Arm Holdings (NASDAQ:ARM), which went public on September 14, saw its shares drop about 6% in pre-market Thursday following the release of the company's FQ2 earnings.
Although FQ2 figures exceeded expectations, the Q3 outlook missed consensus estimates, attributed to a large deal that will likely land later than anticipated.
Quarterly EPS came in at $0.36, better than the consensus estimate of $0.26. Revenue grew 28% year-over-year to $806 million, compared to the consensus estimate of $746.9M, driven by multiple high-value long-term license agreements signed with industry-leading technology companies, and royalty revenue benefiting from market share gains and higher royalty rates.
Annualized contract value (ACV) at the end of Q2 was $1.108 billion, representing a 3% year-over-year growth. Remaining performance obligations (RPO) were $2.414B, up 38% year-over-year.
For Q3/24, the company expects EPS to be in the range of $0.21-$0.28, compared to the consensus of $0.27. Revenue is seen at $720-$800M.
For the full year, the company anticipates EPS in the range of $1.00-$1.10, compared to the consensus estimate of $1.04, and revenue of $2.96-$3.08B, compared to the consensus of $2.96B.
Analysts at HSBC said the company offered "muted guidance vs smartphone peers."
"We continue to remain constructive on its long-term model toward higher royalties and flexible licensing model. However, we maintain our view that it takes time for earnings growth potential to resume," the analysts said.
Additional reporting by Senad Karaahmetovic