Why did ARM fall 10% on earnings?

Arm reported earnings which beat expectations by a good margin. EPS came in at $0.36, as analysts expected $0.30, a very good beat. Revenues were $928 million, as analysts expected $865.94 million, another good beat. Yet, despite these beats, the stock fell peak-to-trough by almost 12%. Why did this happen? Let’s dive straight into it!

Starting of with the financial results of fiscal Q4’24. Yes, it’s one of those with a weird fiscal calendar. But let’s move on. The company beat it initial guidance by a large margin. I will put the table they show, which includes the guide below, because that’s just way easier than me writing down all the numbers.

ARM Q4’24 and FY’24 earnings

The guide for Q1’25 is good as we can see at Tradingview that analysts expect $0.32 of EPS on $877.83 million of revenues. The Full-Year ‘25 guide is however what may have caused the stock to drop. Analysts were expecting $1.55 of EPS on $3.99 billion of revenues, which is pretty much the exact mid-point of guidance. So here we once again see the difference between expected numbers, and hoped numbers from Wall Street, because they pretty much got exactly the numbers they asked for, even beating the expected guidance for the next quarter, but it’s not good enough.

If you found this article informational, educational, or entertaining, make sure to subscribe to my newsletter to receive the Morning Market Feed where I highlight the most notable market events from the prior day. You will also receive a new stock analysis every week. You can subscribe here