Wed, Oct. 7, 6:14 PM
- Adobe (NASDAQ:ADBE) narrowed the initial after-hours losses seen yesterday after the imaging/media software giant provided below-consensus FY16 sales and EPS guidance ahead of an analyst meeting, but nonetheless closed down sharply. Prior to the outlook, Adobe was barely $2 removed from a high of $87.25.
- Several analysts argued Adobe's top-line guidance isn't much to be worried about, given forex pressures, the impact of the cloud/subscription transition, and the fact Adobe expects strong revenue and ARR growth through FY18. On the other hand, some concerns were aired about Adobe's aggressive spending forecast: It expects 15% FY16 opex growth, and also a 15% opex CAGR through FY18.
- RBC's Ross MacMillan (Outperform, $100 target): “[I]mplied opex CAGR of ~15% seems high in a historic and absolute dollar context ... the good news is that we think the market will pay for higher growth and it’s clear that margin optimization is still in play for beyond FY18. Mgmt. is clearly more bullish on the opportunity and we think is trying to calibrate expense expectations to the upper boundaries of what might be required to drive growth."
- Citi's Walter Pritchard (Buy, target cut by $5 to $99): "Long-term guidance suggests 20% top-line growth and 30% EPS growth for FY15-18. We remain slightly above these ranges. As we expect the market to get over impact of FX quickly, the debate that is likely to persist is whether management will grow OpEx at the implied 15%+ rate from FY15-18 ... we note that management has never spent to guidance and we expect profitability still holds upside."
- Wunderlich's Rob Breza (Hold, $90 target) isn't as upbeat. "With approximately 77% of the model transition behind the company, we believe results should be more predictable. However, results continue to disappoint, which will likely have investors pausing. Inconsistent results over the past few quarters combined with a premium valuation and reduced estimates will likely negatively impact near- term performance until a more consistent performance record is established."
- Analyst meeting slides (.pdf)
Tue, Oct. 6, 4:10 PM
- Ahead of an analyst meeting at its annual Adobe MAX conference, Adobe (NASDAQ:ADBE) has guided for FY16 (ends Nov. '16) revenue of $5.7B and EPS of $2.70, below a consensus of $5.93B and $3.19.
- The company forecasts a 20% revenue CAGR, 25% op. cash flow CAGR, and 30% EPS CAGR from FY15 to FY18.
- Digital Media (Creative Cloud, Document Cloud) and Marketing Cloud (online ad software) revenue are both expected to rise 20% in FY16, with Marketing Cloud bookings rising 30% and Digital Media annualized recurring revenue (ARR) 25%.
- Digital Media revenue, Marketing Cloud revenue, and Digital Media ARR are each expected to see 20%+ CAGRs from FY15 to FY18. Marketing Cloud bookings are expected to see a 30% CAGR.
- Shares have tumbled to $77.97 after hours. The analyst meeting starts at 5PM ET (webcast).
- Update (5:33PM ET): Adobe is now only down 2.5%.
Fri, Sep. 18, 10:59 AM
- Down in after hours trading yesterday after beating FQ3 estimates, providing light FQ4 guidance, reporting healthy Creative Cloud subscriber growth, and announcing a management shakeup, Adobe (NASDAQ:ADBE) has turned positive this morning.
- No upgrades or downgrades have arrived. Analyst reactions to Adobe's numbers have been fairly positive, with many backing up Adobe's argument that subscription growth (both for Creative Cloud and other products) is depressing near-term quarterly numbers by pushing out revenue recognition. RBC (Outperform, $105 target) still sees FY17 (ends Nov. '17) revenue beating expectations.
- On the earnings call (transcript), Adobe stated it still expects Marketing Cloud bookings to rise 30% or more in FY16, and that it expects to end FY16 with a total deferred revenue + unbilled backlog balance of more than $3.5B. 54% of Creative Cloud subscriptions are said to be for the full suite, and 46% for individual apps.
- Adobe's FQ3 results, guidance/details
Thu, Sep. 17, 4:45 PM
- Along with the results, Adobe (NASDAQ:ADBE) states Digital Media chief David Wadhwani is leaving to "pursue a CEO opportunity." Document Cloud chief Bryan Lamkin will assume his responsibilities. In addition, CTO Abhay Parasnis will now take responsibility for Adobe's security and research teams, and "drive the overall technology strategy, architecture, and innovation and integration roadmap for Adobe's cloud services." CFO Mark Garrett will now also be responsible for corporate/M&A strategy.
