Arm Holdings plc CEO Rene Haas speaks during the Computex conference in Taipei, Taiwan, Tuesday, June 4, 2024.
Annabel Chi | Bloomberg | Getty Images
arm Shares fell more than 13% in after-hours trading Wednesday after the chip architecture maker issued modest profit guidance for the current quarter and full fiscal year.
Here’s a look at the company’s fiscal first-quarter performance versus the London Stock Exchange Group consensus:
- Earnings per share: Adjusted 40 cents, expected 34 cents
- income: $939 million vs. $902.7 million expected
According to a shareholder letter, Arm’s revenue increased 39% year-on-year in the quarter ended June 30. Net profit reached $223 million, or 21 cents a share, up from $105 million, or 10 cents a share, a year earlier.
But Arm maintained its forecast for full-year adjusted earnings per share of $1.45 to $1.65, with revenue of $3.8 billion to $4.1 billion. Analysts polled by London Stock Exchange Group (LSEG) expected adjusted earnings of $1.58 per share on revenue of $4.02 billion.
Arm Finance Chief Jason Child said on a conference call with analysts that the middle of the revenue guidance range factors in royalty growth in the mid-twenties, down from the mid-twenties predicted in April.
Arm expects second-quarter adjusted earnings per share of 23 to 27 cents on revenue of $780 million to $830 million. This means there is no growth in the middle of the range. Analysts polled by London Stock Exchange Group (LSEG) expected earnings of 27 cents per share on revenue of $804.1 million.
Royalty revenue (a percentage of average selling price or a fixed amount per wafer shipped) totaled $467 million. That figure grew 17%, but was lower than the $486.6 million consensus among analysts polled by StreetAccount.
Licensing and other revenue reached US$472 million, an increase of 72%, higher than LSEG’s forecast of US$418.3 million.
The company said it will no longer report the number of Arms-based chips it has shipped as of this quarter.
Child and Arm CEO Rene said: “We previously considered customer-reported number of chips shipped as a key performance indicator because it represented the impact of our products on companies that use the chips in their products, such as our customers’ customers. Acceptance.
“As we shift our focus to high-value, low-volume markets such as data center servers, artificial intelligence accelerators and smartphone application processors, reported chip volumes shipped are less representative of our performance because of royalty payments Revenue growth is concentrated on a smaller number of wafers.
In the fourth fiscal quarter, Arm chip shipments were 7 billion, down 10% from the same period last year. Previously, management blamed this trend on correct inventory of industrial IoT chips, which are available in large quantities but of relatively low value.
The company is currently investing in Arm computing subsystems, which will lower development costs and speed time to market, Haas and Child wrote. The technology could also boost royalties per wafer, they said.
Arm added two high-value Arm Total Access licenses during the quarter, bringing the total to 33.
During this season, Microsoft Started selling Surface PC Qualcomm Arm-based chips.
Ahead of Arm’s results, its shares were up 93% year to date, well ahead of the S&P 500, which has risen 16% during the same period.
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watch: Arm CEO Rene Haas discusses the impact of artificial intelligence and smartphone demand
