Arm Q4 earnings: AI tailwinds push revenue up 47%

Arm Holdings PLC (NASDAQ: ARM) slipped about 7.0% in extended hours on Wednesday even though it reported better-than-expected revenue for its fourth financial quarter.

Why is Arm stock down in after-hours?

The price action is interesting because the chip design company issued solid guidance indicating continued demand for artificial intelligence as well. $ARM now forecasts its revenue to fall between $875 million and $925 million in Q1 on up to 36 cents of per-share earnings.

Analysts, in comparison, were at $866 million and 31 cents a share, respectively. Rene Haas – its chief executive said in a letter to shareholders today:

We finished our financial year with strong tailwinds as AI is driving increased demand for Arm-based technology across all end markets.

Note that chips of this Nasdaq-listed firm power almost every smartphone in the world. Apple, Nvidia, Google, and Microsoft are among its notable customers. Arm stock is still up well some 40% versus the start of 2024.

Notable figures in Arm Q4 earnings release

• Earned $224 million versus the year-ago $3.0 million
• Per-share earnings also increased significantly to 21 cents
• Adjusted EPS printed at 36 cents as per the earnings report
• Revenue jumped 47% year-over-year to $928 million
• Consensus was 30 cents a share on $880 million in revenue

Arm Holdings recorded an annualised growth of 37% in its royalty revenue while licensing and other revenues went up a whopping 60% in its fourth quarter. CEO Haas also said on Wednesday:

All AI software models, from GPT to Llama, rely and run on the Arm compute platform. As these models become larger and smarter, their requirements for more compute with greater power efficiency can only be realized through Arm.