity Investments - Schedule_4
Equity Investments - Schedule of Gains (Losses) on Non-Marketable Securities (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | |
Investments, All Other Investments [Abstract] | |||
Observable price adjustments on non-marketable equity securities (includes NAV) | $ 0 | $ 4 | $ 31 |
Impairment of non-marketable equity securities | (3) | (8) | (3) |
Sale of non-marketable equity securities | 0 | 0 | 1 |
Total income (loss) from equity investments in non-marketable securities, net | $ (3) | $ (4) | $ 29 |
Financial Instruments - Loans a
Financial Instruments - Loans and Other Receivables Carried at Amortized Cost (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Mar. 31, 2023 |
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Allowance for current expected credit losses | $ (19) | $ (22) |
Loans and other receivables carried at amortized cost, net | 19 | 21 |
Loans receivable | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Loans and other receivables carried at amortized cost | 26 | 25 |
Other receivables | ||
Financing Receivable, Allowance for Credit Loss [Line Items] | ||
Loans and other receivables carried at amortized cost | $ 12 | $ 18 |
Financial Instruments - Narrati
Financial Instruments - Narrative (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | |||
Aug. 31, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | Dec. 31, 2021 | |
Financing Receivable, Allowance for Credit Loss [Line Items] | |||||
Impaired loan receivable | $ 19 | $ 22 | |||
Non-cash distribution, disposal of investment | 0 | 0 | $ 980 | ||
Level 3 | |||||
Financing Receivable, Allowance for Credit Loss [Line Items] | |||||
Convertible loans receivable | 32 | 31 | |||
Convertible loans receivable | Level 3 | |||||
Financing Receivable, Allowance for Credit Loss [Line Items] | |||||
Fair value losses recognized in the Consolidated Income Statements | 1 | 2 | |||
Loans receivable | |||||
Financing Receivable, Allowance for Credit Loss [Line Items] | |||||
Loan receivable | 26 | 25 | |||
Other receivables | |||||
Financing Receivable, Allowance for Credit Loss [Line Items] | |||||
Loan receivable | 12 | 18 | |||
Arduino | |||||
Financing Receivable, Allowance for Credit Loss [Line Items] | |||||
Impaired loan receivable | 16.2 | 19.2 | |||
Cerfe Labs, Inc. | Loans receivable | |||||
Financing Receivable, Allowance for Credit Loss [Line Items] | |||||
Loan receivable | $ 3.1 | $ 3 | |||
Loan term | 4 years | 4 years | |||
Allia Limited | Loans receivable | |||||
Financing Receivable, Allowance for Credit Loss [Line Items] | |||||
Loan receivable | $ 6.9 | $ 3.1 | |||
Loan term | 5 years | 5 years | |||
IoTP | |||||
Financing Receivable, Allowance for Credit Loss [Line Items] | |||||
Non-cash distribution, disposal of investment | $ 12 | $ 12 | |||
IoTP | Other receivables | |||||
Financing Receivable, Allowance for Credit Loss [Line Items] | |||||
Loan receivable | $ 12 | ||||
Ampere | |||||
Financing Receivable, Allowance for Credit Loss [Line Items] | |||||
Convertible loans receivable | $ 29 | ||||
Ampere | Convertible loans receivable | Level 3 | |||||
Financing Receivable, Allowance for Credit Loss [Line Items] | |||||
Fair value losses recognized in the Consolidated Income Statements | $ 1 | $ 2 | $ 0 |
Derivatives - Narrative (Detail
Derivatives - Narrative (Details) £ in Millions, $ in Millions | Mar. 31, 2024 GBP (£) | Mar. 31, 2024 USD ($) | Mar. 31, 2023 GBP (£) | Mar. 31, 2023 USD ($) |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | ||||
Derivative, notional amount | £ | £ 728 | £ 340 | ||
Derivative, fair value | $ | $ 0.1 | $ 9.3 |
Derivatives - Notional Amounts
Derivatives - Notional Amounts (Details) £ in Millions, $ in Millions | Mar. 31, 2024 GBP (£) | Mar. 31, 2024 USD ($) | Mar. 31, 2023 GBP (£) | Mar. 31, 2023 USD ($) |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Derivative, notional amount | £ | £ 728 | £ 340 | ||
Designated as Hedging Instrument | Cash Flow Hedging | ||||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||||
Derivative, notional amount | $ | $ 919 | $ 411 |
Derivatives - Outstanding Deriv
Derivatives - Outstanding Derivative Instruments (Details) - Level 3 - USD ($) $ in Millions | Mar. 31, 2024 | Mar. 31, 2023 |
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative Assets | $ 0 | $ 0 |
Cash Flow Hedging | Designated as Hedging Instrument | ||
Derivative Instruments and Hedging Activities Disclosures [Line Items] | ||
Derivative Assets | 4 | 10 |
Derivative Liabilities | $ 4 | $ 1 |
Derivatives - Cash Flow Hedge G
Derivatives - Cash Flow Hedge Gains and Losses (Details) - Level 3 - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | |
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), after Reclassification, before Tax [Abstract] | |||
Gains (losses) reclassified in Accumulated other comprehensive income on cash flow hedge derivatives | $ 8 | $ 5 | $ 0 |
(Gains) losses reclassified from Accumulated other comprehensive income into income | (18) | 5 | 0 |
Income tax benefit (expense) on cash flow hedges | 2 | (2) | 0 |
Net change of the effective portion of designated cash flow hedges | (8) | 8 | 0 |
Research and development | |||
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), after Reclassification, before Tax [Abstract] | |||
