Arm Holdings vs TCS: Revenue, Profit and Business Model
Arm Holdings reported $4.9B of revenue in FY2026 and $904M of net income. TCS reported ~$31B of revenue in FY2026 and ~$5.7B of net income.
Latest financial snapshot
Arm Holdings
- Latest revenue
- $4.9B (FY2026)
- Net income
- $904M
- Net margin
- 18.4%
- Revenue growth
- +19.4% a year, FY2021–FY2026
TCS
- Latest revenue
- ~$31B (FY2026)
- Net income
- ~$5.7B
- Net margin
- 18.4%
- Revenue growth
- +8.6% a year, FY2022–FY2026
Financial summary
Arm Holdings
Arm makes nearly all of its gross profit from intellectual property, so its cost of sales is small: fiscal 2026 revenue of $4,920 million produced $4,799 million of gross profit, a margin above 97%. Revenue comes in two lines. License and other revenue, $2,307 million in fiscal 2026 and up 25%, is charged upfront or across milestones when a customer takes access to Arm designs. Royalty revenue, $2,613 million and up 21%, is collected per chip once partners ship, which makes it a long tail from designs licensed years earlier. Spending is concentrated in engineering: research and development cost $2,776 million in fiscal 2026, about 56% of revenue, which held operating income to $900 million and net income to $904 million. Arm ended the year with $2,751 million of cash and cash equivalents plus $850 million of short-term investments, and $2,071 million of remaining performance obligations, about 28% of which it expects to recognise as revenue within twelve months. The most recent reported quarter, the three months to June 30, 2026, was a record: revenue rose 22% year over year to $1.29 billion on record first-quarter royalty and licensing revenue, with data center royalties again more than doubling.
TCS
TCS reported FY2026 revenue of ₹2,67,021 crore ($30.017 billion), up 4.6% in rupees but down about 0.5% in dollars, with net income of about $5.71 billion (₹49,210 crore) and a 19.8% net margin. Q1 FY2027 revenue was ₹72,275 crore ($7.624 billion), up 13.9% in rupees and 2.7% in dollars year over year, with an operating margin of about 24% and net profit of ~$1.55 billion (₹13,349 crore). The growth story now rests on AI: TCS put its annualized AI services revenue at $1.8 billion in Q3 FY2026 and $2.6 billion in Q1 FY2027, while total contract value held at $9.5 billion for the quarter.
Revenue and profit by year
Arm Holdings
| Year | Revenue | Net income | Margin | Growth | Source |
|---|---|---|---|---|---|
| FY2026 | $4.9B | $904M | 18.4% | +22.8% | Source |
| FY2025 | $4B | $792M | 19.8% | +23.9% | Source |
| FY2024 | $3.2B | $306M | 9.5% | +20.7% | Source |
| FY2023 | $2.7B | $524M | 19.6% | -0.9% | Source |
| FY2022 | $2.7B | $549M | 20.3% | +33.3% | Source |
| FY2021 | $2B | $388M | 19.1% | — | Source |
Where the revenue comes from
Arm Holdings
- Royalty Revenue53%
Royalties were $2,613 million of Arm's $4,920 million fiscal 2026 revenue, up 21% year over year. Arm collects a per-unit royalty on substantially every chip its partners ship that uses its designs, so the line reflects designs licensed in earlier years; rates generally step down as unit volumes rise, subject to an agreed minimum per chip. Mobile application processors supplied about 43% of fiscal 2026 royalty revenue, while data center royalties more than doubled year over year. Arm attributes part of the growth to a mix shift toward Armv9 designs, which carry higher rates per chip.
- License and Other Revenue47%
License and other revenue was $2,307 million in fiscal 2026, up 25%, and covers licensing, software development tools, design services, training and support. Customers choose among Compute Subsystems, Arm Total Access, which bundles the current portfolio for an annual fee, Arm Flexible Access, which gives cheaper access to older designs with a fee due at tape-out, technology licence agreements and architecture licences. The line is lumpy because a small number of high-value agreements can land in any quarter: revenue from related parties alone rose 141% in fiscal 2026. Remaining performance obligations were $2,071 million at March 31, 2026, about 28% of which Arm expects to recognise within twelve months.
TCS
- IT services
Primary revenue source
Application development, maintenance, modernization and managed technology services.
