The 10-second takeaway
For the quarter ended June 30 (Q2), ARM Holdings beat expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue grew and GAAP earnings per share grew.
Margins increased across the board.
ARM Holdings notched revenue of $212.5 million. The 21 analysts polled by S&P Capital IQ predicted a top line of $203.7 million on the same basis. GAAP reported sales were 12% higher than the prior-year quarter's $189.3 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 $0.17. The eight earnings estimates compiled by S&P Capital IQ averaged $0.15 per share. GAAP EPS of $0.04 for Q2 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 94.8%, 70 basis points better than the prior-year quarter. Operating margin was 37.8%, 1,030 basis points better than the prior-year quarter. Net margin was 29.1%, 660 basis points better than the prior-year quarter.
Next quarter's average estimate for revenue is $214.8 million. On the bottom line, the average EPS estimate is $0.17.
Next year's average estimate for revenue is $858.3 million. The average EPS estimate is $0.68.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 824 members out of 892 rating the stock outperform, and 68 members rating it underperform. Among 200 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 181 give ARM Holdings a green thumbs-up, and 19 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on ARM Holdings is outperform, with an average price target of $29.90.
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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.