Arm Holdings' (NASDAQ: ARM) earnings report last week was a bit of a mixed bag. While Arm beat analyst expectations for both revenue and earnings, the chip company's outlook for fiscal 2025 fell a bit short of the consensus estimate. Arm expects to generate revenue of $3.95 billion for the full year, plus or minus $150 million, a hair below the $3.99 billion analysts anticipated.

Arm stock initially tumbled following the earnings report, but it rebounded in the following days. While the company's outlook didn't blow investors away, there was a lot to like about Arm's results. Revenue surged 47% year over year thanks to strong royalty and licensing growth. Free cash flow increased nearly as fast.

Arm's growth in fiscal 2025 will slow compared to the latest quarter. The midpoint of Arm's revenue-guidance range calls for growth of 22% from fiscal 2024. The timing and unpredictability of licensing deals is a wildcard that can swing revenue up or down. In the long run, Arm expects royalty revenue from devices shipping with Arm-based chips to drive the lion's share of its growth.

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Source Fool.com