Arm Holdings (ARM), the U.K.-based chip designer, exceeded Wall Street’s earnings expectations for its fiscal third quarter but provided guidance for the upcoming quarter that met analyst forecasts. Following the earnings announcement, Arm’s stock saw a drop in after-hours trading.
For the quarter ending December 31, Arm reported adjusted earnings of 39 cents per share, surpassing analysts’ expectations of 34 cents per share. The company also posted revenues of $983 million, exceeding the $949 million forecast. On a year-over-year basis, Arm saw a 34% increase in earnings and a 19% rise in sales.
Looking ahead to the current quarter, Arm projected adjusted earnings of 52 cents per share and sales of $1.23 billion, based on the midpoint of its guidance. This is in line with analyst predictions, which had estimated earnings of 52 cents per share on revenue of $1.22 billion. In the same quarter of the previous year, Arm posted earnings of 36 cents per share on sales of $928 million.
Chief Executive Officer Rene Haas highlighted Arm’s role in driving artificial intelligence (AI) innovation and enhancing user experiences, stating in a shareholder letter, “With our high-performance, energy-efficient, flexible technology, Arm is a key enabler in advancing AI innovation and transforming the user experience, from the edge to the cloud.”
The company’s growth in the December quarter was fueled by the adoption of its v9 architecture, early shipments of Compute Subsystems (CSS), and increased royalties from the Internet of Things (IoT) sector. Additionally, Arm benefitted from custom silicon data center projects initiated by its clients.
Despite the positive earnings results, Arm’s stock fell by more than 5% in after-hours trading, dropping to $163. During the regular trading session on Wednesday, Arm stock closed at $173.26, marking a 6.8% increase.
Arm currently ranks fifth out of 39 companies in Investor’s Business Daily’s (IBD) fabless semiconductor industry group. The company holds an IBD Composite Rating of 96 out of 99.
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