The 10-second takeaway
For the quarter ended Dec. 31 (Q4), ARM Holdings beat expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue increased significantly, and GAAP earnings per share grew.
Gross margins grew, operating margins increased, net margins contracted.
ARM Holdings tallied revenue of $214.5 million. The 20 analysts polled by S&P Capital IQ expected a top line of $192.9 million. Sales were 21% higher than the prior-year quarter's $177.9 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions.
Non-GAAP EPS came in at $0.17. The five earnings estimates compiled by S&P Capital IQ predicted $0.13 per share on the same basis. GAAP EPS of $0.04 for Q4 were 33% higher than the prior-year quarter's $0.03 per share.
Source: S&P Capital IQ. Quarterly periods. Figures may be non-GAAP to maintain comparability with estimates.
For the quarter, gross margin was 95.2%, 100 basis points better than the prior-year quarter. Operating margin was 34.2%, 480 basis points better than the prior-year quarter. Net margin was 24.0%, 210 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $201.8 million. On the bottom line, the average EPS estimate is $0.13.
Next year's average estimate for revenue is $875.2 million. The average EPS estimate is $0.61.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 823 members out of 885 rating the stock outperform, and 62 members rating it underperform. Among 256 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 239 give ARM Holdings a green thumbs-up, and 17 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on ARM Holdings is hold, with an average price target of $27.65.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.