The U.K. regulatory body has allowed more time for Qualcomm to submit its takeover proposal for Alphawave IP, moving the deadline to May 12. Previously, the date was set for April 29. This extension comes as Alphawave IP is engaging in negotiations with Qualcomm regarding a formal offer. The decision to extend follows earlier reports that Alphawave was open to being acquired after its negotiations with Arm (ARM, Financial) did not yield results.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 30 analysts, the average target price for ARM Holdings PLC (ARM, Financial) is $151.21 with a high estimate of $225.00 and a low estimate of $75.34. The average target implies an upside of 34.91% from the current price of $112.08. More detailed estimate data can be found on the ARM Holdings PLC (ARM) Forecast page.
Based on the consensus recommendation from 37 brokerage firms, ARM Holdings PLC's (ARM, Financial) average brokerage recommendation is currently 2.4, indicating "Outperform" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
ARM Key Business Developments
Release Date: February 05, 2025
- Total Revenue: $983 million, a 19% year-on-year increase, exceeding the high end of guidance.
- Royalty Revenue: $580 million, a 23% year-on-year increase, setting a new record.
- Licensing Revenue: $403 million, a 14% year-on-year increase.
- Non-GAAP Operating Costs: $522 million, in line with expectations.
- Non-GAAP Operating Profit: $442 million, near-record levels.
- Q4 Revenue Guidance: Between $1.175 billion and $1.275 billion, representing 32% year-on-year growth at the midpoint.
- Q4 Non-GAAP EPS Guidance: $0.48 to $0.56.
- Fiscal Year '25 Revenue Guidance: Around $4 billion, a 24% year-on-year growth.
- Fiscal Year '25 Royalty Revenue Growth: High teens year-on-year.
- Fiscal Year '25 License Revenue Growth: Around 30% year-on-year.
- Fiscal Year '25 Non-GAAP Operating Expenses: About $2.1 billion, a 21% year-on-year increase.
- Fiscal Year '25 Non-GAAP EPS Guidance: Between $1.56 and $1.64.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ARM Holdings PLC (ARM, Financial) reported record total revenue and royalty revenue for the third quarter of fiscal 2025, with total revenue growing 19% year-on-year.
- The company is experiencing strong demand for its v9 and CSS technologies, driven by AI growth across various markets including smartphones, autos, and IoT.
- ARM is gaining market share in the data center with significant adoption of its technology by major players like AWS, Microsoft, Google, and NVIDIA.
- The company has a large developer community of over 20 million, which supports its ecosystem and future growth.
- ARM's guidance for the fourth quarter indicates expected revenue growth of 32% year-on-year, reflecting strong market demand and potential large license deals.
Negative Points
- ARM's non-GAAP operating costs have reached their highest level at $522 million due to increased R&D spending, which could impact short-term profitability.
- The company's ACV growth rate has decelerated to 9% year-on-year, which is lower than the recent run rate of low teens.
- There is uncertainty regarding the timing of large license deals, which could affect revenue forecasts if they slip into the next fiscal year.
- The Qualcomm lawsuit poses a risk, although ARM has forecasted revenue assuming it will not prevail in the lawsuit.
- ARM China remains a significant portion of revenue, but its contribution is expected to decrease over time, potentially impacting overall revenue growth.
