Arm Holdings, opens new tab, gave a full-year revenue forecast on Wednesday that missed the expectations of investors who had sent the chip designer's shares soaring last September following its IPO on optimism around AI.
For the current fiscal first quarter, Arm forecast revenue in a range between $875 million and $925 million, with a midpoint of $900 million, compared with an average analyst estimate of $857.5 million, according to LSEG data.
The UK chip designer also said it expects full-year revenue between $3.8 billion and $4.1 billion, with a midpoint of $3.95 billion. That compares with a consensus estimate of $3.99 billion.
Arm's fourth-quarter revenue rose 47% to $928 million, compared with analyst estimates of $875.6 million.
The company's licensing business grew 60% to $414 million in the fourth quarter compared with the year-ago period, and its royalty segment jumped 37% to $514 million.
Arm struck four major licensing agreements during the quarter, which is why that segment grew substantially, Child said. The royalties business benefited from a new Arm design that commands a higher rate, and now accounts for 20% of the segment, growing 5 percentage points.