- Consulting and transformation
Strategic growth stream
Business and technology transformation programs for large enterprises.
- Cloud, AI and cybersecurity
Fast-changing growth area
Cloud migration, AI, data, automation, cybersecurity and platform simplification.
- Business process services
Recurring enterprise stream
Technology-enabled operations and business process services.
- Platforms
Differentiated platform stream
Industry platforms such as TCS BaNCS and related software-led offerings.
Business model and strategy
Arm Holdings
How it makes money
Arm licenses intellectual property. It spends heavily on R&D to design power-efficient processor architectures, then licenses the designs to companies such as Apple, Qualcomm and Samsung, which customize them and have them manufactured by a foundry such as TSMC. Arm charges an upfront license fee and an ongoing royalty on each chip shipped.
Growth strategy
With more than 99% of mobile application processors already on its architecture, Arm is pushing into markets where the chip value per unit is higher. Neoverse designs target cloud and AI infrastructure and are the basis of Amazon Graviton, Google Axion, Microsoft Cobalt and Nvidia Grace; Arm says data center royalties more than doubled in fiscal 2026.
Competitive advantage
Arm's moat is the software built around its architecture. iOS, Android and millions of mobile apps are written for the Arm instruction set, so a rival architecture such as Intel's x86 would need developers to rework that software to enter smartphones. Decades of focus on power efficiency, which extends battery life, also give Arm a technical lead in mobile.
TCS
How it makes money
TCS earns revenue through global IT services and consulting, built around eight industry verticals and geographic diversification.
Growth strategy
TCS is growing through AI, cloud modernization, cybersecurity, data, engineering services, platforms, large transformation deals, partnerships and deeper penetration of existing enterprise accounts.
Competitive advantage
TCS' advantage is delivery scale, Tata trust, large-account depth, industry domain expertise, training infrastructure, strong margins and a reputation for mission-critical execution.
Questions about Arm Holdings vs TCS
Which company has higher revenue — Arm Holdings or Tata Consultancy Services Limited?
Arm Holdings reported $4.9B (FY2026), while Tata Consultancy Services Limited reported ~$31B (FY2026). By last reported revenue, Tata Consultancy Services Limited is the larger business, with Arm Holdings reporting a smaller revenue base.
What is the market cap of Arm Holdings vs Tata Consultancy Services Limited?
Arm Holdings's market capitalisation stands at $309.4B, while Tata Consultancy Services Limited's is $84.0B. Arm Holdings carries the higher market valuation, reflecting investors' expectations of its future earnings power relative to Tata Consultancy Services Limited.
Which is more financially efficient — Arm Holdings or Tata Consultancy Services Limited?
Arm Holdings generates $513k / employee in revenue per employee, while Tata Consultancy Services Limited generates $52k / employee. Arm Holdings shows higher revenue efficiency per headcount, though this reflects business model differences — capital-light software companies routinely outperform labour-intensive manufacturers on this metric.
How do Arm Holdings and Tata Consultancy Services Limited make money?
Arm Holdings and Tata Consultancy Services Limited generate revenue in fundamentally different ways. Arm Holdings: Arm licenses intellectual property. Tata Consultancy Services Limited: TCS earns revenue through global IT services and consulting, built around eight industry verticals and geographic diversification.
Which company is valued higher relative to revenue — Arm Holdings or Tata Consultancy Services Limited?
On a price-to-sales (P/S) basis, Arm Holdings trades at 62.9x P/S and Tata Consultancy Services Limited at 2.7x P/S. Arm Holdings commands a higher revenue multiple, typically indicating that investors expect faster growth or higher future margins compared to Tata Consultancy Services Limited. A higher multiple is not inherently better — it may also signal that the stock is priced for perfection.
Is Arm Holdings bigger than Tata Consultancy Services Limited?
By last reported revenue, Tata Consultancy Services Limited (~$31B (FY2026)) is the larger company compared to Arm Holdings ($4.9B (FY2026)). Revenue scale is one dimension of size — market capitalisation, employee count, and geographic reach are also relevant depending on the context.
Figures come from each company's filings and the sources linked beside them. Amounts reported in another currency are shown in US dollars at an approximate rate and marked with ~. Back to the Arm Holdings vs TCS overview