(Gains) losses reclassified from Accumulated other comprehensive income into income | (10) | 3 | 0 |
Selling, general and administrative | |||
Other Comprehensive Income (Loss), Cash Flow Hedge, Gain (Loss), after Reclassification, before Tax [Abstract] | |||
(Gains) losses reclassified from Accumulated other comprehensive income into income | $ (8) | $ 2 | $ 0 |
Derivatives - Non-designated He
Derivatives - Non-designated Hedging Instrument Gains (Losses) (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | |
Derivative Instruments and Hedging Activities Disclosure [Abstract] | |||
Derivative Instruments Not Designated as Hedging Instruments, Gain (Loss), Net | $ (1) | $ (30) | $ (17) |
Fair Value - Schedule of Fair V
Fair Value - Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Mar. 31, 2023 |
Assets, Fair Value Disclosure [Abstract] | ||
Short-term investments | $ 1,000 | $ 661 |
Equity method investments under fair value option | 573 | 592 |
Fair Value, Recurring | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Foreign currency forward contracts | 4 | 1 |
Total financial liabilities | 4 | 1 |
Fair Value, Inputs, Level 1, Level 2, and Level 3 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Money market funds | 1,744 | 1,383 |
Short-term investments | 1,000 | 661 |
Equity method investments under fair value option | 466 | 482 |
Convertible loans receivable | 32 | 31 |
Foreign currency forward contracts | 4 | 10 |
Total financial assets | 3,246 | 2,567 |
Level 1 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Money market funds | 1,744 | 1,383 |
Short-term investments | 1,000 | 661 |
Equity method investments under fair value option | 0 | 0 |
Convertible loans receivable | 0 | 0 |
Foreign currency forward contracts | 0 | 0 |
Total financial assets | 2,744 | 2,044 |
Level 1 | Fair Value, Recurring | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Foreign currency forward contracts | 0 | 0 |
Total financial liabilities | 0 | 0 |
Level 2 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Money market funds | 0 | 0 |
Short-term investments | 0 | 0 |
Equity method investments under fair value option | 0 | 0 |
Convertible loans receivable | 0 | 0 |
Foreign currency forward contracts | 4 | 10 |
Total financial assets | 4 | 10 |
Level 2 | Fair Value, Recurring | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Foreign currency forward contracts | 4 | 1 |
Total financial liabilities | 4 | 1 |
Level 3 | ||
Assets, Fair Value Disclosure [Abstract] | ||
Money market funds | 0 | 0 |
Short-term investments | 0 | 0 |
Equity method investments under fair value option | 466 | 482 |
Convertible loans receivable | 32 | 31 |
Foreign currency forward contracts | 0 | 0 |
Total financial assets | 498 | 513 |
Level 3 | Fair Value, Recurring | ||
Financial Liabilities Fair Value Disclosure [Abstract] | ||
Foreign currency forward contracts | 0 | 0 |
Total financial liabilities | $ 0 | $ 0 |
Fair Value - Schedule of Change
Fair Value - Schedule of Changes in Fair Value of Level 3 Financial Assets and Liabilities (Details) - Level 3 - USD ($) $ in Millions | 12 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Equity Method Investments, Fair Value Option | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Fair value of financial assets at the beginning of the period | $ 482 | $ 524 |
Additions, net of contributions from shareholders of the Company | 0 | 0 |
Fair value losses recognized in the Consolidated Income Statements | (16) | (42) |
Distributions to shareholders of the Company | 0 | 0 |
Fair value at the end of the period | 466 | 482 |
Convertible loans receivable | ||
Fair Value, Assets Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Fair value of financial assets at the beginning of the period | 31 | 29 |
Additions, net of contributions from shareholders of the Company | 0 | 0 |
Fair value losses recognized in the Consolidated Income Statements | 1 | 2 |
Converted into equity | 0 | 0 |
Fair value at the end of the period | $ 32 | $ 31 |
Fair Value - Schedule of Equity
Fair Value - Schedule of Equity Method Investments Key Assumptions (Details) $ in Millions | Mar. 31, 2024 USD ($) | Mar. 31, 2023 USD ($) |
Schedule of Equity Method Investments [Line Items] | ||
Equity method investments | $ 573 | $ 592 |
Level 3 | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity method investments | $ 466 | $ 482 |
Level 3 | Measurement Input, Probability Of IPO, Time To Future Exit Scenario | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity method investments, fair value option, time to future exit | 1 year 6 months | |
Level 3 | Valuation Technique, Probability-Weighted, Expected Return | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity method investments, fair value option, time to future exit | 1 year 3 months 18 days | |
Level 3 | Valuation Technique, Probability-Weighted, Expected Return | Measurement Input, Probability Of IPO, Time To Future Exit Scenario | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity method investments, fair value option, measurement input | 1 | 1 |
Level 3 | Valuation Technique, Probability-Weighted, Expected Return | Measurement Input, Discount Rate | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity method investments, fair value option, measurement input | 0.1764 | 0.1861 |
