Arm Holdings PLC (NASDAQ:ARM) shares were more than 6% lower in Thursday’s premarket trade after the semiconductor technology firm reported its first quarterly earnings report since returning to the public market.
Guidance for the third and full year disappointed investors but Arm’s second quarter exceeded market forecasts.
Revenue for Arm’s second quarter amounted to $806 million, ahead of Wall Street analyst consensus of $744.3 million, whilst adjusted earnings of $0.36 per share also beat expectations pitched at $0.26.
The company flagged growth in its licensing business, which doubled year over year to reach revenue of $388 million.
More than 7.1 billion Arm-based chips were shipped during the quarter, the company said, and its technology is being utilized by Google, Meta and Nvidia, among others, to develop AI chips.
Arm gave third-quarter EPS guidance of $0.21 to $0.28 per share on revenue of $720 million to $800, versus the Street’s projection of $0.27 on revenue between $730 million and $805 million.
For its full year, meanwhile, Arm expects $1.00 to $1.10 of earnings on $2.96 billion to $3.08 billion.
“We didn't just have the IPO to celebrate in Q2 FYE24, it was also a great quarter financially, operationally and strategically, demonstrating the strength of our diversified business and AI driving demand for new Arm technology,” Arm said in a statement.
Adding: “Looking forward, we have good visibility into our licensing pipeline for the second half of the fiscal year, although there is uncertainty regarding the exact timing of some deals and the revenue recognition profiles for future agreements are subject to change.
“Industry analysts forecast that the semiconductor industry is starting to recover, which can benefit our royalty revenue, however, the trajectory of the recovery is not clear, and the industry remains vulnerable to changes in the external macroeconomic environment.”
In New York, Arm was down $3.39 or 6.23% changing hands at $51.01 in premarket.
September’s IPO was priced at $51 per share which valued the UK-based, Softbank-backed semiconductor company at $65 billion.