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Arm shares soar on upbeat full-year outlook

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UK chip designer Arm beat Wall Street estimates for revenue and boosted its full-year forecast on Wednesday, sending the shares up about 20 per cent in after-hours trading.

The company’s revenue of $824mn was up 14 per cent year on year, above consensus estimates of $762.99mn, according to S&P Capital IQ. Arm also revised higher its full-year revenue guidance from a range of $2.96bn-$3.1bn to $3.15bn-$3.2bn.

Arm chief executive Rene Haas credited strong royalty growth with a growing market share in the cloud and automotive sectors, as well as licensing growth driven by a wave of investment in artificial intelligence.

In a letter to shareholders on Wednesday, Arm said that royalty revenue from smartphones had also improved thanks to a recovery in device sales.

Adjusted earnings per share were $0.29, and it lifted its full-year guidance from a range of $1.00-$1.10 to $1.20-$1.24.

Japan’s SoftBank holds more than 90 per cent of shares in Arm, after acquiring the business for $32bn in 2016.

It is Arm’s second quarterly earnings report since going public in September. Its first report left Wall Street underwhelmed, with it reporting a $110mn loss in the three months to the end of September after having to pay out more than $500mn in remuneration costs following the listing in New York, which required it to settle shares previously granted to employees.

Arm shares have climbed more than 21 per cent over the past six months to about $77, well above the $51 price offered when it first listed.

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