That beat analysts' expectations of 115 million pounds, according to a company-provided consensus.
Shares traded over 6 percent higher during the session, before closing around 3.8 percent up.
"In the second half of 2015 we expect to benefit from the increasing deployment of ARMv8-A technology, our latest generation of processors, in the newest smartphones and tablets," Chief Financial Officer Tim Score said on Tuesday.
"These chips typically have a slightly higher royalty rate than the previous generation."
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Royalty revenue, collected a quarter in arrears from a record 3.8 billion chips shipped, rose 26 percent on an underlying basis, ARM said.
Analyst Julian Yates at Investec, who has a "hold" rating on ARM, said it was a good set of numbers, helped by "stellar" royalty growth.
The strong demand for its newest processors - shipped by nine of its chip-making partners in the quarter, representing around 3.5 percent of ARM-based chips - allayed concerns about a slowdown in the top-end of the smartphone market.