Arm Focuses on AI as Chip Shipments Fall

Arm Holdings has announced impressive financial results for the quarter ending June 30, with adjusted earnings per share reaching 40 cents, surpassing the expected 34 cents. The company reported a revenue of $939 million, exceeding analyst expectations of $902.7 million. Year-over-year, Arm's revenue grew by 39%, while net income rose to $223 million, or 21 cents per share, compared to $105 million, or 10 cents per share, in the same quarter last year. Looking ahead, Arm projects adjusted earnings of 23 to 27 cents per share for the fiscal second quarter, with anticipated revenue between $780 million and $830 million. This forecast suggests a potential stagnation in growth at the midpoint of the range, falling short of analyst expectations of 27 cents per share and $804.1 million in revenue. A significant portion of Arm's revenue came from royalties, totaling $467 million, while license and other revenue surged by 72% to $472 million, exceeding the LSEG consensus of $418.3 million. Notably, Arm has ceased reporting the number of Arm-based chips shipped, with the last reported figure being 7 billion chips in the fiscal fourth quarter, a decline of 10% year-over-year. In a strategic move, Arm added two high-value Arm Total Access licenses during the quarter, increasing the total to 33. Additionally, Microsoft has begun selling Surface PCs utilizing Qualcomm's Arm-based chips, indicating a growing market presence for Arm's technology.