Arm's Q1 Revenue Surpasses Expectations, but Stock Tumbles on Outlook Concerns

Arm revenue beats forecasts, outlook in line, yet shares drop 9%

"We're seeing more investment (in AI) than we saw even 90 days ago," Chief Financial Officer Jason Child said in an interview with Reuters. Arm's first-quarter revenue rose 39% to $939 million, exceeding analyst estimates of $902.7 million. The UK chip designer reported first-quarter earnings of 40 cents per share, adjusted for stock-based compensation, among other things. Analysts expected earnings of 34 cents a share. Arm generates revenue from licensing fees for its semiconductor designs and collects a royalty for each chip sold that uses its technology. Arm's designs power nearly every smartphone in the world, and the company has attempted to make headway in data centers and other markets. Chips with Arm technology generate $200 billion a year of revenue for the many chipmakers that sell them, according to research from TD Cowen. Bets that Arm will benefit from a surge in artificial-intelligence computing have nearly tripled the chip designer's share price since its initial public offering last September, giving it market value of about $140 billion. The shares recently traded at roughly 75 times expected earnings, compared with about 31 times earnings for heavyweight chipmaker Nvidia, according to LSEG data. Though Arm's designs are found adjacent to chips that power AI applications, the company's revenue and profit have not benefited from AI to the same degree as Nvidia's. (Max Cherney in San Francisco; Editing by David Gregorio)

Arm quarterly revenue beats Wall Street forecasts, outlook in line

Arm's first-quarter revenue rose 39% to $939 million, exceeding analyst estimates of $902.7 million. The UK chip designer reported first-quarter earnings of 40 cents per share, adjusted for stock-based compensation, among other things. Analysts expected earnings of 34 cents a share. Arm generates revenue from licensing fees for its semiconductor designs and collects a royalty for each chip sold that uses its technology. Arm's designs power nearly every smartphone in the world, and the company has attempted to make headway in data centers and other markets. Chips with Arm technology generate $200 billion a year of revenue for the many chipmakers that sell them, according to research from TD Cowen. Bets that Arm will benefit from a surge in artificial-intelligence computing have nearly tripled the chip designer's share price since its initial public offering last September, giving it market value of about $140 billion. The shares recently traded at roughly 75 times expected earnings, compared with about 31 times earnings for heavyweight chipmaker Nvidia, according to LSEG data. Though Arm's designs are found adjacent to chips that power AI applications, the company's revenue and profit have not benefited from AI to the same degree as Nvidia's. (Max Cherney in San Francisco; Editing by David Gregorio)

Arm quarterly revenue beats Wall Street forecasts, outlook in line

Chip designer Arm Holdings on Wednesday reported a stronger-than-expected 39% surge in quarterly revenue, and forecast fiscal second-quarter sales broadly in line with Wall Street estimates. For the current fiscal second quarter, Arm forecast revenue in a range between $780 million and $830 million, compared with an average analyst estimate of $804.1 million, according to LSEG data. Arm's first-quarter revenue rose 39% to $939 million, exceeding analyst estimates of $902.7 million. The UK chip designer reported first-quarter earnings of 40 cents per share, adjusted for stock-based compensation, among other things. Analysts expected earnings of 34 cents a share. Arm generates revenue from licensing fees for its semiconductor designs and collects a royalty for each chip sold that uses its technology. Arm's designs power nearly every smartphone in the world, and the company has attempted to make headway in data centers and other markets. Chips with Arm technology generate $200 billion a year of revenue for the many chipmakers that sell them, according to research from TD Cowen. Bets that Arm will benefit from a surge in artificial-intelligence computing have nearly tripled the chip designer's share price since its initial public offering last September, giving it market value of about $140 billion. The shares recently traded at roughly 75 times expected earnings, compared with about 31 times earnings for heavyweight chipmaker Nvidia, according to LSEG data. Though Arm's designs are found adjacent to chips that power AI applications, the company's revenue and profit have not benefited from AI to the same degree as Nvidia's. (Max Cherney in San Francisco; Editing by David Gregorio)

