British Chipmaker Arm Holdings Stock Skyrockets After Q3 Performance - Here's Why

Arm Holdings Plc. ARM shares are trading higher after the company reported better-than-expected third-quarter financial results after the bell Wednesday. Here's a look at the highlights. 

Arm Holdings reported adjusted quarterly earnings of 29 cents per share, which beat the analyst consensus estimate of 25 cents by 16%. The company reported quarterly sales of $824 million, which beat the analyst consensus estimate of $761.62 million by 8.19%.

Arm clocked Royalty revenue of $470 million, up 11% year-over-year, driven by the semiconductor industry recovery and the rapidly increasing penetration of Armv9-based chips, which typically command a higher royalty rate.

The company said it scored a better-than-expected license revenue of $354 million, up 18% year-over-year, and strong bookings were due to strong demand for more advanced Arm CPUs as companies increase investment in AI across all end markets.

Arm's adjusted gross margin for the third quarter was 96.7%, up 40 bps year-over-year.

"Arm delivered another quarter of record revenues driven by continued adoption of the world's most pervasive compute platform," said Rene Haas, CEO.

"More customers moving to higher-value Armv9 technology combined with market share gains in cloud server and automotive resulted in strong royalty growth. The AI wave drove licensing growth as these new devices require Arm's performant and power-efficient compute platform," Haas said.

Arm sees fourth-quarter adjusted earnings of between 28 cents and 32 cents per share, much higher than the 21 cents per share estimate, and fourth-quarter revenue between $850 million and $900 million, exceeding the $780.31 million estimate.

Arm also said it sees fiscal year 2024 adjusted earnings between $1.20 and $1.24 per share, versus the estimate of $1.07 per share, and 2024 revenue between $3.155 billion and $3.205 billion, versus the estimate of $3.05 billion.

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ARM Price Action: According to Benzinga Pro, Arm Holdings shares are trading 20% higher after-hours at $92.40 at the time of publication.

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