Level 3 | Minimum | Valuation Technique, Discounted Cash Flow | LTM Revenue Multiple | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity method investments, fair value option, measurement input | 0.013 | 0.021 |
Level 3 | Maximum | Valuation Technique, Discounted Cash Flow | LTM Revenue Multiple | ||
Schedule of Equity Method Investments [Line Items] | ||
Equity method investments, fair value option, measurement input | 0.015 | 0.023 |
Fair Value - Narrative (Details
Fair Value - Narrative (Details) $ in Millions | Dec. 31, 2021 USD ($) |
Ampere | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Convertible promissory note | $ 29 |
Shareholders' Equity (Details)
Shareholders' Equity (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | ||||
Aug. 31, 2023 | Mar. 31, 2022 | Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | Jun. 30, 2021 | |
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Shares held in EBT (in shares) | 603,450 | |||||
Market value of shares held in EBT | $ 75.4 | |||||
Reduction to retained earnings | (2,751) | $ (2,457) | ||||
Non-cash distribution, disposal of investment | 0 | $ 0 | $ 980 | |||
IoTP | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Non-cash distribution, disposal of investment | $ 12 | $ 12 | ||||
Treasure Data | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Reduction to retained earnings | $ 44.2 | |||||
Arm China | ||||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | ||||||
Non-cash distribution, disposal of investment | $ 975.7 |
Restructuring and Other (Detail
Restructuring and Other (Details) - USD ($) $ in Millions | 12 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Restructuring and Related Activities [Abstract] | ||
Restructuring Charges | $ 1.5 | $ 25.8 |
Share-based Compensation - Narr
Share-based Compensation - Narrative (Details) | 1 Months Ended | 2 Months Ended | 12 Months Ended | ||||||||
Sep. 18, 2023 USD ($) employee $ / shares shares | Oct. 31, 2023 | Aug. 31, 2023 shares | Dec. 31, 2022 USD ($) shares | Nov. 30, 2022 USD ($) employee | Sep. 30, 2022 USD ($) | Apr. 30, 2017 | Jun. 30, 2022 employee | Mar. 31, 2024 USD ($) executive_award shares | Mar. 31, 2023 USD ($) $ / shares shares | Mar. 31, 2022 USD ($) $ / shares shares | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Share-based compensation cost (credit) | $ 1,070,000,000 | $ 326,000,000 | $ 26,000,000 | ||||||||
Non-current portion of accrued compensation and share-based compensation increase (decrease) | 20,000,000 | 152,000,000 | |||||||||
Additional paid-in capital | 2,171,000,000 | 1,216,000,000 | |||||||||
Accrued compensation and benefits and share-based compensation increase (decrease) | 298,000,000 | 589,000,000 | |||||||||
IPO | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Sale of stock (in dollars per share) | $ / shares | $ 51 | ||||||||||
2019 AEP | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Share-based compensation cost (credit) | $ 217,200,000 | 515,700,000 | 56,000,000 | 30,800,000 | |||||||
Share-based compensation, tax benefit (expense) | 114,100,000 | 11,600,000 | 5,400,000 | ||||||||
Accelerated share-based compensation | 11,800,000 | ||||||||||
Number of grantees affected by modification | employee | 5,251 | 435 | |||||||||
2019 AEP | Reclassification, Other Noncurrent Liabilities | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Non-current portion of accrued compensation and share-based compensation increase (decrease) | $ (306,600,000) | ||||||||||
Additional paid-in capital | 306,600,000 | ||||||||||
2019 EIP | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Share-based compensation cost (credit) | 4,100,000 | $ 4,100,000 | $ 4,500,000 | 6,200,000 | 100,000 | (500,000) | |||||
Share-based awards, liability paid | $ 0 | $ 0 | $ 0 | ||||||||
Potential fixed monetary amount | $ 20,000,000 | ||||||||||
Weighted average grant date fair value per RSU, expected to vest (in dollars per share) | $ / shares | $ 37.43 | ||||||||||
2019 EIP | Reclassification, Other Noncurrent Liabilities | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Non-current portion of accrued compensation and share-based compensation increase (decrease) | (5,700,000) | ||||||||||
Additional paid-in capital | 5,700,000 | ||||||||||
2022 RSU Plan | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Potential fixed monetary amount | $ 95,000,000 | ||||||||||
Accrued compensation and benefits and share-based compensation increase (decrease) | $ 32,000,000 | ||||||||||
Number of executive awards | executive_award | 2 | ||||||||||
Omnibus Incentive Plan | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Share-based compensation cost (credit) | $ 25,200,000 | ||||||||||
Share-based compensation, tax benefit (expense) | 4,700,000 | ||||||||||
Unrecognized share-based compensation | $ 106,700,000 | ||||||||||
Unrecognized share-based compensation, recognition period | 1 year 1 month 6 days | ||||||||||
Shares authorized (in shares) | shares | 20,500,000 | 20,500,000 | |||||||||
Annual increase in shares authorized | 2% | ||||||||||
Restricted Stock Units (RSUs) | 2019 AEP | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Vesting | 100% | ||||||||||
Aggregate nominal amount, limit | 2.20% | ||||||||||
Outstanding (in shares) | shares | 0 | 11,601,185 | 13,507,360 | ||||||||
Non-current portion of accrued compensation and share-based compensation increase (decrease) | $ 114,200,000 | ||||||||||