Arm outlook disappoints Wall Street, shares dive 13%

It can take years - roughly four years for AI server chips - to realize the windfall from designs it licensed this year, Arm CEO Rene Haas said on a conference call after the report. "The way to think about all this increased licensing activity is a very good predictor of future royalty growth," Haas said. Arm benefits now from a design included alongside some versions of Nvidia's H100 AI chips. But it will reap even more cash from Nvidia's forthcoming family of Blackwell chips, of which it has begun to send samples to customers. Nvidia surged nearly 13% on Wednesday, on expectations its top-of-the-line processors will remain in tight demand after Microsoft reported a massive increase in AI expenditures. Shares of its smaller rival Advanced Micro Devices also rose after the company ratcheted up its 2024 forecast for its AI chip sales. These gains lifted the PHLX chip index that surged 7% in its biggest daily gain since 2022. As well, chipmaker Qualcomm forecast fourth-quarter revenue above Wall Street estimates, betting on the need for more chips in smartphones that are getting AI upgrades, sending its shares up 5% after hours. For the current fiscal second quarter, Arm forecast revenue in a range between $780 million and $830 million, compared with an average analyst estimate of $804.1 million, according to LSEG data. The company left its full-year guidance unchanged. "Despite Arm Holdings' impressive earnings beat, their cautious (lukewarm) full year forecast has dampened spirits," said Michael Schulman, chief investment officer of Running Point Capital. "Arm is still benefiting from the artificial intelligence spending explosion, but weakness in other markets, possibly from inventory gluts has caused management to temper lofty expectations." Still, it posted a 39% surge in first-quarter revenue, to $939 million, exceeding analyst estimates of $902.7 million. The boost in revenue was largely because of a "handful" of significant licensing deals the company signed, though its royalty revenue suffered from several weak end markets, Chief Financial Officer Jason Child said in an interview with Reuters. Licensing deals were boosted by the tremendous appetite for the silicon necessary to power AI applications. "We're seeing more investment (in AI) than we saw even 90 days ago," Child said. Since its IPO last year, Arm has begun to sell designs that are nearly pre-built, so customers can produce chips more quickly. Those deals are lucrative at the initiation stage but Arm stands to make more in royalties when the customers ships its products, which could take months or years. Child said Arm has seven such customers and will see some royalties from them in the fourth quarter this year, but "next year it's gonna become meaningful." The company has also seen a boost in revenue from customers transitioning to its latest design architecture Arm v9, which now accounts for 50% of smartphone revenue, Child said. Revenue from China dipped to roughly 13% of total sales, when it often accounts for 20% or more a quarter. Royalties in China grew 114% but its licensing business shrank 68% during the quarter. The significant jump in China royalties means fewer handsets there are using chips made by companies such as Qualcomm and Apple. Arm's designs power nearly every smartphone in the world, and the company has attempted to make headway in data centers and other markets. (Max Cherney in San Francisco; Editing by David Gregorio and Sayantani Ghosh)

Arm Quarterly Revenue Beats Wall Street Forecasts, Outlook in Line

Chip designer Arm Holdings on Wednesday reported a stronger-than-expected 39% surge in quarterly revenue, and forecast fiscal second-quarter sales broadly in line with Wall Street estimates. For the current fiscal second quarter, Arm forecast revenue in a range between $780 million and $830 million, compared with an average analyst estimate of $804.1 million, according to LSEG data. Arm's first-quarter revenue rose 39% to $939 million, exceeding analyst estimates of $902.7 million. The UK chip designer reported first-quarter earnings of 40 cents per share, adjusted for stock-based compensation, among other things. Analysts expected earnings of 34 cents a share. Arm generates revenue from licensing fees for its semiconductor designs and collects a royalty for each chip sold that uses its technology. Arm's designs power nearly every smartphone in the world, and the company has attempted to make headway in data centers and other markets. Chips with Arm technology generate $200 billion a year of revenue for the many chipmakers that sell them, according to research from TD Cowen. Bets that Arm will benefit from a surge in artificial-intelligence computing have nearly tripled the chip designer's share price since its initial public offering last September, giving it market value of about $140 billion. The shares recently traded at roughly 75 times expected earnings, compared with about 31 times earnings for heavyweight chipmaker Nvidia, according to LSEG data. Though Arm's designs are found adjacent to chips that power AI applications, the company's revenue and profit have not benefited from AI to the same degree as Nvidia's. (Max Cherney in San Francisco; Editing by David Gregorio)

