Arm forecasts third quarter below Wall Street on deal delay, shares dive 8%
- Arm became publicly listed again in September after Japan’s SoftBank Group, which still owns more than 90 per cent, sold some of its shares
- Arm said it forecast a fiscal 2024 revenue range with a midpoint of US$3.02 billion, above analyst expectations of US$2.95 billion
Semiconductor company Arm Holdings on Wednesday gave a fiscal third-quarter sales outlook below Wall Street estimates, with the company attributing the forecast to a large deal that is likely to land later than expected.
Arm’s shares dove 8 per cent to US$50 in extended trading after the news.
But the company, which sells designs and other intellectual property (IP) for creating semiconductors that power most of the world’s smartphones, also forecast fiscal full-year sales that beat Wall Street expectations, powered by a wave of companies designing new chips amid a boom in artificial intelligence applications.
Arm became publicly listed again in September after Japan’s SoftBank Group Corp, which still owns more than 90 per cent of the firm, sold some of its shares. One issue that Arm is grappling with is new accounting rules that affect how it must recognise revenue from large, multi-year licence deals.
In a shareholder letter, Arm’s top executives said that “revenue recognition profiles for future agreements are subject to change”.
