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Arm Holdings beat quarterly profit and revenue expectations but its forecast for the current quarter merely matched them, and the shares slipped after hours.
The British chip designer earned an adjusted 52 cents a share on revenue of $1.44 billion in its fiscal second quarter, up 27% from a year earlier and ahead of the 47 cents and $1.38 billion analysts had projected. On a GAAP basis, earnings fell to 12 cents a share from 22 cents.
Shares fell nearly 4% after hours, Investing.com reported in a 4:38 p.m. ET update.
The guide was the letdown. For the current quarter Arm forecast adjusted earnings of 52 to 60 cents a share on revenue of $1.49 billion to $1.59 billion, essentially in line with the 55 cents and $1.53 billion analysts expected. Investors who had priced in a blowout sold the news.
The engine is licensing. License and other revenue jumped 50% to $773 million while royalties rose 8% to $670 million, the company said in its shareholder letter. Royalties from data-center chips doubled, while smartphone royalties grew more slowly as high memory prices squeeze phone makers. Arm says hyperscalers, the giant cloud operators, now account for more than half its royalty base, a company claim that underscores its push beyond phones.
“AI is driving unprecedented demand for compute across the cloud, devices and autonomous systems, with Arm being the compute platform of choice,” CEO Rene Haas and finance chief Jason Child wrote, calling demand for its new Arm AGI data-center chip “extremely strong.”
The report lands in a rough patch for chip stocks. The Philadelphia Semiconductor Index slumped 15.4% in October and Arm’s U.S.-listed shares tumbled nearly 29% last month as investors question whether the AI spending boom will pay off. Arm’s designs sit inside nearly every smartphone on earth, and it collects a small royalty on each chip sold, so its results are a window into both the phone market and the AI buildout.
JBizNews Desk | Cambridge, England
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