“Major tech company surpasses revenue predictions”
Written by Max A. CherneySAN FRANCISCO (Reuters) – Leading chip technology provider Arm Holdings released its fiscal fourth-quarter forecast on Wednesday, exceeding expectations from Wall Street analysts as it anticipates a consistent demand for customized silicon. Arm’s shares experienced a decline of around 6.5% in after-hours trading subsequent to the release of this report.
For the ongoing fiscal fourth quarter, Arm projected revenue to fall within a range of $1.18 billion to $1.28 billion, with a midpoint of $1.23 billion, surpassing the average analyst estimate of $1.22 billion according to LSEG data. In the third quarter, Arm recorded a revenue increase of 19% to $983 million, surpassing analyst projections of $946.7 million.
The UK-based chip designer reported third-quarter earnings of 39 cents per share, adjusted for stock-based compensation and other factors, exceeding analysts’ expectations of 34 cents a share. Arm’s revenue is derived from licensing fees for its semiconductor designs and royalties collected for each chip sold utilizing its technology.
For the full year, Arm revised its revenue guidance to a range of $3.94 billion to $4.04 billion from the previous $3.8 billion to $4.1 billion. Additionally, the company refined its adjusted earnings per share guidance for the full year. CEO Rene Haas attributed the narrowed full-year guidance to the proximity of the end of the fiscal year, explaining, “You kind of know where you’re going to land the plane as you’re getting that close.”
Arm’s latest Armv9 technology features higher royalty rates compared to prior versions and is integrated into the chips powering the latest generation of Apple’s iPhones. Arm’s designs are utilized in nearly all smartphones globally, and the company has been striving to expand its presence in data centers and other sectors. Chips incorporating Arm technology generate approximately $200 billion in annual revenue for the various chipmakers utilizing them, as per research from TD Cowen.
Recent initiatives by Arm to redefine its position in the chip market include raising prices and potentially challenging its primary customers, as reported by Reuters last month. In December, Arm’s attempt to secure higher royalty rates from Qualcomm in a Delaware court was unsuccessful after a week-long trial.
Last month, the administration of President Donald Trump announced a $500-billion AI infrastructure project named Stargate, featuring data centers and associated technologies. Notable backers of this venture include SoftBank, the majority owner of Arm, Oracle, and Arm itself.
(Max A. Cherney in San Francisco and Juby Babu in Mexico City; Editing by Rod Nickel)
