Arm Stock Plunges Despite Revenue, Earnings Beat as Guidance Misses Expectations

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Key Takeaways

  • Arm reported fiscal fourth-quarter net and gross Wednesday that hit analysts' estimates.
  • The spot designer said record-high royalty gross helped thrust a 47% year-over-year jump successful its wide revenue.
  • However nan company's shares tumbled successful extended trading Wednesday arsenic its guidance for fiscal 2025 missed analysts' expectations.

Arm Holdings (ARM) shares tumbled complete 6% successful extended trading Wednesday aft nan British semiconductor spot designer's better-than-expected results for nan fiscal 4th fourth were overshadowed by its anemic guidance for fiscal 2025.

The company's gross for nan 4th fourth of fiscal 2024 was $928 million, a 47% year-over-year summation and supra analysts' projections. Net income came successful astatine $224 cardinal aliases 21 cents per share, up from $3 cardinal aliases 0 cents per stock successful nan year-ago quarter, and besides 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 institution indicated record-high royalty gross drove its gross beat, accounting for $514 cardinal of full revenue. Arm highlighted that "chips based connected Armv9 exertion now lend astir 20% of royalty revenue, up from astir 15% past quarter."

"From unreality to edge, each AI package models, from GPT to Llama, trust and tally connected nan Arm compute platform," Arm CEO Rene Haas said, adding that "as these models go larger and smarter, their requirements for much compute pinch greater powerfulness ratio tin only beryllium realized done Arm."

However, contempt what nan CEO described arsenic "strong tailwinds heading into FYE25 arsenic AI is driving accrued request for Arm-based technology," nan company's guidance for fiscal 2025 missed analysts' expectations.

The institution said it anticipates its full-year gross for fiscal 2025 to beryllium betwixt $3.8 cardinal and $4.1 billion, up from $3.2 cardinal successful fiscal 2024, but short of nan $4.03 cardinal analysts expected, estimates compiled by Visible Alpha indicated.

Arm shares were down astir 7% astatine $99 successful extended trading astir 5:30 p.m. ET Wednesday pursuing nan merchandise of nan company's net report.

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