Arm Holdings PLC (NASDAQ:ARM) shares extended gains after Wednesday’s closing bell following a stronger-than-expected March quarter earnings report and an upbeat outlook for the current period.
For the first quarter of fiscal 2027, the company guided revenue to $1.26 billion at the midpoint and adjusted earnings per share of $0.40, compared with analyst estimates of $1.25 billion and $0.36, respectively.
For the quarter ended March 31, Arm reported adjusted earnings per share of $0.60, ahead of estimates of $0.58.
Revenue came in at $1.49 billion above expectations of $1.47 billion. The company described the result as its highest-ever quarterly revenue and noted it came in above the midpoint of its prior guidance.
Segment performance was led by licensing revenue, which rose 29% year-over-year to $819 million, supported by demand for the Arm platform.
Royalty revenue increased 11% to $671 million, driven by growth across smartphones, edge AI, physical AI, and cloud AI. The company said data center royalty revenue more than doubled compared with the same period a year earlier.
Remaining performance obligations (RPO), a measure of unearned revenue, declined 7% year over year to $2.07 billion. Arm attributed the decrease to improved timing of revenue conversion.
“Arm delivered a third consecutive year of more than 20% revenue growth, driven by strong demand for the Arm compute platform,” Arm CEO Rene Haas said.
“As AI becomes more agentic, demand for Arm AGI CPU, Arm’s first data center chip, has exceeded expectations, reinforcing Arm as the compute platform for the AI era.”
Shares of Arm surged 10% afterhours following the report, building on an almost 14% gain during Wednesday’s session.