Share-based awards, liability paid | $ 18,200,000 | 15,900,000 | |||||||||
Fair value of awards | $ 16,200,000 | ||||||||||
Cash settlement, shares held by participant | 50% | ||||||||||
Vested (in shares) | shares | (11,358,553) | ||||||||||
Granted (in shares) | shares | 2,603 | ||||||||||
Restricted Stock Units (RSUs) | 2019 EIP | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Aggregate nominal amount, limit | 30% | ||||||||||
Outstanding (in shares) | shares | 0 | 192,999 | 903,925 | ||||||||
Share-based compensation, tax benefit (expense) | $ 1,600,000 | $ (400,000) | $ 0 | ||||||||
Non-current portion of accrued compensation and share-based compensation increase (decrease) | 3,600,000 | ||||||||||
Fair value of awards | $ 7,200,000 | ||||||||||
Shares cancelled (in shares) | shares | 355,463 | ||||||||||
Vested (in shares) | shares | (192,999) | ||||||||||
Restricted Stock Units (RSUs) | 2022 RSU Plan | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Aggregate nominal amount, limit | 4% | ||||||||||
Share-based compensation cost (credit) | $ 2,100,000 | ||||||||||
Share-based awards, liability paid | $ 269,000,000 | ||||||||||
Accelerated share-based compensation | $ 17,700,000 | ||||||||||
Number of grantees affected by modification | employee | 5,041 | 5,539 | |||||||||
Expected to vest (in shares) | shares | 284,036 | ||||||||||
Weighted average grant date fair value per RSU, expected to vest (in dollars per share) | $ / shares | $ 40.47 | ||||||||||
Unrecognized share-based compensation, recognition period | 9 months 18 days | ||||||||||
Restricted Stock Units (RSUs) | Arm Non-Executive Directors RSU Award Plan | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Outstanding (in shares) | shares | 31,806 | 13,340 | |||||||||
Granted (in shares) | shares | 31,806 | 13,340 | |||||||||
Phantom Share Units (PSUs) | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Outstanding (in shares) | shares | 0 | 0 | 64,862 | ||||||||
Share-based compensation cost (credit) | $ (500,000) | $ (3,100,000) | |||||||||
Share-based awards, liability paid | $ 900,000 | 7,100,000 | 1,500,000 | ||||||||
Fair value of awards | $ 1,100,000 | $ 1,500,000 | |||||||||
Vesting period | 3 years | ||||||||||
Vested (in shares) | shares | (27,503) | (32,198) | |||||||||
Intrinsic value (in dollars per share) | $ / shares | $ 38.84 | $ 39.83 | |||||||||
Accrued compensation and benefits and share-based compensation increase (decrease) | $ 1,100,000 | ||||||||||
Executive Awards | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Share-based compensation, tax benefit (expense) | $ 0 | $ 0 | $ (500,000) | ||||||||
Executive Awards | 2022 RSU Plan | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Outstanding (in shares) | shares | 22,756,418 | 11,129,734 | |||||||||
Share-based compensation cost (credit) | $ 9,800,000 | $ 521,600,000 | $ 267,000,000 | ||||||||
Share-based compensation, tax benefit (expense) | $ 89,200,000 | 36,600,000 | |||||||||
Non-current portion of accrued compensation and share-based compensation increase (decrease) | 13,800,000 | ||||||||||
Additional paid-in capital | 1,900,000 | ||||||||||
Number of grantees affected by modification | employee | 14 | ||||||||||
Vested (in shares) | shares | (6,751,502) | ||||||||||
Accrued compensation and benefits and share-based compensation increase (decrease) | 253,100,000 | ||||||||||
Shares issued (in shares) | shares | 1,875,202 | ||||||||||
Unrecognized share-based compensation | $ 693,900,000 | ||||||||||
Granted (in shares) | shares | 17,134,484 | ||||||||||
Executive Awards | 2022 RSU Plan | Reclassification, Other Current Liabilities | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Additional paid-in capital | $ 9,100,000 | $ 31,700,000 | |||||||||
Accrued compensation and benefits and share-based compensation increase (decrease) | (9,100,000) | $ (31,700,000) | |||||||||
Executive Awards | 2022 RSU Plan | Reclassification, Other Noncurrent Liabilities | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Non-current portion of accrued compensation and share-based compensation increase (decrease) | (20,200,000) | ||||||||||
Additional paid-in capital | $ 20,200,000 | ||||||||||
Restricted Stock Units, Launch Awards | 2022 RSU Plan | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Potential fixed monetary amount | 80,000,000 | ||||||||||
Vesting period | 3 years | ||||||||||
Accrued compensation and benefits and share-based compensation increase (decrease) | 23,000,000 | ||||||||||
Retricted Stock Units, Annual Awards | 2022 RSU Plan | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Potential fixed monetary amount | 15,000,000 | ||||||||||
Accrued compensation and benefits and share-based compensation increase (decrease) | $ 9,000,000 | ||||||||||
Retricted Stock Units, Annual Awards | 2022 RSU Plan | Minimum | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Vesting | 0% | ||||||||||
Retricted Stock Units, Annual Awards | 2022 RSU Plan | Maximum | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Vesting | 200% | ||||||||||
Restricted Stock Units, Continuous Service | 2022 RSU Plan | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Vesting period | 3 years | ||||||||||
