Chip design company Arm Holdings Ltd. recently announced its financial results, and despite exceeding expectations across all business segments, the company's stock price fell during extended trading. According to the latest earnings report, Arm's licensing revenue in the second fiscal quarter reached $514 million, a 23% increase from the same period last year.
This is mainly due to the recovery of the smartphone market and the continued adoption of the Armv9 architecture, which now accounts for a quarter of the total revenue from this business. Analysts had previously expected this segment's revenue to be $502 million.
However, Arm saw a 15% decline in licensing and other revenues, totaling $330 million, while analysts from FactSet predicted this segment's revenue to be $307 million. Analysts pointed out that Arm's licensing business typically affects its patent licensing revenue, meaning that current licensing agreements usually convert into future patent licensing revenue. Arm explained the reasons for the decline in revenue, stating that it was mainly due to the normal fluctuations in timing and scale of several high-value licensing agreements, as well as a decrease in contributions from pending orders.
Overall, Arm's total revenue reached $844 million, exceeding the market consensus of $810 million. Despite the impressive financial performance, Arm's stock price fell by 5% in after-hours trading on Wednesday. As of Wednesday's close, Arm's stock price has doubled so far this year.
In the shareholder letter, Arm stated, "The emergence of new artificial intelligence hardware and small language models is unlocking edge AI applications in smartphones, personal computers, consumer electronics, automobiles, and industrial equipment." The company emphasized that its wide application across various end markets allows it to seize these emerging opportunities. Arm also noted that it is meeting the growing demand for energy-efficient computing in data centers.
Additionally, Arm's net income for the quarter was $107 million, or 10 cents per share, compared to a loss of $110 million, or 11 cents per share, in the same period last year. Adjusted earnings per share were 30 cents, higher than the analysts' expectation of 26 cents. Looking ahead, Arm expects its revenue for the third fiscal quarter to be between $920 million and $970 million, with adjusted earnings per share between 32 cents and 36 cents, compared to analysts' expectations of $939 million and 33 cents, respectively.
Key Points:
🌟 Arm's patent licensing revenue in the second fiscal quarter reached $514 million, exceeding expectations.
📉 Despite strong financial performance, Arm's stock price fell by 5% in after-hours trading.
🔮 Arm expects revenue for the next quarter to be between $920 million and $970 million, with adjusted earnings per share between 32 and 36 cents.