Arm has posted a loss a month before its proposed listing in New York.
Revenue fell 11 per cent to £480million in the three months to June.
Arm’s chip technology is widely used in Apple products such as iPhones and iPads, which have seen a prolonged sales slump in recent earnings.
Arm is owned by Japanese investment firm SoftBank and the figures are a blow to its chief executive Masayoshi Son, who is trying to convince leading investors in the US to back the float.
SoftBank took Arm private for £24billion in 2016, removing it from the London Stock Exchange.
Setback: Softbank chief exec Masayoshi Son (pictured) is trying to convince leading investors in the US to back the float
It had hoped to sell Arm to US chip firm Nvidia in 2020 but the £31billion deal collapsed due to regulatory blocks.
After it failed, the UK undertook an intense lobbying effort to convince SoftBank to have a dual listing in London as well as the New York.
But SoftBank snubbed the City earlier this year, stating that the US was the ‘best path forward’ for the company.
This delivered a serious blow to London, which has recently endured an exodus of firms.
The world’s largest building materials company CRH has warned it is going to move its primary stock market listing to New York, and gambling giant Flutter is gearing up to list there in the autumn.
Listings in the US are increasingly preferred by tech entrepreneurs, garnering higher valuations.
London’s largest ever float to date was in 2011 when Anglo-Swiss mining firm Glencore listed at a £38billion valuation.
SoftBank’s finance chief Yoshimitsu Goto said: ‘The Arm IPO plan is going very smoothly.’
Dan Ives, tech analyst at Wedbush Securities, said although the results were poor, there were reasons to be cheerful.
He said: ‘These results are not roses and rainbows but that does not change the long-term value proposition for Arm. Arm is in a position of strength in the AI arms race with an IPO an important strategic step forward.’
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