ARM Holdings Earnings: Here’s Why Investors Don’t Like These Results

ARM Holdings plc (NASDAQ:ARMH) delivered a profit and missed Wall Street’s expectations, AND came up short on beating the revenue expectation. The revenue miss is a negative sign to shareholders seeking high growth out of the company. Shares are down 1.17%.

ARM Holdings plc Earnings Cheat Sheet

Results: Adjusted Earnings Per Share decreased 70.59% to $0.05 in the quarter versus EPS of $0.17 in the year-earlier quarter.

Revenue: Decreased 19.56% to $171.2 million from the year-earlier quarter.

Actual vs. Wall St. Expectations: ARM Holdings plc reported adjusted EPS income of $0.05 per share. By that measure, the company missed the mean analyst estimate of $0.22. It missed the average revenue estimate of $256.41 million.

Quoting Management: Simon Segars, President and Chief Executive Officer, said during the conference call: “Q2 was a very strong quarter for ARM, driven by very strong licensing result. We licensed 25 processor licenses, 70 Mali licenses and this is really driven by leaders in the semiconductor industry, connecting to ARM into the long range roadmaps. Royalties also grew strongly, 24% year-on-year growth significantly outperforming the industry which only grew by 2% in the same time period. What that leads to is total revenues of $264 million and that enables us to continue investing in our roadmaps in hiring people to drive our R&D, also at the same time delivering profits and cash and being able to increase our dividend return to our shareholders. So we are very pleased with the way Q2 has developed.”

Key Stats (on next page)…

Revenue decreased 33.85% from $258.79 million in the previous quarter. EPS decreased 79.17% from $0.24 in the previous quarter.

Looking Forward: Analysts have a more positive outlook for the company’s next-quarter performance. Over the past three months, the average estimate for next quarter’s earnings has risen from a profit of $0.23 to a profit $0.24. For the current year, the average estimate has moved up from a profit of $0.90 to a profit of $0.96 over the last ninety days.

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(Company fundamentals provided by Xignite Financials. Email any earnings discrepancies to earnings [at] wallstcheatsheet.com)

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