Restricted Stock Units, Continuous Service | Omnibus Incentive Plan | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Vesting period | 3 years | ||||||||||
Restricted Stock Units, Time-Based | 2022 RSU Plan | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Vesting period | 3 years | ||||||||||
Restricted Stock Units, Liability-Classified | 2019 AEP | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Weighted average grant date fair value per RSU, expected to vest (in dollars per share) | $ / shares | $ 23.33 | ||||||||||
Restricted Stock Units, Liability-Classified | 2022 RSU Plan | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Vested (in shares) | shares | (351,022) | ||||||||||
Performance Shares | Omnibus Incentive Plan | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Vesting period | 3 years | ||||||||||
Performance Shares, Time Based | Omnibus Incentive Plan | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Vesting period | 3 years | ||||||||||
Performance Shares, Continuous Service And Performance Conditions | 2022 RSU Plan | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Service period | 1 year | ||||||||||
Performance Shares, Continuous Service And Performance Conditions | Omnibus Incentive Plan | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Service period | 1 year | ||||||||||
Performance Shares, Continuous Service And Performance Conditions | Omnibus Incentive Plan | Minimum | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Vesting | 0% | ||||||||||
Performance Shares, Continuous Service And Performance Conditions | Omnibus Incentive Plan | Maximum | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Vesting | 200% | ||||||||||
Restricted Stock Units And Performance Shares | Omnibus Incentive Plan | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Outstanding (in shares) | shares | 1,879,276 | 0 | |||||||||
Vested (in shares) | shares | (50,784) | ||||||||||
Granted (in shares) | shares | 1,941,165 | ||||||||||
Restricted Stock Units - Cash Receipt | 2019 AEP | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Accelerated share-based compensation | $ 11,800,000 | ||||||||||
Restricted Stock Units - Retention Option | 2019 AEP | |||||||||||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||||||||||
Accelerated share-based compensation | $ 2,200,000 |
Share-based Compensation - Sche
Share-based Compensation - Schedule of Restricted Stock Unit Activity (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Restricted Stock Units (RSUs) | 2019 AEP | ||
Awards | ||
Outstanding, beginning of period (in shares) | 11,601,185 | 13,507,360 |
Granted (in shares) | 2,603 | |
Vested (in shares) | (11,358,553) | |
Cancelled and forfeited (in shares) | (245,235) | |
Outstanding, ending of period (in shares) | 0 | 11,601,185 |
Weighted Average Grant Date Fair Value Per RSU | ||
Outstanding (in dollars per share) | $ 0 | $ 54.47 |
Granted (in dollars per share) | 54.51 | |
Vested (in dollars per share) | 55.43 | |
Cancelled and forfeited (in dollars per share) | $ 54.51 | |
Restricted Stock Units (RSUs) | 2019 EIP | ||
Awards | ||
Outstanding, beginning of period (in shares) | 192,999 | 903,925 |
Vested (in shares) | (192,999) | |
Outstanding, ending of period (in shares) | 0 | 192,999 |
Weighted Average Grant Date Fair Value Per RSU | ||
Outstanding (in dollars per share) | $ 0 | $ 51 |
Vested (in dollars per share) | $ 51 | |
Executive Awards | 2022 RSU Plan | ||
Awards | ||
Outstanding, beginning of period (in shares) | 11,129,734 | |
Executed Awards converted from liability awards (in shares) | 1,875,202 | |
Granted (in shares) | 17,134,484 | |
Vested (in shares) | (6,751,502) | |
Cancelled and forfeited (in shares) | (631,500) | |
Outstanding, ending of period (in shares) | 22,756,418 | 11,129,734 |
Weighted Average Grant Date Fair Value Per RSU | ||
Outstanding (in dollars per share) | $ 42.30 | $ 35.87 |
Executed Awards converted from liability awards (in dollars per share) | 51 | |
Granted (in dollars per share) | 43.68 | |
Vested (in dollars per share) | 37.47 | |
Cancelled and forfeited (in dollars per share) | $ 40.27 | |
Restricted Stock Units, Liability-Classified | 2019 AEP | ||
Weighted Average Grant Date Fair Value Per RSU | ||
Fair value of outstanding awards | $ 270.7 | |
Restricted Stock Units, Liability-Classified | 2022 RSU Plan | ||
Awards | ||
Vested (in shares) | (351,022) |
Share-based Compensation - Sc_2
Share-based Compensation - Schedule of Omnibus Incentive Plan (Details) - Restricted Stock Units And Performance Shares - Omnibus Incentive Plan - $ / shares | 12 Months Ended | |
Mar. 31, 2024 | Mar. 31, 2023 | |
Awards | ||
Outstanding, beginning of period (in shares) | 0 | |
Granted (in shares) | 1,941,165 | |
Cancelled and forfeited (in shares) | (11,105) | |
Outstanding, ending of period (in shares) | 1,879,276 | 0 |
Weighted Average Grant Date Fair Value Per RSU | ||
Outstanding (in dollars per share) | $ 68.13 | $ 0 |
Granted (in dollars per share) | 68.14 | |
Vested (in dollars per share) | 71.03 | |
Cancelled and forfeited (in dollars per share) | $ 57.01 |
Share-based Compensation - Sc_3
Share-based Compensation - Schedule of Share-Based Compensation Expense (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | |
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Share-based compensation cost (credit) | $ 1,070 | $ 326 | $ 26 |
