On Wednesday, Arm revealed its second quarter earnings since its September launch as a publicly traded company.On Wednesday,Arm, a semiconductor technology firm, reported earnings that beat Wall Street expectations. The company's licensing business, which is their primary source of revenue, doubled in size over the past year. The firm reported 36 cents in adjusted EPS and $806 million in revenue, which was better than the expected $744.3 million. However, Arm shares dropped 7% in extended trading due to the fact that their revenue guidance fell short of expectations for the current quarter.
Arm reported a net loss of 11 cents per share due to the more than $500 million in one-time share-based compensation triggered by their September IPO. This added expense is thought to be between $150 million and $250 million for future quarters. Total revenue was up 28% on an annual basis and the firm stated that 7.1 billion Arm-based chips were shipped during the quarter. Arm's main source of revenue is from royalties when chipmakers pay to build Arm-compatible chips or licenses for complete chip designs which is noted as licensing revenue. Royalties brought in $418 million, down 5% from the same period last year, whereas licensing sales were $388 million, up 106% from the same period. Arm mentioned that with multiple long-term agreements with technology companies, the licensing segment's growth should continue in future quarters.
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