Arm stock dives 11% as slow AI gains lead to tepid outlook

It can take years - roughly four years for AI server chips - to realize the windfall from designs it licensed this year, Arm CEO Rene Haas said on a conference call after the report. "The way to think about all this increased licensing activity is a very good predictor of future royalty growth," Haas said. Arm benefits now from a design included alongside some versions of Nvidia's H100 AI chips. But it will reap even more cash from Nvidia's forthcoming family of Blackwell chips, of which it has begun to send samples to customers. Nvidia surged nearly 13% on Wednesday, on expectations its top-of-the-line processors will remain in tight demand after Microsoft reported a massive increase in AI expenditures. AMD shares also rose after the company ratcheted up its 2024 forecast for its AI chip sales. These gains lifted the PHLX chip index 7%, its biggest daily gain since 2022. As well, chipmaker Qualcomm forecast fourth-quarter revenue above Wall Street estimates, betting on the need for more chips in smartphones that are getting AI upgrades. For the current fiscal second quarter, Arm forecast revenue between $780 million and $830 million, compared with an average analyst estimate of $804.1 million, according to LSEG data. "Despite Arm Holdings' impressive earnings beat, their cautious (lukewarm) full year forecast has dampened spirits," said Michael Schulman, chief investment officer of Running Point Capital. "Arm is still benefiting from the artificial intelligence spending explosion, but weakness in other markets, possibly from inventory gluts has caused management to temper lofty expectations." Still, it posted a 39% surge in first-quarter revenue, to $939 million, exceeding analyst estimates of $902.7 million. The boost in revenue was largely because of a "handful" of significant licensing deals the company signed, though its royalty revenue suffered from several weak end markets, Chief Financial Officer Jason Child said in an interview with Reuters. Licensing deals were boosted by the tremendous appetite for the silicon necessary to power AI applications. "We're seeing more investment (in AI) than we saw even 90 days ago," Child said. Since its IPO last year, Arm has begun to sell designs that are nearly pre-built, so customers can produce chips more quickly. Those deals are lucrative at the initiation stage but Arm stands to make more in royalties when the customers ships its products, which could take months or years. Child said Arm has seven such customers and will see some royalties from them in the fourth quarter this year, but "next year it's gonna become meaningful." The company has also seen a boost in revenue from customers transitioning to its latest design architecture Arm v9, which now accounts for 50% of smartphone revenue, Child said. Revenue from China dipped to roughly 13% of total sales, when it often accounts for 20% or more a quarter. Royalties in China grew 114% but its licensing business shrank 68% during the quarter. The significant jump in China royalties means fewer handsets there are using chips made by companies such as Qualcomm and Apple. Arm's designs power nearly every smartphone in the world, and the company has attempted to make headway in data centers and other markets. (Max Cherney in San Francisco; Editing by David Gregorio and Sayantani Ghosh)

Chip designer Arm Holdings reports 39% surge in revenue but shares fall

Even as shares fall about 9%, chief financial officer says firm is seeing 'more investment' in AI than 'even 90 days ago' Chip designer Arm Holdings on Wednesday reported a stronger-than-expected 39% surge in quarterly revenue, and forecast fiscal second-quarter sales broadly in line with Wall Street estimates, yet its shares fell about 9% in extended trading. For the current fiscal second quarter, Arm forecast revenue in a range between $780m and $830m, compared with an average analyst estimate of $804.1m, according to LSEG data. "We're seeing more investment [in artificial intelligence] than we saw even 90 days ago," chief financial officer Jason Child said in an interview with Reuters. Arm's first-quarter revenue rose 39% to $939m, exceeding analyst estimates of $902.7m. The UK chip designer reported first-quarter earnings of 40 cents per share, adjusted for stock-based compensation, among other things. Analysts expected earnings of 34 cents a share. Arm generates revenue from licensing fees for its semiconductor designs and collects a royalty for each chip sold that uses its technology. Arm's designs power nearly every smartphone in the world, and the company has attempted to make headway in data centers and other markets. Chips with Arm technology generate $200bn a year of revenue for the many chipmakers that sell them, according to research from TD Cowen. Bets that Arm will benefit from a surge in AI computing have nearly tripled the chip designer's share price since its initial public offering last September, giving it market value of about $140bn. The shares recently traded at roughly 75 times expected earnings, compared with about 31 times earnings for heavyweight chipmaker Nvidia, according to LSEG data. Though Arm's designs are found adjacent to chips that power AI applications, the company's revenue and profit have not benefited from AI to the same degree as Nvidia's.

