06:23 AM EDT, 05/09/2024 (MT Newswires) -- Arm Holdings' ( ARM ) US-listed shares fell early Thursday after outlining a full-year revenue outlook that fell short of market estimates at the midpoint, while the British semiconductor manufacturer saw chip shipments drop 10% year-on-year during its fiscal fourth quarter.

The chipmaker expects revenue to be in the range of $3.8 billion to $4.1 billion for fiscal 2025, while the consensus on Capital IQ for $3.97 billion is above the $3.95 billion midpoint of the guidance. In the previous fiscal year, revenue jumped 21% to $3.23 billion. The company's stock on Nasdaq dropped more than 8% before the opening bell.

Licensing revenue is forecast to continue to be "lumpy from period to period" for the year due to the "timing of revenue recognition," Chief Financial Officer Jason Child said during an earnings call, according to a Capital IQ transcript. "We expect the first half to represent approximately 40% of our license revenue for the year, with (the second quarter) being the smallest and (the fourth quarter) being the largest quarter of the year."

Fiscal 2025 adjusted earnings are pegged to come in between $1.45 and $1.65 per share, compared with the Street's current estimate of $1.52. The company anticipates adjusted operating expenses to increase annually by 19%, reflecting its research and development investment plans to support future growth, according to Child.

Arm said chips reported as shipped declined to 7 billion for the March quarter from 7.8 billion the year before. Adjusted EPS jumped to $0.36 from $0.02, topping analysts' $0.31 estimate. Revenue surged 47% to $928 million, surpassing the Street's view for $881.3 million.

Royalty revenue climbed 37% to $514 million driven by higher penetration of the company's artificial intelligence-enabled Armv9-based chips in various markets, especially smartphones and automotive, among other factors. Revenue from licensing soared 60% to $414 million, due to multiple high-value agreements signed with companies seeking to invest in AI. Annualized contract value improved 15% to $1.18 billion.

For the ongoing three-month period, Arm expects adjusted EPS of $0.32 to $0.36 and revenue to be between $875 million and $925 million. The Street is looking for normalized EPS of $0.32 on revenue of $882 million.

"We expect royalty revenue to remain strong with year-over-year growth of approximately 20%," Child told analysts on the call. "This is partially offset by weakness in (internet of things) driven by inventory correction in the broader industrial market, as has been widely reported by many of our semiconductor peers."

Price: 96.56, Change: -9.51, Percent Change: -8.97