Adobe Tops Estimates, Issues Strong Guidance

Adobe Systems Incorporated (ADBE) topped consensus analyst EPS estimates by 1 cent in its recently ended quarter (F4Q07), while beating consensus revenue estimates by $25 million. Non-GAAP operating income was $362.2 million, versus $256.4 million a year ago, representing 39.7% of the company’s total non-GAAP revenue. Non-GAAP net income was $289.6 million, compared to $198.9 million a year ago, and good for non-GAAP EPS of $0.49. On that basis, analysts were expecting EPS of $0.48. Total revenue grew 34% to $911 million in the latest quarter, versus consensus estimates of $886 million. Adobe CEO Shantanu Narayen noted, “continued adoption of our Creative Suite 3 family of products, record revenue for Acrobat and strong momentum in our enterprise business." Narayen said the company is "positioned to achieve a sixth consecutive year of double-digit growth." (Adobe Systems F4Q07 (Qtr End 11/30/07) Earnings Call Transcript)

Looking ahead, Adobe expects revenue of $855 to $885 million next quarter (F1Q08) non-GAAP operating margin of 40%, and EPS of $0.44 to $0.46; consensus estimates had been for adjusted EPS of $0.42 on total sales of $837 million. Piper Jaffray analyst Gene Munster, who rates Adobe's shares a Buy, was enthusiastic about the company's outlook. "They raised the first quarter and by a good amount," he said. Adobe also gave a full-year 2008 operating margin target of 39% on revenue growth of approximately 13%. Shares, which fell 2.87% in composite trading Monday, fell another 0.7% in extended trading.

Sources: Press release, Bloomberg
Additional Reading: Citi Offers 10 Software Predictions for 2008

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