ARM Holdings (NASDAQ:ARM) shares dropped more than 8% pre-market today after the company announced annual revenue guidance that did not meet expectations, despite reporting better-than-expected results for its fiscal fourth quarter, largely driven by increased licensing revenue amid a surge in enterprise AI spending.

In Q4, the chip designer reported adjusted earnings of $0.36 per share on revenue of $928 million, surpassing Wall Street's expectations of $0.21 per share on revenue of $780.2 million. The company highlighted a 60% increase in license revenue to $414 million year-over-year, attributed to multiple high-value license agreements as companies escalate their investment in ARM-based technologies for AI across various markets.

For the first quarter, ARM guided adjusted earnings per share between $0.32 and $0.36 and revenue between $875 million and $925 million. This guidance exceeds analyst expectations, which anticipated earnings per share of $0.31 and revenue of $864.4 million. Looking ahead to the full year 2024, ARM expects adjusted earnings per share to range from $1.45 to $1.65, compared to the analyst estimate of $1.53. The company forecasts annual revenue between $3.8 billion and $4.1 billion, with the midpoint at $3.95 billion, slightly below the anticipated $3.98 billion.