By Kelly Cloonan


Arm Holdings forecast slower revenue growth despite rising demand for its chip designs for artificial intelligence data centers.

The British semiconductor design company on Wednesday guided for revenue to rise about 18% in the current quarter, slowing from growth of 26% in the fiscal third quarter.

The company expects royalty revenue to rise by a low-teens percentage, slowing from 27% growth in the latest quarter. That forecast is mostly based on typical seasonality.

"Our Q4, or calendar Q1, is always one of the slower quarters," Chief Financial Officer Jason Child said during a call with analysts.

Comparisons with the fourth quarter in the prior year will also be tougher since that was when a chip from MediaTek was released, helping to boost royalty revenue, Child said.

The company noted it's increasingly confident in its future revenue prospects given strong customer demand and a growing base of long-duration contracts at higher royalty rates.

For the current fiscal fourth quarter, the company guided for revenue of about $1.47 billion, plus or minus $50 million. Analysts polled by FactSet forecast $1.44 billion. The company forecast adjusted earnings of 58 cents, plus or minus 4 cents.

Shares fell 8.3%, to $96.12, in after-hours trading. Through market close, shares are down 35% in the last year.

The guidance came after Arm logged lower profit despite higher sales in its latest quarter, which topped Wall Street's expectations.

The company posted a profit of $223 million, or 21 cents a share, compared with $252 million, or 24 cents a share, a year earlier.

Adjusted earnings per share were 43 cents, ahead of estimates of 41 cents a share according to analysts polled by FactSet.

Revenue climbed 26% to $1.24 billion, above analyst estimates of $1.23 billion.

Royalty revenue increased 27% to $737 million, driven by higher royalty rates per chip and increased use of Arm's chips in data centers.

"Demand for AI computing on our platform continues to accelerate," Chief Executive Rene Haas said.

License and other revenue gained 25% to $505 million, due to normal fluctuations in the timing and size of several large license agreements and contributions from the company's backlog, it said.


Write to Kelly Cloonan at kelly.cloonan@wsj.com


(END) Dow Jones Newswires

02-04-26 1901ET