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.
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 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.
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.)
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.
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.
Is ARM Holdings the best semiconductor stock for you? You may be missing something obvious. Check out the semiconductor company that Motley Fool analysts expect to lead "The Next Trillion-dollar Revolution." Click here for instant access to this free report.
- Add ARM Holdings to My Watchlist.
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. The Motley Fool has no position in any of the stocks mentioned. 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.