Text size
Adobe had warned that the results would be affected by some structural setbacks.
Dreamstime
Adobe
Shares are trading lower in late trading after the software company reported better-than-expected earnings but provided an outlook for the current quarter, which has fallen shy of Wall Street estimates.
Adobe shares are up 1.8% in after-hours trading down to $ 458. The stock rose 2.8% in the regular session of the day.
For the quarter ended March 4, the creative and marketing software vendor reported revenue of $ 4.26 billion, up 9%. That was slightly ahead of both the company’s $ 4.23 billion target and the Wall Street consensus of $ 4.24 billion. Earnings on a adjusted, non-GAAP basis were $ 3.37 per share, also slightly better than both guidance at $ 3.35 per share, and analyst estimates of $ 3.34 per share. GAAP earnings were $ 2.66 per share, three cents above the lead.
Adobe CEO Shantanu Narayen noted in a statement that this company had record first quarter earnings. CFO Dan Durn added that the results “reflect strong performance and resilience through endless circumstances.”
“Our momentum, product innovation and immense market potential position us for success in 2022 and beyond,” said Durn.
Adobe repurchased 3.8 million shares in the quarter.
The company’s digital media segment revenue was $ 3.11 billion, up 9%, while digital experience segment revenue was $ 1.06 billion, up 13%. Adjusting for currency over a 13-week period, compared to 14 weeks a year ago, digital media revenue increased by 17%, while digital experience was 20% higher. Digital media annualized recurring revenue was up $ 418 million, ahead of the company’s target of $ 400 million.
For the fiscal second quarter, Adobe sees revenue of $ 4.34 billion, with $ 440 million not new ARR from digital media. The company sees growth of 13% to 14% in digital media revenue on a constant currency basis, and 15% to 16% for digital experience revenue. Adobe projects earnings of $ 3.30 per share on a non-GAAP basis, or $ 2.44 per share under generally accepted accounting principles. Street Consensus raised $ 4.4 billion in revenue and non-GAAP earnings of $ 3.35 per share.
Adobe also said that on March 4, the company stopped all new sales of Adobe products and services in Russia and Belarus. The company said it is reducing its digital media annual recurring revenue balance by $ 75 million to reflect all existing businesses in the two countries. Adobe added that while it continues to provide digital media services in Ukraine, the company has reduced its stated ARR by $ 12 million to reflect its entire business there. The company expects these moves to reduce revenue in fiscal 2022 by $ 75 million.
Newsletter subscription
Barron’s Tech
A weekly guide to our best stories about technology, disruptions, and the people and stocks in the middle of it all.
While forecasting the quarter, Citigroup analyst Tyler Radke warned that the company could post “lower than typical” upside to the company’s new ARR Digital Media Metrics net, due to both “increasing competition at the lower end of the market and a more slow digital marketing spending backdrop. ” He noticed that
Salesforce
(CRM), in its recent earnings report, has shown some delay in its marketing cloud business.
Radke also worried that the expansion of the operating margin could slow down as travel and maintenance costs return with the opening of the post-Covid economy and incremental investment in business.
Write to Eric J. Savitz at eric.savitz@barrons.com
Add Comment