Arm Holdings (ARM) shares soared more than 20% in after-hours trading on Wednesday after the company reported strong financial results and a rosy outlook as demand for artificial intelligence processing increases.
The British semiconductor designer reported adjusted earnings per share of 29 cents for the third quarter of fiscal 2024, up from 22 cents in the year-ago period. Revenue rose 14% to $824 million as the company gained market share in cloud and automotive, and AI boosted licensing revenue. Both sales and bottom line numbers exceeded the guidance the company provided in November.
Arm said the better-than-expected performance of its licensing business, which allows chipmakers to buy designs that run on its products, was due to “more advanced Arm CPUs as companies increase investment in AI across end markets. This is due to “strong demand.” Arm’s licensing revenue increased 18% year over year to $354 million.
“We expect next quarter to be even better and set a new record,” Chief Executive Officer Rene Haas and Chief Financial Officer Jason Child said in a letter to shareholders. . “We are driven by a combination of growing royalty revenue, the need for more compute and AI in all markets, customer demand for our platform, and a focus on our unparalleled developer ecosystem. , produced these results.”
Arm now expects fourth-quarter sales to be between $850 million and $900 million, which would push fiscal 2024 sales to up to $3.2 billion. In November, the company expected fiscal 2024 sales to be between $2.96 billion and $3.08 billion.
The company spun off from Japan’s SoftBank and began trading American Depositary Shares (ADS) on Nasdaq in September. The company’s initial public offering was the largest in the United States since 2021.
About three hours after the earnings announcement, Arm shares were trading at $94.00, up 22% from Wednesday’s closing price. The stock had soared as much as 40% in after-hours trading.
