Shares of British microchip designer Arm Holdings (ARM) are down 8% after the company provided revenue guidance that missed analysts’ targets.
The lacklustre outlook overshadowed the fact that Arm reported fiscal fourth-quarter revenue of $928 million U.S., a 47% increase from a year ago.
The sales growth was driven by Arm’s licensing unit, which grew 60% to $414 million U.S. during the quarter. The company said demand for artificial intelligence (AI) chips is powering its sales growth.
Arm’s royalty revenues grew 37% year-over-year to $514 million U.S. in the quarter due to its recently introduced Armv9-based microchip. The royalty revenue was a record amount.
In terms of profit, Arm earned $0.36 U.S. per share, beating forecasts of $0.31 U.S. a share.
However, despite the strong print, Arm’s guidance left analysts and investors underwhelmed.
For fiscal 2025, Arm said it expects revenue of $3.80 billion U.S. to $4.1 billion U.S. Wall Street analysts were expecting revenue of $3.99 billion U.S. for the full year.
For the current quarter, the company forecast revenue of $875 million U.S. to $925 million U.S. Wall Street had been looking for sales of $857.5 million U.S.
Prior to today’s (May 9) decline, the stock of Arm had risen 75% since its initial public offering (IPO) last autumn and was trading at $106.07 U.S. per share.
