Arm’s Revenue Surpasses Investor Expectations: Shares Soar by 40%

The semiconductor firm, Arm, has posted its financial results for the third quarter of its fiscal year 2024 after its debut on the US stock market. The outcomes have surpassed market expectations, triggering a surge in the company’s stock prices.

At its peak, Arm’s stock price skyrocketed by 41% after the quarterly statistics were released, as numerous foreign media have reported. However, at the time this article was prepared, the gain in the after-hours trading session was 19.85%, with the main session closing at a rise of 5.52% to $77.01 per share. Arm’s quarterly sales increased by 14% to a record $824 million, outdoing analysts’ forecasts. Out of this total, royalties accounted for $470 million, marking an 11% year-on-year increase also setting a new record for Arm’s royalty revenue.

Boost in revenue and popularity

Arm’s architecture Armv9 has not only renewed the smartphone market but has also expanded. This platform demands higher royalty rates and more cores per device, which also enhances the amount from licensing revenues as Arm’s processors become more popular in the server and automotive sectors. Direct revenue from Arm’s licensing sales in the previous quarter totalled $354m, marking an 18% year-on-year increase. The company signed five new licensing agreements during this period.

Operational profit increase

The operational profit in annual comparison surged by 17% to $338 million. The operating profit margin remained steady at 40% while the total profit margin exceeded 95%. In total, Arm shipped 7.7 billion corresponding architecture processors to its customers in the third calendar quarter of last year, a deescalation of 3% in comparison to the previous year. This decline in the smartphone segment was offset partly by an increase in chip deliveries in the automotive segment. Simultaneously, an 8% sequential increase showed hints of demand recovery.

Forecasts for the current quarter

For the current quarter, Arm expects to generate earnings ranging from $850 million to $900 million, which will likewise exceed analysts’ expectations. The company hopes to keep operational expenses within the $490 million range. For the full fiscal year, which is due to end in April, the earnings are predicted to range between $3.15 billion to $3.2 billion, while the operational expenses are expected to stay within $1.7 billion. Arm’s clients were able to ship 30.6 billion processors in the previous fiscal year.

Company diversification and future plans

Arm’s CEO Rene Haas stressed at the reporting event that the successful strategies that the company has implemented over the past few years have started to bear fruit. Positive results of the last two quarters only mark the beginning of an upward trend.

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