The editor of Downcodes will explain to you the latest financial report of Arm Holdings Ltd.! Although Arm's second-quarter revenue exceeded expectations, reaching $844 million, patent licensing revenue increased 23% year-on-year to $514 million, and it achieved profitability, the stock price fell 5% in after-hours trading. This has attracted market attention. What exactly caused this contrast? Let’s deeply analyze Arm’s financial report data and explore the factors hidden behind it.
Chip design company Arm Holdings Ltd. recently announced its financial report. Although its business exceeded expectations, the company's stock price fell in the subsequent extended trading. According to the latest financial report, Arm’s patent licensing revenue reached US$514 million in the second quarter of the fiscal year, an increase of 23% over the same period last year.
This is mainly due to the recovery of the smartphone market and the continued adoption of the Armv9 architecture, which now accounts for a quarter of the business's total revenue. Analysts had expected revenue of $502 million.
However, Arm saw a 15% decline in licensing and other revenue, totaling $330 million, while FactSet analysts forecast revenue of $307 million. Analysts pointed out that Arm's licensing business usually affects its patent licensing revenue, meaning that current licensing agreements will usually be converted into patent licensing revenue in the future. Arm explained the revenue decline, saying it was primarily due to normal fluctuations in the timing and size of multiple high-value licensing agreements, as well as reduced contributions from backlog orders.
Overall, Arm’s total revenue reached US$844 million, exceeding the market consensus of US$810 million. Despite the stellar earnings report, Arm's shares fell 5% in after-hours trading on Wednesday. Arm's shares had doubled for the year as of Wednesday's close.
In the shareholder letter, Arm said, "The emergence of new artificial intelligence hardware and small language models is unlocking edge AI application scenarios in smartphones, personal computers, consumer electronics, automobiles and industrial equipment." The company emphasized that Arm is used in various terminals The market’s broad reach enables it to capitalize on these emerging opportunities. Arm also noted that it is meeting the growing demand for energy-efficient computing in data centers.
In addition, Arm's net income for the quarter was $107 million, or 10 cents per share, compared with a loss of $110 million, or 11 cents per share, in the same period last year. Adjusted earnings per share were 30 cents, above analysts' expectations of 26 cents. Looking ahead, Arm expects revenue of $920 million to $970 million for its fiscal third quarter and adjusted earnings per share of between 32 cents and 36 cents. Analysts expected $939 million and $33 cents, respectively. point.
All in all, Arm's financial results showed strong growth momentum for the company, but the stock price decline reflected market concerns about future growth expectations and the volatility of the licensing business. The editor of Downcodes will continue to pay attention to the development of Arm and bring you more exciting reports.