Arm Shares Drop Despite Record-Breaking Revenue as Future Guidance Falls Short

Arm Holdings (ARM) experienced a decline in its stock price following the release of its fiscal first-quarter earnings forecast, which fell short of market expectations.

The semiconductor designer and partner to Nvidia (NVDA) projected adjusted earnings per share between 30 and 38 cents for the fiscal first quarter, below the 41 cents anticipated by analysts according to Visible Alpha. Additionally, Arm's revenue guidance ranged from $1 billion to $1.1 billion, slightly under the consensus estimate at the midpoint.

Following the announcement, Arm's shares dropped approximately 9% during after-hours trading. Year-to-date, the stock has seen less than a 1% increase as of Wednesday's market close.

Despite the cautious outlook, Arm reported record fiscal fourth-quarter revenue of $1.24 billion, marking a 34% increase year-over-year and surpassing analyst expectations. Adjusted net income reached $584 million, or 55 cents per share, compared to $376 million, or 36 cents per share, in the prior year, outperforming Wall Street forecasts.

Royalty revenues climbed 18% to an all-time high of $607 million, while license and other revenues surged 53% to $634 million.

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