Arm disappoints investors with weak guidance for current quarter

The leading developer of processor architectures, the British company Arm, this week published results for the last quarter and also gave a revenue forecast for the current quarter, which disappointed investors. The $945 million in revenue included was lower than the $950.9 million that analysts had expected on average. At the same time, the forecast for specific earnings per share coincided with the expectations of investors – 34 cents per Arm share.

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The UK holding’s calendar recently concluded the second quarter of fiscal 2025, so the issuer’s full fiscal year outlook covers the next six months. Last fiscal year, Arm customers collectively managed to ship 28.6 billion chips with its architectures to market. At the end of the last quarter, the number of Arm-compatible chips produced over the entire history of the holding exceeded 300 billion units.

Of Arm’s $844 million in revenue last quarter, $330 million came from licensing agreements, with the bulk of the $514 million coming from royalties on each chip sold by customers. At the same time, the Armv9 architecture formed 25% of royalty revenue in the last quarter versus about 10% a year earlier. Operating profit reached $64 or $326 million, depending on the calculation method. Arm’s operating expenses increased 25% year-over-year, largely due to a 21% increase in the number of engineering employees. The company’s net income reached $107 million last quarter. A year ago, the company showed both net losses and operating losses.

Arm’s total revenue in the past quarter increased by 5% year-on-year to $844 million, but revenue from licensing agreements decreased by 15% year-on-year to $330 million. Royalties brought the company 23% more than a year earlier. While many market participants are reducing their headcount, Arm increased it by 16% to 7,709 people. Of these, 6,429 employees are engineers.

In the current quarter, Arm expects to earn from $920 to $970 million and incur operating expenses of $525 million. Arm does not consider it necessary to revise the forecast for the entire 2025 fiscal year, which has barely crossed the equator, and expects revenue for the period from $3.8 to $4 .1 billion with operating expenses at $2.05 billion. The reported annual value of Arm contracts currently exceeds last year’s figures by 13% and reaches $1.253 billion. The modest forecast for revenue after the publication of the quarterly report caused a decline in Arm’s stock price by 5% during additional trading session in the USA. In any case, the company’s stock price has increased by almost 93% since the beginning of the year.