Arm Disappoints After Sticking With Tepid Annual Forecast

(Bloomberg) -- Arm Holdings Plc handily beat analysts' estimates with its quarterly results but held off on boosting its annual forecast, giving mixed signals to investors about the chip company's growth prospects. Revenue rose 39% to $939 million in the fiscal first quarter, which ran through June, Arm said in a statement Wednesday. That was well ahead of the $905.4 million analysts had projected. But the company maintained its sales prediction for the full year of roughly $3.95 billion, just shy of the $4 billion average estimate. The shares declined about 4% in extended trading after closing at $144.17 in New York. The stock has gained 92% this year. Arm is still finding its footing as a public company following a highly anticipated stock sale last year. Investors see the Cambridge, England-based company as a key beneficiary of the artificial intelligence spending boom, though it hasn't yet achieved the consistent sales growth of companies like Nvidia Corp. or Broadcom Inc. Arm has a unique role in the chip industry. Its designs and standards are fundamental to semiconductors that run most of the world's smartphones. And Chief Executive Officer Rene Haas is trying to extend that reach into the lucrative market for data center gear, helping Arm tap more of the spending devoted to AI systems. Earnings were 40 cents a share in the first quarter, excluding some items. That compares with average estimate of 34 cents. The company projects sales of $780 million to $830 million for the current quarter -- in line with analysts estimates. The annual forecast ranges from $3.8 billion to $4.1 billion. Weakness in other markets that Arm's technology is sold into is offsetting the strength in data center and high-end smartphones, Haas said in an interview. That led to its decision not to raise its annual targets, he said. Companies such as STMicroelectronics NV and NXP Semiconductors NV have given disappointing projections this earnings season, citing inventory gluts in some markets, including in the industrial and auto markets. Arm has previously said it can post a revenue growth rate of at least 20% in fiscal 2026 and 2027, an attempt to show confidence in the company's long-term prospects. Arm licenses the fundamental set of instructions that software uses to communicate with chips. It also provides so-called design blocks that companies such as Qualcomm Inc. use to build their products. The company has been moving toward providing more complete layouts that can be taken directly to the manufacturing stage. That shift makes it more of a competitor for customers like Qualcomm, as well as helping further its push into the data center. Arm is still 90%-owned by Japan's SoftBank Group Corp. The initial public offering in 2023 raised $4.9 billion, marking the biggest debut on a US exchange that year. Arm said that its licensing business grew 72% from a year earlier to $472 million, helped by multiple "high-value" agreements that demonstrate long-term commitments to use its technology. Royalty revenue was up 17% at $467 million, reflecting a shift to types of chips that carry a higher rate. There was also strong growth in high-end smartphones, it said. Arm licensees pay for access to its blueprints in fixed agreements -- and then pay royalties based on how many and what type of chips they ultimately make, use or sell.

Arm Holdings 1Q Profit, Revenue Increases on AI Demand

Arm Holdings posted higher profit and revenue in its fiscal first quarter as demand for artificial intelligence-enabled devices boosts demand for the company's chips. The semiconductor and software design company on Wednesday reported a profit of $223 million, or 21 cents a share, up from $105 million, or 10 cents a share, in the year-ago quarter. Analysts polled by FactSet expected per-share earnings of 34 cents. Revenue rose 39% to $939 million. Wall Street analysts expected revenue of $905.5 million, according to FactSet. License and other revenue increased 72% to $472 million from the prior year, as the company signed multiple high-value license agreements. Royalty revenue was up 17% to $467 million, driven by the adoption of Arm's chips and strong growth in premium smartphones, the company said. "As the energy needs of AI continue to escalate, so does the demand for the high-performance, power-efficient Arm compute platform," said Chief Executive Rene Haas. For its second fiscal quarter, Arm expects revenue between $780 million and $830 million. Analysts polled by FactSet expect revenue of $801.8 million. The company backed its full-year revenue outlook of between $3.8 billion and $4.1 billion, in line with analysts' views.

