The 10-second takeaway
For the quarter ended March 31 (Q1), ARM Holdings beat expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue expanded and GAAP earnings per share grew.
Margins improved across the board.
ARM Holdings reported revenue of $211.9 million. The 18 analysts polled by S&P Capital IQ predicted revenue of $206.4 million on the same basis. GAAP reported sales were 14% higher than the prior-year quarter's $186.2 million.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.16. The eight earnings estimates compiled by S&P Capital IQ predicted $0.15 per share. GAAP EPS of $0.04 for Q1 were 33% higher than the prior-year quarter's $0.03 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 94.0%, 30 basis points better than the prior-year quarter. Operating margin was 37.9%, 1,290 basis points better than the prior-year quarter. Net margin was 28.2%, 970 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $211.0 million. On the bottom line, the average EPS estimate is $0.15.
Next year's average estimate for revenue is $902.8 million. The average EPS estimate is $0.69.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 838 members out of 909 rating the stock outperform, and 71 members rating it underperform. Among 221 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 206 give ARM Holdings a green thumbs-up, and 15 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 $29.26.
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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.