Arm Holdings (NASDAQ:ARM) shares dropped more than 12% on Wednesday after the company issued a softer-than-expected outlook, even as first-quarter results met expectations.
For the quarter ended June 30, 2025, the chip designer posted adjusted earnings per share of $0.35 on revenue of $1.05 billion, aligning with consensus forecasts of $0.35 and $1.06 billion, respectively.
Royalty revenue increased 25% year-over-year to $585 million, supported by rising adoption of the Armv9 architecture and growing shipments of Compute Subsystems used in data centers, automotive, and mobile applications. AI and edge computing workloads also contributed to the growth.
Looking ahead, Arm guided for fiscal second-quarter adjusted EPS of $0.29 to $0.37, below consensus of $0.35. Revenue is projected between $1.01 billion and $1.11 billion, with the midpoint slightly under Wall Street's $1.07 billion estimate.