- Continuing a recent trend of light guidance, Adobe expects FQ4 revenue of $1.275B-$1.325B and EPS of $0.56-$0.62 vs. a consensus of $1.36B to $0.64. Adobe reiterates the transition from up-front licenses to Creative/Document Cloud subscriptions is pushing out revenue recognition, and states "larger engagements and longer implementation cycles" are pushing Marketing Cloud revenue into the deferred revenue balance and unbilled backlog.
- Adobe added 684K Creative Cloud subs in FQ3, up slightly from FQ2's 639K and bringing the total base to 5.33M. Creative annual recurring revenue (ARR) grew by $262M Q/Q to $2.29B. Document Cloud ARR rose by $28M to $357M.
- Adobe: "We are migrating existing customers to Creative Cloud, and are attracting large numbers of first-time customers. In addition, we are now migrating significant numbers of hobbyist customers who previously used Photoshop Elements and Lightroom on a perpetual basis to the Creative Cloud Photography subscription offering."
- Top-line/regional data: Digital Media revenue +24% Y/Y to $769.7M. Digital Marketing +20% to $402.5M, with $368.4M from Marketing Cloud (ad software). Print & Publishing -4% to $45.6M. Subscription revenue ($829.1M) now accounts for 68% of total revenue. The Americas were 57% of revenue, EMEA 29%, and Asia-Pac 14%.
- Financials: Thanks to lower G&A spend, GAAP operating expenses rose just 1% Y/Y to $780.7M. Also lifting EPS: $132M was spent on buybacks. The deferred revenue balance rose by ~$80M Q/Q to $1.31B. Adobe ended FQ3 with $3.7B in cash/short-term investments, and $1.9B in debt.
- Shares have fallen to $77.75 after hours.
- Adobe's FQ3 beat, PR, datasheet (.pdf), earnings slides (.pdf)
Thu, Sep. 17, 4:04 PM
Wed, Sep. 16, 5:35 PM
Tue, Jun. 16, 4:34 PM
- With a strong dollar and the rapid shift towards subscription sales from up-front license payments weighing, Adobe (NASDAQ:ADBE) has guided (.pdf) for FQ3 revenue of $1.175B-$1.225B and EPS of $0.45-$0.51, below a consensus of $1.25B and $0.54. Likewise, FY15 (ends Nov. '15) guidance is for revenue of $4.845B and EPS of $2.05, below a consensus of $4.88B and $2.08.
- 639K Creative Cloud subs were added in FQ2, +38% Y/Y and bringing the base to 4.61M. Creative annualized recurring revenue (ARR) rose 13% Q/Q to $2.02B.
- Segment/geographic data: Digital Media (Creative Cloud/Acrobat) revenue +8% Y/Y to $747.5M. Digital Marketing (Marketing Cloud/LiveCycle) +10% to $366.5M. Print/publishing +4% to $48.2M. The Americas accounted for 58% of revenue, EMEA 28%, and Asia-Pac 14%.
- Other data: Document Cloud ARR, boosted by the March launch of the $15/month Document Cloud service, rose 11% Q/Q to $329M. Marketing Cloud (ad tech) revenue rose 15%, and the platform's bookings are still expected to rise 30% in FY15. Subscription growth led the deferred revenue balance to rise 32% Y/Y to $1.23B. Subscriptions now make up 66% of revenue.
- Financials: Operating expenses (non-GAAP) fell by $1.2M Y/Y to $684.9M. On a GAAP basis, R&D spend totaled $208M, sales/marketing $427M, and G&A $130.2M. $200M was spent to buy back 2.6M shares. Adobe ended FQ2 with $3.4B in cash/short-term investments, and $1.9B in debt.
- ADBE -1% AH to $79.15.
- FQ2 results, PR, prepared remarks/slides (.pdf), datasheet (.pdf)
Tue, Jun. 16, 4:04 PM
Mon, Jun. 15, 5:35 PM
Tue, Mar. 17, 4:54 PM
- Adobe (NASDAQ:ADBE) added 517K Creative Cloud subs in FQ1, 28% more than a year ago and bringing the total base to 3.97M. The company had only guided for CC net adds to drop Q/Q from FQ4's 644K (due to seasonality).
- FQ2 guidance is light: Revenue of $1.125B-$1.175B and EPS of $0.41-$0.47, below a consensus of $1.18B and $0.48. Many enterprise tech firms have been dealing with intense forex pressures. CC net adds are still expected to grow Q/Q each of the next 3 quarters.
