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Adobe CEO: 'Every Single Analyst' Identifies Us As The Industry Leader

Adobe CEO: 'Every Single Analyst' Identifies Us As The Industry Leader
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On a day where Adobe Systems Incorporated (NASDAQ: ADBE) introduced its 2015 iteration of Creative Cloud, Adobe beat expectations thanks to its cloud options, specifically Creative Cloud, Document Cloud, and Marketing Cloud.

'Unique Set Of Technology'

While most of the earnings call centered around product descriptions and offerings, Adobe's strong performance and innovation is a welcome result among an increasingly cloud-based industry that requires near continuous changes. Despite its positive results, Adobe shares fell a little under 2 percent in after-hours trading on Tuesday.

Of note, the company did reduce its FY15 sales forecast to $4.845 billion from $4.925 billion, below Wall Street consensus of $4.88 billion.

The main idea here is that Adobe has recorded record-high revenue at $1.162 billion, and the company is saying that its best overall measure of business health, Creative Annualized Recurring Revenue, or "Creative ARR" has exceeded the boundaries set by just the legacy Adobe Creative Suite. Adobe reported a growth of 230 million ARR in Q2.

Related Link: Shutterstock Still A Buy Despite Adobe Competition, Cantor Says

The board is pushing analysts away from the traditional ARPU, or average revenue per customer, to use as a measure of overall health of the company's growth and forecasts -- toward ARR, which measures various product segments.

"We have this unique set of technology aspects to help customers solve products across industries," President and CEO Shantanu Narayen said of Adobe's growth. "We believe that Adobe is in great shape and we can drive strong financial results for the rest of 2015 and beyond."

The Numbers

Given Adobe's traditionally conservative forecasts, overall, the company's revenues grew 8.8 percent in the quarter, with stronger growth expected in the back half of the year.

Adobe stated retention rates among its current customer base remain strong, and said 4.61 million outstanding Creative Cloud subscriptions are in place, with 639,000 new subscriptions matriculating in Q2.

Adobe's brought its EPS to $0.30 (basic) non-GAAP, a twelve cent increase from last year's $0.18 per share. Over the course of this year, Adobe issued 1,359 common shares.

Gross margin decreased on the year from 85.5 percent to 84.1 percent for the month ending in May. Deferred revenue, meanwhile, rose to $1.23 billion at the end of the quarter.

Adobe repurchased 2.6 million shares at a cost of $200 million; $133 million was done under the new $2 billion authorization approved by the Board of Directors in January 2015, reducing Adobe's float.

'One-Stop Shop'

The board is expecting increases in revenues through customer retention and a need to upgrade from Creative Suite software to the newer Creative Cloud system, its now "one-stop shop for creatives."

This, combined with Adobe's purchase of Fotolia in January and the release of Adobe Stock (allowing Photoshop users to even access stock photos right in the app) are newer platforms designed to increase growth among the photo community, a large majority of Adobe's creative base.

While analysts were wary of Adobe's "record" gains in quarterly revenues, Narayen made clear that Adobe's only going to grow from its already strong position.

"Every single analyst that covers the digital marketplace identifies Adobe as the leader."

Posted-In: Adobe earnings Shantanu NarayenEarnings Long Ideas News Top Stories Tech Trading Ideas Best of Benzinga


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