Arm Holdings PLC (NASDAQ:ARM) shares tumbled more than 12% as its second quarter profit outlook disappointed, drawing focus from in-line Q1 earnings.
For Q2, the processor designer projected earnings per share (EPS) between $0.29 and $0.37, at the midpoint below analyst expectations of $0.35.
It also projected revenue in the range of $1.01 billion to $1.11 billion, at the midpoint aligning with Street estimates of $1.06 billion.
For the fiscal first quarter of 2026, which ended in June, EPS of $0.35 was down 13% year-over-year, which matched analyst estimates.
Revenue of $1.05 billion, up 12% year-over-year, was slightly above estimates of $1.04 billion or 11% growth.
Remaining performance obligations (RPO), a measure of future revenue, was $2.23 billion, flat from the previous quarter.
“Arm is powering AI workloads everywhere with unmatched performance and energy efficiency,” Arm CEO Rene Haas said in a statement.
“Our Q1 fiscal 2026 results exceeded $1 billion in revenue for the second straight quarter as royalties grew across all target end markets, demonstrating the strength of Arm as the AI platform of choice – from the cloud to the smallest edge devices.”
Arm’s US-listed shares fell 12.2% to $143 late morning on Thursday.