Adobe issues healthy guidance; Creative Cloud momentum continues

|About: Adobe Systems Incorporated (ADBE)|By:, SA News Editor

Adobe (ADBE) expects FQ2 revenue of $1B-$1.05B and EPS of $0.26-$0.32, largely favorable to a consensus of $990.4M and $0.27. FY14 (ends Nov. '14) guidance is for "relatively flat" revenue growth and EPS of $1.10 vs. a consensus for 0.6% growth and $1.12. Adobe's shift to recurring revenue streams has been pushing out revenue recognition.

405K paid Creative Cloud subs were added in FQ1 vs. 402K in FQ4 and 331K in FQ3; the total base is now at 1.84M. Creative Cloud's annualized recurring revenue (ARR) rose to $987M from $801M at the end of FQ2. Adobe is aiming for 3M paid subs and ARR of $1.6B by the end of FY14.

Total digital media revenue (pressured by the Creative Cloud shift) fell 7% Y/Y to $641.1M. Digital marketing revenue rose 17% to $314.4M, fueled by a 24% increase in Marketing Cloud revenue to $267M (down from 38% growth in FQ4). Adobe is shooting for FY14 Marketing Cloud revenue and bookings growth of 20% and 30%, respectively.

Opex rose 3% Y/Y, and $263M was spent on buybacks. The deferred revenue balance rose by $52M Q/Q to $881M. 52% of revenue is now recurring.

Shares +0.7% AH. FQ1 results, PR, datasheet, prepared remarks.