Arm to provide 2025 revenue guide "at least in line" with estimates - Wells Fargo

Investing.com -- Chip designer Arm is set to provide preliminary guidance for its 2025 financial year that could either meet or top Wall Street estimates, analysts at Wells Fargo said on Monday.

In a note to clients, the analysts argued that client royalties could help Arm unveil full-year revenue growth "at least in line" with consensus projections of $3.98 billion.

Arm, which began trading its shares on the Nasdaq last year, makes money by licensing its designs to semiconductor firms. It also rakes in royalties when products using one of its designs are sold.

"We expect [management] to start FY25 guide [with] stronger-than-exp[ected] license guide," the Wells Fargo analysts said. "We also believe Arm has good license visibility through FY25 end, but we believe it is unlikely [management] will give explicit license rev[enue] guidance beyond [its fiscal first quarter], perhaps instead choosing to provide a quarterly range for investors to consider beyond [the first quarter]."

The Wells Fargo analysts added that they are raising their revenue and profit estimates for Arm for the 2025 fiscal year, citing strong "licensing and royalty trends." They also increased their 2026 and 2027 estimates.

For the fiscal fourth quarter, the analysts see Arm beating consensus forecasts for total revenue of $871 million and earnings per share of $0.29. The company is due to release the results after the closing bell on May 8.