Cost of sales | |||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Share-based compensation cost (credit) | 41 | 12 | 1 |
Research and development | |||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Share-based compensation cost (credit) | 728 | 212 | 18 |
Selling, general and administrative | |||
Share-Based Payment Arrangement, Expensed and Capitalized, Amount [Line Items] | |||
Share-based compensation cost (credit) | $ 301 | $ 102 | $ 7 |
Share-based Compensation - Sc_4
Share-based Compensation - Schedule of RSU Assumptions (Details) - Restricted Stock Units (RSUs) - $ / shares | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | |
2019 AEP | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Weighted average share price (in dollars per share) | $ 56.10 | $ 41.51 | $ 39.27 |
Expected volatility until liquidity event | 40% | 40% | 35% |
Time to liquidity event | 6 months | 6 months | 1 year |
Dividend yield | 0% | 0% | 0% |
Risk free interest rate | 5.52% | 4.94% | 1.60% |
2019 EIP | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Weighted average share price (in dollars per share) | $ 41.51 | $ 39.27 | |
Expected volatility until liquidity event | 35% | ||
Transaction costs | 2.50% | ||
Time to liquidity event | 6 months | 1 year | |
Discount for lack of marketability | 7.50% | ||
Dividend yield | 0% | ||
Risk free interest rate | 1.60% | ||
2022 RSU Plan | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Transaction costs | 2.50% | 2.50% | |
2022 RSU Plan | Minimum | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Weighted average share price (in dollars per share) | $ 44.52 | $ 35.16 | |
Present value per RSU | $ 43.40 | $ 33.13 | |
Time to liquidity event | 6 months | 6 months | |
Discount for lack of marketability | 0% | 0% | |
2022 RSU Plan | Maximum | |||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | |||
Weighted average share price (in dollars per share) | $ 48.18 | $ 39.67 | |
Present value per RSU | $ 46.98 | $ 39.67 | |
Time to liquidity event | 1 year | 10 months 24 days | |
Discount for lack of marketability | 7.50% | 7.50% |
Share-based Compensation - Sc_5
Share-based Compensation - Schedule of Commitment For Potential Payments and Liability Recognized (Details) - USD ($) $ in Millions | 12 Months Ended | |
Mar. 31, 2023 | Mar. 31, 2024 | |
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Accrued Liability | $ 589 | $ 298 |
2022 RSU Plan | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Potential Fixed Monetary Amount | 95 | |
Accrued Liability | 32 | |
Restricted Stock Units, Launch Awards | 2022 RSU Plan | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Potential Fixed Monetary Amount | 80 | |
Accrued Liability | 23 | |
Retricted Stock Units, Annual Awards | 2022 RSU Plan | ||
Share-Based Compensation Arrangement by Share-Based Payment Award [Line Items] | ||
Potential Fixed Monetary Amount | 15 | |
Accrued Liability | $ 9 |
Income Taxes - Schedule of Inco
Income Taxes - Schedule of Income Before Provision for Income Taxes (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | |||
United Kingdom | $ 139 | $ 427 | $ 608 |
Foreign | 73 | 244 | 178 |
Income (loss) before income taxes | $ 212 | $ 671 | $ 786 |
Income Taxes - Schedule of Tax
Income Taxes - Schedule of Tax (Expense) Benefit (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | |
Current Income Tax Expense (Benefit), Continuing Operations [Abstract] | |||
United Kingdom | $ 2 | $ (87) | $ (44) |
Foreign | (178) | (94) | (146) |
Total current tax (expense) benefit | (176) | (181) | (190) |
Deferred Income Tax Expense (Benefit), Continuing Operations [Abstract] | |||
United Kingdom | 114 | 25 | (53) |
Foreign | 156 | 9 | 133 |
Total deferred tax (expense) benefit | 270 | 34 | 80 |
Total income tax (expense) benefit | $ 93.8 | $ (146.8) | $ (109.7) |
Income Taxes - Schedule of Effe
Income Taxes - Schedule of Effective Income Tax Rate (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | |
Income Tax Disclosure [Abstract] | |||
Income tax (expense) benefit at statutory rate | $ (53) | $ (127) | $ (149) |
Foreign tax rate differential | (14) | (2) | 8 |
Research and development tax credits | 94 | 37 | 25 |
Change in valuation allowance | (4) | (5) | 22 |
Non-deductible/non-taxable items | (3) | (3) | 3 |
Patent box benefit | (4) | 25 | 69 |
Impact of U.K. rate change | (3) | (2) | (64) |
Withholding tax | (122) | (72) | (32) |
Gains exempt from U.K. tax | (3) | 2 | 8 |
Windfall tax benefit associated with share-based compensation | 206 | 0 | 0 |
Total income tax (expense) benefit | 93.8 | (146.8) | (109.7) |
Income tax (expense) benefit attributable to discontinued operations | $ 0 | $ 0 | $ (28) |
Income Taxes - Narrative (Detai
Income Taxes - Narrative (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | |
Income Tax Examination [Line Items] | |||
Total income tax (expense) benefit | $ (93.8) | $ 146.8 | $ 109.7 |
Income tax (expense) benefit as a percentage of income before taxes | 44% | (22.00%) | (14.00%) |
Tax loss carryforward | $ 376.6 | ||
Deferred tax asset, operating loss carryforward | 94.2 | ||
R&D expenditure credits | 70.6 | ||
Unrecognized tax benefits that would impact effective tax rate | 71.9 | $ 56.3 | $ 43.6 |
Unrecognized tax benefits, income tax penalties expense | 1.8 | 0.8 | 0.7 |
Unrecognized tax benefits, income tax penalties and interest accrued | 15.5 | $ 14.2 | $ 15.8 |
