ARM Holdings Beats on Both Top and Bottom Lines

Seth Jayson, The Motley Fool
Updated

ARM Holdings (NAS: ARMH) reported earnings on April 24. 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 expanded and GAAP earnings per share grew.


Margins improved across the board.

Revenue details
 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.

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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 $0.16. 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.

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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%, 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.

Looking ahead
 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.

Investor sentiment
 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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At the time thisarticle was published 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 ofMotley 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.

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