Arm Holdings (NASDAQ:ARM) delivered stronger-than-expected third-quarter earnings, but a tightened full-year outlook disappointed investors, sending shares down over 4% in pre-market trading Thursday.
The chip designer reported earnings per share of $0.39, significantly outpacing analysts’ expectations of $0.25. Revenue for the quarter also came in stronger than anticipated at $983 million, surpassing the projected $946.8 million.
Despite the robust quarterly results, Arm tempered its expectations for the year ahead. For the fourth quarter, the company forecasts earnings per share between $0.48 and $0.56, in line with analysts’ average estimate of $0.53. Revenue is expected to range from $1.175 billion to $1.275 billion, closely matching Wall Street’s projection of $1.23 billion.
Looking at the full year, Arm narrowed its revenue guidance to a range of $3.94 billion to $4.04 billion, tightening its previous estimate of $3.8 billion to $4.1 billion. While the midpoint of the revised range, $3.99 billion, sits slightly above analyst expectations of $3.96 billion, the company no longer expects to hit the higher end of its earlier forecast.
Similarly, the chipmaker refined its full-year earnings per share outlook, adjusting the midpoint to $1.60 from its prior forecast of $1.55. While the revision reflects incremental improvement, the cautious stance on reaching upper-end targets weighed on investor sentiment.