Arm Shares Slump 9.7% in After-Hours Trading as Outlook Misses Estimates

The company sees fiscal second quarter revenue reaching $780 million to $830 million. The midpoint of that outlook is below the $806.2 million average of analyst estimates compiled by Bloomberg. Adjusted earnings are seen ranging from 23 cents to 27 cents a share for the second quarter, with the midpoint trailing the average estimate of 27 cents.

For the first quarter, the company said revenue rose 39% to $935 million, buoyed by record license revenue and strong growth in royal revenues, the company said in a press release after the market closed Wednesday. That's above the $905 million expected by analysts. Adjusted earnings climbed 67% to 40 cents a share, better than the 34.2 cents forecast by analysts.

"Increasing chip complexity is driving royalty revenue growth," CEO Rene Haas and CFO Jason Child said in a letter to shareholder. " AI-enabled devices need significantly increased performance yet also require energy-efficiency and rapid time-to-market."