Arm shares drop on weak forecast
Arm beat on earnings and revenue but issued a disappointing forecast in its quarterly report on Wednesday.
Arm shares dropped more than 8% in extended trading on Wednesday after the chip-design company issued weaker-than-expected guidance for the current quarter.
Here's how the company did in the fiscal fourth quarter compared with LSEG consensus:
Earnings per share: 55 cents, adjusted vs. 52 cents expected
Revenue: $1.24 billion vs. $1.23 billion
While Arm topped estimates for the quarter ended March 31, Wall Street is looking ahead to the company's forecast for the first quarter.
Arm said revenue will be between $1 billion and $1.1 billion. The middle of the range is below the $1.1 billion average analysts estimated, according to LSEG. Earnings per share will be between 30 cents and 38 cents, while analysts were expecting 42 cents.
SoftBank controls about 90% of Arm, and took the company public in 2023. It now has a market cap of over $130 billion as of Wednesday's close.
Arm designs the fundamental architecture upon which many chips are built, and sells licenses for its designs to companies such as Qualcomm and Nvidia, charging royalty fees on each sale they make. The company claims 99% of premium smartphones are powered by Arm technology.