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Kirk Boodry

Redex Research

Equity Bottom-Up

<ul>
<li>We've been pessimistic on prospects for ARM and recent news flow and share price performance hasn't helped but a decent report from TSMC eases some of our concerns</li>
<li>Softbank needs high teens royalty revenue growth for ARM and TSMC as a bellwether (+30% for Q3 and Q4 guidance) is better than AMD or Nvidia</li>
<li>We remain more conservative on valuation ($37bn) than Softbank assuming high single-digit growth and c. 43% EBITDA margins</li>
</ul>


We've been pessimistic on prospects for ARM and recent news flow and share price performance hasn't helped but a decent report from TSMC eases some of our concerns
Softbank needs high teens royalty revenue growth for ARM and TSMC as a bellwether (+30% for Q3 and Q4 guidance) is better than AMD or Nvidia
We remain more conservative on valuation ($37bn) than Softbank assuming high single-digit growth and c. 43% EBITDA margins


Softbank Group - The Most Important Number in Q2 Results May Be ARM Royalty Revenue