The company has stopped disclosing the number of chips reported as shipped and has issued light earnings guidance.

• Arm results exceeded expectations, but earnings guidance did not.
• The company has ceased disclosing the number of chips shipped quarterly.

On Wednesday, shares of the chip-architecture maker fell more than 9% in extended trading after the company issued light earnings guidance for the current quarter and the full fiscal year.

In the fiscal first quarter, the company's performance differed from LSEG's consensus.

• Earnings per share: 40 cents adjusted vs. 34 cents expected
• Revenue: $939 million vs. $902.7 million expected

In the quarter that ended on June 30, Arm's revenue increased by 39% compared to the previous year, resulting in a net income of $223 million, or 21 cents per share, up from $105 million, or 10 cents per share, in the prior quarter.

Analysts surveyed by LSEG had predicted $1.58 in adjusted earnings per share and $4.02 billion in revenue, but Arm maintained its full-year view of $1.45 to $1.65 in adjusted earnings per share on $3.8 billion to $4.1 billion in revenue.

In the fiscal second quarter, Arm anticipates adjusted earnings of 23 to 27 cents per share on revenue of $780 million to $830 million. This implies no growth at the midpoint of the range. Analysts surveyed by LSEG had predicted 27 cents per share and $804.1 million in revenue.

The total revenue from royalties, which is either a percentage of the average selling price or a fixed amount per chip when they are shipped, amounted to $467 million. Although this was an increase of 17%, it was below the $486.6 million forecast by analysts surveyed by StreetAccount.

The revenue from licenses and other sources increased by 72% to $472 million, surpassing the $418.3 million forecast by the LSEG.

The company announced that it will no longer disclose the number of Arms-based chips that were shipped as of this quarter.

In the letter, Arm CEO Rene Haas and Jason Child stated that the number of chips reported as shipped by our customers was previously considered a key performance indicator because it represented the acceptance of our products by companies who use chips in their products (e.g., our customers' customers).

"By concentrating our efforts on high-value, low-volume markets such as data center servers, AI accelerators, and smartphone application processors, our reported shipment numbers may not accurately reflect our performance, as our royalty revenue growth is primarily driven by a smaller number of chips."

In the fiscal fourth quarter, Arm reported a 10% decrease in the number of chips shipped year over year, which totaled 7 billion. Previously, management attributed the decline to an inventory correction in industrial internet of things chips, which have a high volume but low value.

Haas and Child stated that the company is now investing in Arm Compute Subsystems, which will reduce development costs and speed up time to market. Additionally, they noted that the technology has the potential to increase royalty revenue fees per chip.

In the quarter, two high-value Arm Total Access licenses were added, resulting in a total of 33 licenses.

During the quarter, started selling Surface PCs that draw on Arm-based chips.

The S&P 500 index has gained 16% this year, while Arm's stock has risen 93%, outpacing the index's growth.

A conference call will be held at 5 p.m. ET for executives to discuss the results.

This is breaking news. Please check back for updates.

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