Arm beats earnings expectations with strong revenue growth, but issues conservative full-year guidance

From CNBC: 2024-07-31 17:43:02

Arm shares dropped over 13% in extended trading after issuing conservative earnings guidance. The fiscal first quarter saw earnings per share of 40 cents adjusted, beating the 34 cents consensus, with revenue hitting $939 million, exceeding the $902.7 million expected. Net income was $223 million, up 112% YoY.

Despite the strong performance, Arm maintained full-year guidance below analyst expectations. The company expects adjusted earnings per share of $1.45 to $1.65 on revenue of $3.8 billion to $4.1 billion. The revenue growth rate for royalties is forecasted to be in the low twenties for the full year.

For the fiscal second quarter, Arm predicts adjusted earnings of 23 to 27 cents per share on $780 million to $830 million in revenue, with royalties contributing $467 million, up 17% YoY. License and other revenue soared 72% to $472 million.

Arm plans to shift focus toward higher-value, lower-volume markets like data center servers and AI accelerators. The company will no longer disclose the number of shipped chips due to changes in the performance indicators for their business.

Investments in Arm Compute Subsystems aim to reduce development costs and accelerate time to market. The company added two high-value Arm Total Access licenses, bringing the total to 33, as Microsoft began selling Surface PCs with Qualcomm’s Arm-based chips.

Despite the stock dropping post-earnings, Arm experienced a 93% year-to-date increase. The company is optimistic about growth in high-value markets and developments in compute subsystems to bolster royalty revenue.



Read more at CNBC:: Arm Q1 earnings report 2025