#FloatLikeAButterflyStingLikeADBE: Adobe's Earnings End A Great 2015 - Adobe (NASDAQ:ADBE)

Adobe Systems Incorporated ADBE shares have appreciated 22.37 percent year-to-date, rising almost to their 52-week high on December 4.

Stephens’ Alex Zukin has maintained an Overweight rating on the company, while raising the price target from $100 to $115, while Citi’s Walter H. Pritchard has maintained a Buy rating and price target of $99 on the company.

The company has ended 2015 on a very strong note, with robust 4Q results across the board and very strong subscriber additions, significantly ahead of the consensus.

A Very Strong Quarter

Analyst Alex Zukin elaborated that while CC sub adds and digital media ARR were significantly ahead of the consensus, marketing cloud booking rose 35 percent, both sequentially and year-on-year.

“Our core thesis on the name is that the company is expanding the market opportunity for Creative Cloud, positioning for greater monetization of that customer base while also delivering on a high-growth Marketing Cloud business that fuels long-term growth and profitability,” Zukin stated.

Related Link: Adobe Stock Is Rising After Earnings Highlights From Q4 Conference Call

The key metrics for the quarter included total revenue of $4.796 billion, with EPS of $2.08. Net creative cloud sub adds came in at 833,000, well above the consensus. Total revenue for marketing cloud, however, was below expectations, driven by higher than expected selection of managed services offerings.

Management increased its FY16 digital media ARR guidance, without appearing to have “made concessions on ARPU despite the significant increase in subscribers.” Adobe Systems also indicated that it did not expect any slowing down in the pace of new customer additions going forward.

The non-GAAP EPS estimate for FY16 has been raised from $2.72 to $2.73.

Sub Adds Steal The Show

Analyst Walter H. Pritchard mentioned that the quality of the subscriber additions stole the show, while ARPU remained stable for the third consecutive quarter. Operating margins continued to improve during 4Q, coming in ahead of the consensus and the estimates, driving higher than expected EPS.

The 1Q revenue guidance was slightly ahead of the estimates but below the consensus, while the digital media ARR guidance for 2016 was raised from $250 million to $3.875 billion, driven by the strong sub adds in Q4 and expectations of stable ARPU.

“Management noted FY16 revenue guidance remained unchanged as the increase in ARR is offset by less ST revenues,” Pritchard mentioned, adding that the FY15-18 targets also remained unchanged.
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