Arm Holdings Stock Falls, Weighed Down by Earnings Guidance

Arm Holdings (ARM) shares gave back Wednesday’s gains in after-hours trading, dropping even as the chip-design company reported fiscal first-quarter earnings that were higher than expected.

The shares were recently down more than 12% after gaining more than 8% in the regular session. The shares have risen for much of 2024, climbing more than 90% this year.

The chip-design company projected adjusted earnings per share between 23 cents and 27 cents for the current quarter, leaving unchanged its full-year revenue and adjusted EPS guidance. The quarterly outlook was below some reported analyst consensus estimates.

In its fiscal first quarter ended June 30, Arm posted record revenue of $939 million, up 39% year-over-year and above the analyst consensus of $912 million, per Visible Alpha. Diluted earnings per share were 21 cents, compared to 10 cents in the year-ago quarter and expectations of 16 cents. 

The growth was driven by licensing and other revenue, which jumped 72% to $472 million. Royalty revenue increased 17% to $67 million, which the company attributed to penetration of its Armv9-based chips.