Arm Holdings Ltd. released its second-quarter financial report, with data showing that its patent licensing revenue exceeded expectations, reaching $514 million, a year-on-year increase of 23%. This growth is mainly attributed to the recovery of the smartphone market and the widespread adoption of the Armv9 architecture. However, despite overall revenue exceeding expectations to reach $844 million, Arm's share price fell 5% in after-hours trading, attracting market attention. This article will analyze the various data of Arm's financial report in detail and explore the possible reasons for the decline in stock prices.
Chip design company Arm Holdings Ltd. recently released its financial report, and although its various businesses exceeded expectations, the company's stock price fell in subsequent extended transactions. According to the latest financial report, Arm's fiscal second quarter patent authorization revenue reached US$514 million, an increase of 23% over the same period last year.
This is largely 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' total revenue. Analysts had previously expected revenue to be $502 million in that portion.
However, Arm has seen a 15% decline in licensing and other revenues, totaling $330 million, while FactSet analysts predict revenue of $307 million. Analysts point out that Arm's licensing business often affects its patent licensing revenue, meaning that current licensing agreements will usually translate into patent licensing revenue in the future. Arm explained the reasons for the decline in revenue, saying it was mainly due to normal fluctuations in the time and size of several high-value license agreements and the reduction in contribution to pending orders.
Overall, Arm's total revenue reached US$844 million, exceeding the market's consensus estimate of US$810 million. Despite the impressive financial performance, Arm's share price fell 5% in after-hours trading on Wednesday. As of Wednesday's close, Arm's share price has doubled within the year.
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 in various terminals. The widespread application of the market allows it to grasp 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, higher than analysts' expectations of 26 cents. Looking ahead, Arm's fiscal third-quarter revenue forecast was $920 million to $970 million, with adjusted earnings per share between 32 cents and 36 cents, with analysts' expectations of $939 million and $33 respectively. point.
Key points:
Arm's second-quarter patent authorization revenue reached US$514 million, exceeding expectations.
Despite the good financial performance, Arm's share price fell 5% in after-hours trading.
Arm expects revenue to be between $920 million and $970 million in the next quarter, with adjusted earnings per share of 32 to 36 cents.
All in all, Arm's second-quarter financial report showed strong growth in the company's core business, but the decline in stock prices reflected market concerns about future growth expectations and volatility in licensed business. Whether Arm can continue to maintain growth and meet market challenges is worthy of further attention.