Arm Holdings Stock Slides On Q3 Earnings: Revenue Beat, EPS Beat, Revised Guidance And More

Arm Holdings Plc ARM reported third-quarter financial results for fiscal year 2025 after the market close on Wednesday. Here’s a rundown of the report.

Q3 Earnings: Arm reported third-quarter revenue of $983 million, beating analyst estimates of $946.73 million. The chip designer reported adjusted earnings of 39 cents per share, beating analyst estimates of 34 cents per share, according to Benzinga Pro.

Total revenue was up 19% year-over-year, driven by record levels of royalty revenue and continued strength in license revenue. Royalty revenue grew 23% year-over-year primarily driven by continued adoption of Armv9 architecture, increased usage of Arm chips in data centers and IoT improvement.

Annualized contract value (ACV) was up 9% year-over-year to $1.27 billion. Arm said free cash flow totaled $349 million in the quarter. The company ended the period with $2.67 billion in cash, cash equivalents and short-term investments.

“Arm delivered record third-quarter revenue driven by continued strong adoption of Armv9 and CSS compute platforms,” said Rene Haas, CEO of Arm Holdings.

“With our high-performance, energy-efficient, flexible technology, Arm is a key enabler in advancing AI innovation and transforming the user experience, from the edge to the cloud.”

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Guidance: Arm expects fourth-quarter revenue of $1.175 billion to $1.275 billion. The company anticipates fourth-quarter adjusted earnings of 48 cents to 56 cents per share.

Arm also narrowed its full-year guidance. The company now expects full-year revenue of $3.94 billion to $4.04 billion and full-year adjusted earnings of $1.56 to $1.64 per share.

Arm executives will further discuss the quarter on a call with investors and analysts at 5 p.m. ET.

ARM Price Action: Arm shares were down 6.99% after hours, trading at $161.25 at the time of publication Wednesday, according to Benzinga Pro.

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