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, 5:43 PM
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, 5:37 PM
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
Tue, Aug. 25, 9:37 AM
- "We are now into the foothills of the revenue and margin reacceleration which should gain momentum going forward," writes Baird's Steven Ashley, upgrading Adobe (NASDAQ:ADBE) to Outperform while maintaining an $85 target.
- Much like RBC's Ross MacMillan, Ashley is optimistic about the ability of Creative Cloud to expand Adobe's addressable market. "The Adobe business model transition not only enhances customer lifetime value, it also expands the market by attracting new paying-customers, and perhaps most importantly is transformational from a customer point of view."
- He adds Adobe's Creative Cloud mobile apps "incentivize legacy CS6/CS5 customers to adopt CC," as well as bring more content to the cloud, bring in new customers, and boost renewal rates. ARPU (recently pressured by subscription discounts) is expected to bottom soon, before rising over the next 18 months.
- Shares are up strongly as the Nasdaq posts a 2.9% gain.
Tue, Jun. 16, 11:02 AM
- Ahead of this afternoon's FQ2 report, Adobe (ADBE +0.6%) has announced its 2015 refresh for its mainstay Creative Cloud platform. The highlight is the launch of Adobe Stock, a stock photo service that's based on recently-acquired Fotolia, features 40M+ images, and is tightly integrated with various CC apps.
- Adobe's aggressive and flexible pricing options for Stock, which targets a $3B/year stock photo market, have drawn attention: CC subs can pay $10 for 1 image, $30/month for 10 monthly images (unused images get rolled over), and $199/month for 750 images. Stock photo rival Shutterstock (NYSE:SSTK) is selling off, much as it did when the Fotolia acquisition was announced.
- Updates for existing CC apps include: 1) The introduction of Illustrator's Artboards feature (lets users simultaneously work on multiple versions of an image) to Photoshop. 2) A fog/haze-removal tool for Photoshop and Lightroom. 3) The introduction of Adobe's Character Animator tool (animates 2D illustrations) to After Effects. 4) Major performance improvements for Illustrator.
- Meanwhile, Adobe has brought 4 of its iOS apps - Photoshop Mix, Brush CC, Shape CC, and Color CC - to Android. Two new iOS apps are also launching: Preview CC, a mobile app/Web design preview app, and Hue CC, a lighting/color scheme capture app for video projects.
- Two months ago: Adobe shows off new video tools, gets good Document Cloud reviews
Wed, Mar. 18, 9:12 AM
Tue, Mar. 17, 5:38 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)
Wed, Jan. 14, 4:43 PM
- Adobe's (NASDAQ:ADBE) buyback is good for repurchasing over 5% of shares at current levels. It succeeds a prior $2B buyback that has been used up, and is good through FY17 (ends Nov. '17).
- The media/ad software giant spent $127M on buybacks during its November quarter, and $689M over the whole of FY14. It ended the quarter with $3.7B in cash/investments to finance capital returns with, and $1.5B in debt.
- ADBE +1.2% AH.
Dec. 12, 2014, 4:52 PM
- At least nine firms hiked their Adobe (NASDAQ:ADBE) targets after the company beat FQ4 estimates, reported stronger-than-expected Creative Cloud net adds, and announced it's buying Fotolia for $800M. Shares made new highs today, and have now more than doubled since late 2012.
- "We remain above management’s guidance for Q1 as we believe guidance is conservative," says Bernstein's Mark Moerdler (Outperform). He expects Adobe to end FY15 with 6.1M CC subs (above the company's 5.9M target), and sees the base rising to 7.9M by the end of FY16 and 8.2M by the end of FY17.
- UBS' Brent Thill (Buy) thinks Adobe could deliver FY17 EPS of $4.00 (well above FY15 guidance of $2.05), and that a $100/share valuation would be justified under such circumstances given "high visibility, high teens/low 20s rev growth, and 20%+ sustainable EPS growth."
- Morgan Stanley's Jennifer Lowe (Market Perform) likes the sub growth, but also notes a mix shift towards point product sales is pressuring ARPU. "ABDE plans to add 20% more subs in FY15 than added in FY14, but the same amount of [annualized recurring revenue], suggesting that lower-cost SKUs will continue to lead the way. We believe price has been a primary concern for those holding off on Creative Cloud, and the challenge for ADBE will be striking the right balance between price and unit growth to maximize ARR."
Dec. 12, 2014, 9:16 AM
Dec. 11, 2014, 5:35 PM
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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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