Post Earnings Coverage as Adobe Reported Record Breaking Quarter; Revenue Gew 22% and Adjusted EPS Soared 42%
Upcoming AWS Coverage on Intuit Post-Earnings Results
LONDON, UK / ACCESSWIRE / March 29, 2017 / Active Wall St. announces its post-earnings coverage on Adobe Systems Inc. (NASDAQ: ADBE). The Company announced its second quarter fiscal 2017 financial results on March 16, 2017. The maker of software like Photoshop and Illustrator smashed passed top- and bottom-line expectations. Register with us now for your free membership at:
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One of Adobe Systems' competitors within the Application Software space, Intuit Inc. (NASDAQ: INTU), reported on February 23, 2017, its financial results for Q2 FY17, which ended January 31, 2017. AWS will be initiating a research report on Intuit in the coming days.
Today, AWS is promoting its earnings coverage on ADBE; touching on INTU. Get our free coverage by signing up to:
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Earnings Reviewed
For the three months ended March 03, 2017, Adobe achieved record revenue of $1.68 billion, up 21.6% on a y-o-y basis. The Company's revenue surpassed its own guidance of $1.63 billion and also exceeded analysts' consensus of $1.64 billion.
During Q1 FY17, the Company's Subscription comprised 82% of Adobe's quarterly revenues, up 29.3% from the year-ago same period, while Products contributed 11% of revenues, down 8.8% on a y-o-y basis, and Services & Support which contributed the remaining portion of revenue, was up 2.2% y-o-y.
For Q1 FY17, Adobe reported earnings of $398.5 million, or $0.80 per share. Post adjustments for stock-based compensation and other factors, the Company recorded earnings of $0.94 per share, up 42% on a y-o-y basis. The Company's earnings numbers surpassed market expectations of $0.87 per share.
Segment Results
During Q1 FY17, Adobe's revenues from Digital Media Solutions surged 22% on a y-o-y basis to $1.14 billion. The Company's Total Digital Media Annualized Recurring Revenue (ARR) grew to $4.25 billion at the end of the reported quarter, reflecting an addition of $265 million of net new digital ARR. Within Digital Media, Adobe delivered Creative revenue of $942 million which represents 29% growth on a y-o-y basis. Furthermore, the Company increased Creative ARR by $244 million during Q1 FY17 and exited the quarter with $3.76 billion of Creative ARR.
Adobe stated that Q1 FY17 ARR performance was driven by strong subscription adoption and retention, strength with Creative Cloud for teams – particularly in Europe – and continued growth with Adobe Stock. Creative Cloud ARPU was either steady or grew quarter-over-quarter across all offerings in Q1.
With Document Cloud, Adobe achieved revenue of $196 million. Document Cloud ARR grew to $493 million exiting Q1 FY17, driven by continued adoption of Acrobat subscriptions and value added services such as Adobe Sign.
In Digital Marketing, Adobe achieved record Adobe Marketing Cloud revenue of $477 million, which represents 26% y-o-y growth. TubeMogul added $32 million of revenue in the reported quarter, which was $13 million above the Company's target of $19 million.
Mobile data transactions grew to 56% of total Adobe Analytics transactions in the reported quarter. Total data transactions in Q1 FY17 grew to 41.3 trillion, and in the trailing four quarters, data transactions with the Company's Marketing Cloud solutions exceeded 100 trillion. Adobe had $18.3 million in hedge gains in Q1 FY17 versus $8.1 million in hedge gains in Q4 FY16 and $3.2 million in hedge gains in Q1 FY16.
Balance Sheet
For Q1 FY17, Adobe's trade DSO was 46 days which compared to 42 days in the year-ago corresponding quarter and 47 days in the previous quarter. Deferred revenue grew to a record $2.06 billion, up 28% on a y-o-y basis. The Company's cash and short-term investment position exiting Q1 FY17 was $4.65 billion. Cash flow from operations was a record $730 million in the reported quarter.
In Q1 FY17, Adobe repurchased approximately 2.2 million shares at a cost of $238 million. The Company has $300 million remaining under the January 2015 authority, post which it will begin repurchases under its new $2.5 billion authority granted in January 2017.
Outlook
In Q2 FY17, Adobe is targeting revenue of approximately $1.73 billion. The Company is expecting to achieve approximately $290 million of net new Digital Media ARR in Q2 FY17. Adobe is forecasting Digital Media segment y-o-y growth of approximately 24% and Adobe Marketing Cloud y-o-y revenue growth of approximately 26%.
Stock Performance
On Tuesday, March 28, 2017, the stock closed the trading session at $128.69, slightly up 0.34% from its previous closing price of $128.25. A total volume of 2.21 million shares have exchanged hands. Adobe Systems' stock price rallied 22.54% in the last three months, 19.98% in the past six months, and 38.05% in the previous twelve months. Furthermore, on a year to date basis, the stock surged 25.00%. Shares of the company have a PE ratio of 49.25.
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