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ARM Holdings Beats on Both Top and Bottom Lines

By Seth Jayson - Updated Apr 10, 2017 at 1:44PM

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Just the facts, Fool.

ARM Holdings (Nasdaq: ARMH) reported earnings on April 23. Here are the numbers you need to know.

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 grew significantly. Non-GAAP earnings per share increased significantly. GAAP earnings per share expanded.

Gross margins were steady, operating margins increased, net margins expanded.

Revenue details
ARM Holdings reported revenue of $258.6 million. The 14 analysts polled by S&P Capital IQ expected sales of $242.6 million on the same basis. GAAP reported sales were 22% higher than the prior-year quarter's $211.9 million.

Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
EPS came in at $0.24. The six earnings estimates compiled by S&P Capital IQ forecast $0.21 per share. Non-GAAP EPS of $0.24 for Q1 were 50% higher than the prior-year quarter's $0.16 per share. GAAP EPS of $0.06 for Q1 were 50% higher than the prior-year quarter's $0.04 per share.

Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 94.0%, much about the same as the prior-year quarter. Operating margin was 38.1%, 20 basis points better than the prior-year quarter. Net margin was 30.5%, 230 basis points better than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
Next quarter's average estimate for revenue is $249.5 million. On the bottom line, the average EPS estimate is $0.21.

Next year's average estimate for revenue is $1.06 billion. The average EPS estimate is $0.94.

Investor sentiment
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 821 members out of 917 rating the stock outperform, and 96 members rating it underperform. Among 231 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 201 give ARM Holdings a green thumbs-up, and 30 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 $44.42.

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