Market Overview

Adobe Stock Is Rising After Earnings; Highlights From Q4 Conference Call

  • Shares of Adobe Systems Incorporated (NASDAQ: ADBE) hit a new 52-week high of $93.65 on Friday morning.
  • Adobe reported earnings of $0.62 per share on revenue of $1.31 billion in its fourth quarter results on Thursday.
  • Following the earnings print, Adobe's management hosted a conference call to discuss its quarterly performance and outlook.

Shares of Adobe Systems were trading higher by more than 3 percent after spiking to a new 52-week high of $93.65. Investors were reacting positively to the company's fourth quarter results which were released Thursday afternoon.

Adobe said that it earned $0.62 per share on revenue of $1.31 billion in the fourth quarter. Wall Street analysts were looking for an earnings per share of $0.60 on revenue of $1.31 billion.

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Following the earnings release, Adobe's management hosted a conference call to discuss its quarterly performance and outlook. The call was hosted by the company's President and CEO, Shantanu Narayen, and its Chief Financial Officer, Mark Garrett.

Q4 In Review

  • Adobe noted "strong performance" across each of its three cloud businesses: Creative Cloud, Adobe Document Cloud, and Adobe Marketing Cloud.
  • Mobile apps, such as Photoshop Fix, received "high app store ratings" with millions of versions downloaded.
  • Adobe launched its first file sync and share partnership with Dropbox.
  • Adobe introduced Audience Marketplace, a new data exchange that connects advertisers and content publishers.
  • International adoption accelerated in countries like Japan and Germany.
  • The company also announced an expansion of its relationship with Accenture to deliver digital marketing solutions for life sciences, healthcare, and financial services.
  • Unbilled backlog at the end of the quarter grew to a record of $2.89 billion while deferred revenue grew to a record of $1.49 billion.
  • 1.4 million shares were repurchased during the quarter at a cost of $122 million.
  • Adobe's tax rate was 25 percent on a GAAP basis – inline with prior targets.
  • Adobe ended the quarter with 13,893 employees versus 13,665 at the end of the prior quarter.

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Outlook And Forward Looking Commentary

  • Adobe's growth strategy is driven by three initiatives: 1) migrating the Creative Suite installed base, 2) attracting new customers, and 3) driving higher average revenue per user through cloud services.
  • Adobe's fiscal 2016 targets include total revenue of $5.7 billion and GAAP earnings per share of approximately $1.80 (non-GAAP EPS of approximately$2.70).
  • The company expects revenue and earnings per share to grow "sequentially" during fiscal 2016.
  • The company expects its GAAP earnings per share to be in a range of $0.33 to $0.39.
  • $1.6 billion remains under the company's share repurchase authorization.

Notable Quotes

  • Narayen on Adobe's importance to clients: "We help our customers build digital experiences informed by insights, supported by data, brought to life through powerful creations, and delivered at the moment that matters."
  • Narayen on mobile-to-desktop: "Our goal is to make the mobile-to-desktop workflow for creatives as seamless as possible so that they can be creative and productive wherever they are. We're looking to expand further, with new mobile apps, like Adobe Voice and Slate, which bring Adobe technology to storytellers of every age and ability."
  • Garrett on fiscal 2015: "Fiscal 2015 was a watershed year for Adobe. Strong growth across key financial metrics reflect our amazing performance. Our long-term financial targets, including a 20% revenue CAGR through fiscal 2018, show that the benefits of our move to the cloud are just beginning."
  • Garrett on retention rates and churn: "Churn has not been a problem, retention remains really high. We've done really well from that perspective. We've talked about the fact that as customers do larger deployments. It does take a little bit longer to get them up and running and that delays the revenue clock a little bit. It's not a huge material problem. In fact it's a good thing, because they are doing larger deals with us."

Posted-In: Adobe Adobe Cloud adobe systems Shantanu NarayenEarnings News Events


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