Foreign Tax Authority | |||
Income Tax Examination [Line Items] | |||
Tax loss carryforward | 348.7 | ||
Deferred tax assets, operating loss carryforwards, U.S. | 73.2 | ||
Tax credit carryforward | 120.5 | ||
Foreign Tax Authority | Tax Credit Carryforward With No Expiration | |||
Income Tax Examination [Line Items] | |||
Tax loss carryforward | 340.1 | ||
Foreign Tax Authority | Tac Credit Carryforward With Expiration | |||
Income Tax Examination [Line Items] | |||
Tax loss carryforward | 8.7 | ||
Deferred tax assets, operating loss carryforwards, U.S. | 1.8 | ||
State and Local Jurisdiction | |||
Income Tax Examination [Line Items] | |||
Deferred tax assets, operating loss carryforwards, U.S. | 195.4 | ||
Deferred tax asset, operating loss carryforward, net of federal benefit | 12.5 | ||
Tax credit carryforward | 59.9 | ||
Deferred tax asset, tax credit carryforward, net of federal benefits | 47.8 | ||
State and Local Jurisdiction | Tax Credit Carryforward With No Expiration | |||
Income Tax Examination [Line Items] | |||
Tax credit carryforward | 26.9 | ||
State and Local Jurisdiction | Tac Credit Carryforward With Expiration | |||
Income Tax Examination [Line Items] | |||
Tax credit carryforward | $ 33 |
Income Taxes - Schedule of Defe
Income Taxes - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Mar. 31, 2023 |
Income Tax Disclosure [Abstract] | ||
Lease liability | $ 19 | $ 13 |
Fixed assets | 27 | 23 |
Tax losses and R&D tax credits | 408 | 147 |
Equity investments | 9 | 7 |
Share-based compensation | 28 | 30 |
Reserves and other liabilities | 23 | 27 |
Total gross deferred tax assets | 514 | 247 |
Less: Valuation allowance | (25) | (21) |
Total deferred tax assets, net of valuation allowance | 489 | 226 |
Right of use assets | (18) | (12) |
Acquired intangibles | (5) | (6) |
Outside basis differences | (106) | (110) |
Hedging reserve | 0 | (3) |
Contract liabilities | (213) | (218) |
Total deferred tax liabilities | (342) | (349) |
Net deferred tax assets | $ 147 | |
Net deferred tax liabilities | $ (123) |
Income Taxes - Schedule of Unre
Income Taxes - Schedule of Unrecognized Tax Benefits (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | |
Reconciliation of Unrecognized Tax Benefits, Excluding Amounts Pertaining to Examined Tax Returns [Roll Forward] | |||
Gross unrecognized tax benefits—April 1 | $ 62 | $ 54 | $ 75 |
Gross increases—tax positions in prior period | 5 | 6 | 2 |
Gross decreases—tax positions in prior period | (1) | 0 | 0 |
Gross increases—tax positions in current period | 19 | 7 | 6 |
Settlements | 0 | (1) | (28) |
Lapse of statute of limitations | (1) | (1) | 0 |
Foreign exchange | (1) | (3) | (1) |
Gross unrecognized tax benefits— March 31 | $ 83 | $ 62 | $ 54 |
Net Income (Loss) Per Share - S
Net Income (Loss) Per Share - Schedule of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, $ in Millions | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | |
Earnings Per Share [Abstract] | |||
Net income from continuing operations | $ 306 | $ 524 | $ 676 |
Net loss from discontinued operations | 0 | 0 | (127) |
Net income (loss) | $ 306 | $ 524 | $ 549 |
Weighted average ordinary shares used to calculate basic net income (loss) per share (in shares) | 1,027,443,122 | 1,025,234,000 | 1,025,234,000 |
Equity-classified awards (in shares) | 17,053,910 | 2,271,008 | 0 |
Weighted average ordinary shares used to calculate diluted net income (loss) per share (in shares) | 1,044,497,032 | 1,027,505,008 | 1,025,234,000 |
Income (loss) per share attributable to ordinary shareholders — basic | |||
Net income from continuing operations (in USD per share) | $ 0.30 | $ 0.51 | $ 0.66 |
Net loss from discontinued operation (in USD per share) | 0 | 0 | (0.12) |
Net income (loss) per share - basic (in USD per share) | 0.30 | 0.51 | 0.54 |
Income (loss) per share attributable to ordinary shareholders — diluted | |||
Net income from continuing operations (in USD per share) | 0.29 | 0.51 | 0.66 |
Net loss from discontinued operation (in USD per share) | 0 | 0 | (0.12) |
Net income (loss) per share - diluted (in USD per share) | $ 0.29 | $ 0.51 | $ 0.54 |
Net Income (Loss) Per Share - A
Net Income (Loss) Per Share - Antidilutive Securities Excluded from Computation of Earnings Per Share (Details) - shares | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | |
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share (in shares) | 254,189 | 17,417,165 | 14,230,025 |
Restricted Stock Units (RSUs) | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share (in shares) | 254,189 | 16,870,903 | 14,230,025 |
Executive Awards | |||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | |||
Antidilutive securities excluded from computation of earnings per share (in shares) | 0 | 546,262 | 0 |
Commitments and Contingencies (
Commitments and Contingencies (Details) - USD ($) $ in Millions | 1 Months Ended | ||
Sep. 30, 2023 | Mar. 31, 2024 | Mar. 31, 2023 | |
Debt Instrument [Line Items] | |||
Loss contingency | $ 40 | ||
Loss contingency accrual reversal | $ 40 | ||
Purchase commitment | $ 340 | ||
Purchase obligations remaining | 298 | ||
Purchase obligations, next 12 months | 37 | ||
Financial Standby Letter of Credit | Arduino | |||
Debt Instrument [Line Items] | |||
Guarantor obligation | $ 5.4 |
Retirement Benefits Plan (Detai