- Digital Media revenue rose 10% Y/Y to $702.8M; Creative ARR grew by $180M Q/Q to $1.79B, and Document Services (Acrobat/EchoSign) ARR by $37M to $297M ahead of the Document Cloud launch. Marketing Cloud (ad tech) revenue remain strong, rising 17% to $311.5M. LiveCycle/conferencing revenue fell 4% to $45.7M.
- $174M was spent to buy back 2.4M shares. GAAP operating expenses fell 1% Y/Y to $392.7M due to lower sales/marketing spend. Thanks to subscription growth, the deferred revenue balance rose 34% Y/Y to $1.18B.
- Adobe has dropped to $76.50 AH. With shares having gone into earnings near a high of $80.30, expectations were high.
- FQ1 results, PR, datasheet (.pdf), presentation (.pdf)
Tue, Mar. 17, 4:06 PM
Mon, Mar. 16, 5:35 PM
Dec. 11, 2014, 4:49 PM
- Adobe (NASDAQ:ADBE) added 644K Creative Cloud subs in FQ4, growing the total base to 3.45M and yielding 1.146M net adds for the second half of FY14. Guidance was for CC sub growth in the second half to only "slightly exceed" 1M.
- CC sub growth is expected to decline Q/Q in FQ1 (partly due to seasonality), but then increase in each of the following three quarters. Digital media annual recurring revenue (ARR) is expected to follow a similar trend. Adobe aims to end FY15 with 5.9M CC subs (+70% Y/Y).
- Thanks to the shift to CC subscriptions from up-front licenses, standard guidance is light: Adobe expects FQ1 revenue of $1.05B-$1.1B and EPS of $0.34-$0.40 vs. a consensus of $1.1B and $0.39. FY15 (ends Oct. '15) guidance is for revenue of $4.85B and EPS of $2.05 vs. a consensus of $4.93B and $2.07.
- Creative revenue is expected to grow "significantly" in FY15. Marketing Cloud (online ad tech) revenue and bookings to respectively rise 25% and 30%. Document Services (Acrobat) is expected to grow slightly; Print and Publishing and LiveCycle/Web Conferencing are expected to decline slightly.
- Marketing Cloud revenue, also affected by a shift towards subscription revenue streams, rose 4% Y/Y to $330.2M. However, FY14 bookings were up over 30%. Document Services revenue fell 1% to $197.1M.
- $127M was spent on buybacks in FQ4. GAAP opex rose 2% Y/Y to $807.4M.
- ADBE +7.8% AH. FQ4 results, PR, datasheet, prepared remarks.
Dec. 11, 2014, 4:06 PM
Dec. 10, 2014, 5:35 PM
Oct. 6, 2014, 7:36 PM
- Adobe (NASDAQ:ADBE) has used an analyst briefing at its MAX user conference to provide new long-term financial targets (.pdf). The media software giant is aiming for FY15 (ends Nov. '15) EPS of $2.00 (below a $2.07 consensus), and FY16 EPS of greater than $3.00.
- With Adobe having absorbed most of the near-term revenue hit from its transition to a cloud/subscription model for Creative Suite, the company expects to post a 20% revenue CAGR from FY14-FY16. Digital Media and Marketing Cloud are respectively expected to see 20% and 25% revenue CAGR, and Marketing Cloud a 30% bookings CAGR.
- The company still expects to end FY14 with 3.3M paid Creative Cloud subs, up from 1.44M at the end of FY13. 60% of Digital Media revenue is expected to be recurring, up from 36% a year earlier.
- 30%+ Marketing Cloud bookings growth is expected in FY14. $1M+ contracts have grown 84% Y/Y over the first three quarters.
- Adobe is using MAX to launch a set of new and rebranded mobile apps for Creative Cloud subs. Among them: Photoshop Sketch, Photoshop Mix, Illustrator Line, Brush, Shape, and Premiere Clip. Clip is Adobe's first iOS video-editing app.
- Also unveiled: New PC Creative Cloud tools (inc. 3D printing features and Win. 8 touch support), the Creative Cloud Market content library (free to CC subs), and a public beta for the mobile Creative SDK.
Adobe Systems Inc offers a line of software and services used by creative professionals, marketers, developers, enterprises and consumers for creating, managing, delivering, measuring, optimizing and engaging with compelling operating systems.
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