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David Paul Morris / Bloomberg / Getty Images
Key Takeaways
- Arm reports first-quarter earnings for fiscal 2025 after the closing bell Wednesday.
- The chip designer's revenue and earnings are expected to rise from the year-ago period.
- Analysts called Arm's royalty revenue "the key driver to watch," anticipating year-over-year growth.
- The company could also comment on reports that the chip designer is developing an artificial intelligence chip.
Arm Holdings (ARM) is set to report first-quarter earnings after the bell on Wednesday, with investors likely watching for updates on its royalty revenue and reported artificial intelligence (AI) chip development.
The British chip designer is projected to report revenue of $909.34 million, which would represent about 34% growth from the year-ago period. Arm's net income is expected to come in at $154.13 million or 16 cents per share, up from $105 million or 10 cents per share a year earlier.
| Analyst Estimates for Q1 2025 | Q4 2024 | Q1 2024 | |
| Revenue | $909.34 million | $928 million | $675 million |
| Diluted Earnings Per Share | 16 cents | 21 cents | 10 cents |
| Net Income | $154.13 million | $224 million | $105 million |
Key Metric: Royalty Revenue Growth
Investors will likely be watching for sustained royalty revenue growth as Arm earns a significant portion of its revenue through the royalties on its chip designs.
In the prior quarter, Arm reported earnings and revenue that beat analysts' estimates, driven by record-high royalty revenue of $514 million.
The company is expected to report royalty revenue of $489.9 million for the first quarter, down sequentially but an over 22% jump from the year-ago period, with Rosenblatt analysts calling royalties "the key driver to watch."
Business Spotlight: Reported AI Chip
Arm could also provide investors with insights about an AI chip the company reportedly has in development.
The company could be positioned to gain as big tech companies like Microsoft (MSFT), Meta (META), Alphabet (GOOGL), and Amazon (AMZN) invest in AI, and build out data centers to run AI-related workloads.
Arm shares were down over 5% at $141.44 as of Monday's close following a downgrade from HSBC, though even with Monday's losses, the stock has nearly doubled in value since the start of the year.
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