Shares of Arm and Qualcomm wobble after hours, despite solid earnings and revenue beats - SiliconANGLE

Shares of Arm and Qualcomm wobble after hours, despite solid earnings and revenue beats Arm Holdings Plc and Qualcomm Inc. made strong gains during the regular trading session today, with their respective share prices up by more than 8%, but both stocks wavered in after-hours trading after the chipmakers posted their latest financial results. Arm's stock took the biggest hit, falling more than 10% after it could only offer light guidance for the current quarter and the full fiscal year. Qualcomm's share price dipped by just over a percentage point, and it may feel more aggrieved, since it posted a solid earnings and revenue and offered a strong outlook for the current quarter. British chip designer Arm did okay in the quarter just gone, posting earnings and revenue that came in above expectations. The company reported a profit before certain costs such as stock compensation of 40 cents per share, while its revenue jumped 39%, to $939 million. Wall Street had been looking for adjusted earnings of just 34 cents per share on lower sales of $902.7 million. Arm's net profit came to $223 million, more than double the $105 million profit it delivered a year earlier. However, there was a caveat to its results, as its royalty revenue came to just $467 million, whereas analysts had been looking for $492 million. On the other hand, Arm's revenue from licensing and other sources came to $472 million, easily beating the consensus estimate of $418 million. What really upset investors, though, was Arm's guidance. The company said it sees fiscal second-quarter earnings of between 23 and 27 cents per share on revenue of $780 million to $830 million. At the middle of the range, that would imply no growth. The midpoint of both forecasts is notably lower than Wall Street's target of 27 cents per share in earnings and $804.1 million in revenue. The company is also maintaining its full-year view of $1.45 to $1.65 per share in earnings and $3.8 billion to $4.1 billion in revenue for fiscal 2025. That may have also disappointed investors, who were hoping Arm might see some benefits from the ongoing enterprise scramble for AI chips. In a conference call with analysts, Arm Chief Executive Rene Haas (pictured) tried to address investor's concerns over the company's AI prospects. He noted that other chipmakers, such as Nvidia Corp. and Advanced Micro Devices Inc. have both seen big boosts in revenue due to demand for AI processors. However, he pointed out that Arm doesn't see the same immediate benefits because it doesn't actually make any AI chips, but simply licenses designs for them. It collects a royalty on each chip that uses its technology, but it can take years - as long as four years for AI server chips - for the company to realize the windfall from new designs licensed by customers, Haas explained. "The way to think about all this increased licensing activity is a very good predictor of future royalty growth," Haas said. The CEO said some of Arm's intellectual property is used in Nvidia's popular H100 graphics processing unit, which is widely used to power AI workloads. It's seeing some benefits from that, and expects to see even more from that company's upcoming Blackwell GPUs, which are expected to go on sale later this year. As of this quarter, Arm said it is no longer reporting the total number of Arm-based chips that were shipped. In a letter to shareholders, Haas explained that this was previously considered a key metric because "it represented the acceptance of our products by companies who use chips in their products (e.g. our customers' customers)". However, the company believes that because it's shifting its focus to higher-value, lower-volume markets such as data center servers, artificial intelligence accelerators and smartphone application processors, the total number of chips shipped is less representative of its performance. That's because "the growth in royalty revenue is concentrated in a smaller number of chips," Haas said. While Arm's stock was heading into a tailspin, Qualcomm's held its ground a bit better, thanks to some solid numbers and a much more optimistic forecast. The smartphone chip supplier reported third quarter earnings before certain costs of $2.33 per share, ahead of the Street's forecast of $2.25 per share. Revenue for the period rose 11% to $9.39 billion, comfortably beating the analyst's target of $9.21 billion. All told, Qualcomm delivered a net income of $2.13 bullion, up from $1.8 billion in the year ago period. What set Qualcomm apart from Arm was its guidance. The company said it's looking for fourth quarter revenue of $9.5 billion to $10.3 billion, with the midpoint of that range coming in ahead of the Street's forecast of $9.7 billion. As for earnings, Qualcomm is targeting between $2.45 and $2.65 per share, higher than the Street's consensus estimate of $2.45 per share. Qualcomm CEO Cristiano Amon (pictured, right) said the company remains excited about the opportunities for AI in smartphone applications. "We don't have any heroic assumptions in our model, but we actually like the direction this is going," he said. "It could create an interesting upside if we have an AI-driven upgrade cycle." Prior to today's report, Qualcomm's stock had risen 37% over the previous 12 months.