By Max A. Cherney
SAN FRANCISCO (Reuters) – Chip tech provider Arm Holdings said on Wednesday it will no longer meet the top end of its previous full-year guidance, but slightly topped Wall Street’s fourth-quarter expectations.
Arm shares slumped about 5% in extended trading after the report.
For the current fiscal fourth quarter, Arm forecast revenue in a range between $1.18 billion and $1.28 billion, with a midpoint of $1.23 billion, compared with an average analyst estimate of $1.22 billion, according to LSEG data.
Arm’s third-quarter revenue rose 19% to $983 million, compared with analyst estimates of $946.7 million.
The UK chip designer reported third-quarter earnings of 39 cents per share, adjusted for stock-based compensation among other items. Analysts expected earnings of 34 cents a share.
Arm generates revenue from licensing fees for its semiconductor designs and collects a royalty for each chip sold that uses its technology.
For the full year, Arm narrowed its revenue guidance to a range of $3.94 billion to $4.04 billion from $3.8 billion to $4.1 billion. The company also narrowed its adjusted earnings per share guidance for the full year.
CEO Rene Haas said the company’s narrowed full-year guidance was the result of being close to the end of the fiscal year. The prior guidance had not changed for “some time,” he said.
“You kind of know where you’re going to land the plane as you’re getting that close,” Haas said in an interview.
The chip technology provider’s latest Armv9 technology carries higher royalty rates than its prior versions. It is used in the chips that power Apple’s latest generation of iPhones.
The company’s designs power nearly every smartphone in the world, and the company has attempted to make headway in data centers and other markets. Chips with Arm technology generate $200 billion a year of revenue for the many chipmakers that sell them, according to research from TD Cowen.
But in recent years, low-profile Arm has attempted to alter its position in the chip market by raising prices and moving to potentially compete with its biggest customers, Reuters reported last month. In December, Arm failed at one attempt to secure higher royalty rates from Qualcomm in a Delaware court after a week-long trial.
Last month, President Donald Trump’s administration announced a $500-billion AI infrastructure venture called Stargate that includes data centers and related technologies. Backers include Arm-majority owner SoftBank, Oracle and Arm itself, which is a “technology partner.”
(Max A. Cherney in San Francisco and Juby Babu in Mexico City; Editing by Rod Nickel)