Retirement Benefits Plan (Details) - USD ($) $ in Millions | 12 Months Ended | ||
Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | |
Retirement Benefits [Abstract] | |||
Defined contribution plan, expense | $ 96.7 | $ 78.4 | $ 77 |
Accrued defined contribution plan | $ 11.8 | $ 9.6 |
Related Party Transactions (Det
Related Party Transactions (Details) - USD ($) $ in Millions | 1 Months Ended | 12 Months Ended | |||||||
Dec. 31, 2023 | Aug. 31, 2023 | Feb. 28, 2023 | Mar. 31, 2022 | Mar. 31, 2024 | Mar. 31, 2023 | Mar. 31, 2022 | Sep. 30, 2022 | May 31, 2021 | |
Related Party Transaction [Line Items] | |||||||||
Revenue | $ 3,233 | $ 2,679 | $ 2,703 | ||||||
Operating expenses | 2,968 | 1,902 | 1,939 | ||||||
Accounts receivable, net | 781 | 999 | |||||||
Other current liabilities | 835 | 293 | |||||||
Contract liabilities | 198 | 293 | |||||||
Non-cash distribution, disposal of investment | 0 | 0 | 980 | ||||||
Revenue | 41 | ||||||||
Proceeds from equity method investments | 6.9 | 0 | 1.9 | ||||||
Other non-current assets | 270 | 202 | |||||||
Loans receivable | |||||||||
Related Party Transaction [Line Items] | |||||||||
Loans and other receivables carried at amortized cost | 26 | 25 | |||||||
Related Party | |||||||||
Related Party Transaction [Line Items] | |||||||||
Revenue | 724 | 654 | 484 | ||||||
Operating Lease, Lease Income, Lease Payments | 1.7 | 2 | 1.6 | ||||||
Accounts receivable, net | 182 | 402 | |||||||
Other current liabilities | 7 | 17 | |||||||
Contract liabilities | 107 | 135 | |||||||
Service Share Arrangement | Related Party | |||||||||
Related Party Transaction [Line Items] | |||||||||
Revenue | 670.8 | 649 | 474.2 | ||||||
Operating expenses | 74.1 | 64.1 | 63.5 | ||||||
Contract termination costs | $ 5.5 | ||||||||
Net receivable | 175.8 | 386.9 | |||||||
Accounts receivable, net | 181.1 | 400.7 | |||||||
Other current liabilities | 5.3 | 13.9 | |||||||
Contract liabilities | 105.7 | 103.4 | |||||||
Common Control in SoftBank | |||||||||
Related Party Transaction [Line Items] | |||||||||
Revenue | 3.6 | ||||||||
Operating expense | 0.2 | ||||||||
Common Control in SoftBank | Related Party | |||||||||
Related Party Transaction [Line Items] | |||||||||
Revenue | 4.4 | 1.3 | 1.5 | ||||||
Accounts receivable, net | 0.8 | 0.5 | |||||||
Contract liabilities | 1.6 | 1.6 | |||||||
Contract assets | 3.1 | ||||||||
Other receivables | 12 | ||||||||
Other Equity Investments | Related Party | |||||||||
Related Party Transaction [Line Items] | |||||||||
Revenue | 49.3 | 3.5 | 8.5 | ||||||
Accounts receivable, net | 0.5 | ||||||||
Contract liabilities | 18.7 | 30.2 | |||||||
Contract assets | 0.2 | 8.7 | |||||||
Linaro Agreement | Related Party | |||||||||
Related Party Transaction [Line Items] | |||||||||
Other current liabilities | 1.3 | 0.3 | |||||||
Subscription costs incurred | 10.6 | 8.9 | $ 7.9 | ||||||
Amounts of transaction | $ 4 | ||||||||
Related party transaction, term | 5 years | ||||||||
Prepaid expense and other assets | 3.2 | 4 | |||||||
Gain from related party transaction | 3.7 | ||||||||
Raine Securities LLC Agreement | Related Party | |||||||||
Related Party Transaction [Line Items] | |||||||||
Operating expenses | 10.7 | 2.5 | |||||||
Other current liabilities | 2.5 | ||||||||
Proceeds from reimbursement from underwriters | (5.2) | ||||||||
IoTP | |||||||||
Related Party Transaction [Line Items] | |||||||||
Non-cash distribution, disposal of investment | $ 12 | 12 | |||||||
Arduino | Related Party | Loans receivable | |||||||||
Related Party Transaction [Line Items] | |||||||||
Other non-current assets | 16.2 | 19.2 | |||||||
Cerfe Labs, Inc. | Loans receivable | |||||||||
Related Party Transaction [Line Items] | |||||||||
Loans and other receivables carried at amortized cost | 3.1 | 3 | |||||||
Ampere | Loans receivable | |||||||||
Related Party Transaction [Line Items] | |||||||||
Other non-current assets | $ 32.4 | $ 30.9 | |||||||
Treasure Data | SoftBank Vision Fund II | |||||||||
Related Party Transaction [Line Items] | |||||||||
Loans payable | $ 50 | ||||||||
Treasure Data | SoftBank Vision Fund II | Loans Payable | |||||||||
Related Party Transaction [Line Items] | |||||||||
Interest rate | 2% | ||||||||
Acetone Limited | |||||||||
Related Party Transaction [Line Items] | |||||||||
Ownership percentage | 10% | ||||||||
Arm China | |||||||||
Related Party Transaction [Line Items] | |||||||||
Non-cash distribution, disposal of investment | $ 975.7 | ||||||||
Arm China | Acetone Limited | |||||||||
Related Party Transaction [Line Items] | |||||||||
Ownership percentage | 48.18% |
Segment and Geographic Inform_3
Segment and Geographic Information (Details) - USD ($) $ in Millions | Mar. 31, 2024 | Mar. 31, 2023 |
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 420 | $ 391 |
United Kingdom | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | 287 | 281 |
United States | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | 90 | 78 |
Other countries | ||
Revenues from External Customers and Long-Lived Assets [Line Items] | ||
Long-lived assets | $ 43 | $ 32 |
Subsequent Events (Details)
Subsequent Events (Details) $ in Millions | May 21, 2024 USD ($) |
Subsequent Event | Arm Technology Investments 2 Limited | |
Subsequent Event [Line Items] | |
Cornerstone investment agreement, purchase price | $ 35 |