:max_bytes(150000):strip_icc()/GettyImages-1650938364-a2d62db69b3d46db92ce75d7c672466b.jpg "Arm Stock Plunges Despite Revenue, Earnings Beat as Guidance Misses Expectations")
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Key Takeaways
- Arm reported fiscal fourth-quarter earnings and revenue Wednesday that beat analysts’ estimates.
- The chip designer said record-high royalty revenue helped drive a 47% year-over-year jump in its overall revenue.
- However the company’s shares tumbled in extended trading Wednesday as its guidance for fiscal 2025 missed analysts’ expectations.
Arm Holdings (ARM) shares tumbled over 6% in extended trading Wednesday after the British semiconductor chip designer’s better-than-expected results for the fiscal fourth quarter were overshadowed by guidance for fiscal 2025 that missed estimates.
The company’s revenue for the fourth quarter of fiscal 2024 was $928 million, a 47% year-over-year increase and above analysts’ projections. Net income came in at $224 million or 21 cents per share, up from $3 million or 0 cents per share in the year-ago quarter, and also blew past analysts’ expectations, according to estimates compiled by Visible Alpha.
| Q4 FY 2024 | Analyst Estimates for Q4 FY 2024 | Q4 FY 2023 | |
| Revenue | $928 million | $880.90 million | $633 million |
| Diluted Earnings Per Share | 21 cents | 14 cents | 0 cents |
| Net Income | $224 million | $140.6 million | $3 million |
The company indicated record-high royalty revenue drove its revenue beat, accounting for $514 million of total revenue. Arm highlighted that “chips based on Armv9 technology now contribute around 20% of royalty revenue, up from around 15% last quarter.”
“From cloud to edge, all AI software models, from GPT to Llama, rely and run on the Arm compute platform,” Arm CEO Rene Haas said, adding that “as these models become larger and smarter, their requirements for more compute with greater power efficiency can only be realized through Arm.”
However, despite what the CEO described as “strong tailwinds heading into FYE25 as AI is driving increased demand for Arm-based technology,” the company’s guidance for fiscal 2025 missed analysts’ expectations.
The company said it anticipates its full-year revenue for fiscal 2025 to be between $3.8 billion and $4.1 billion, up from $3.2 billion in fiscal 2024, but short of the $4.03 billion analysts expected, estimates compiled by Visible Alpha indicated.
Arm shares were down nearly 7% at $99 in extended trading around 5:30 p.m. ET Wednesday following the release of the company’s earnings report.