Adobe Systems (ADBE) Shares Soar on Higher 1Q Earnings

Shares of Adobe Systems (ADBE) were trading up +6.04 or +6.71 percent to $96.00 per share in Friday’s premarket after the company announced first quarter earnings that beat analyst expectations yesterday after the market close. Adobe stock closed at $89.96, up +1.79 or +2.03 percent in Thursday’s regular trading session.

San Jose, California based Adobe Systems is one of the world’s largest software companies and has been at the forefront of computer software application development and marketing since its founding in 1982.
Adobe was started by John Warnock and Charles Geschke, from XeroxPARC to create the Postscript software for desktop publishing, subsequently licensed to Apple Computer. The company has a large array of products including desktop and server software, internet web design programs, document and video formats and web content management software. The company also sells its services through Creative Cloud, a subscription service that offers subscribers access to Adobe software such as Photoshop and Illustrator for a monthly fee.

For Adobe’s first fiscal quarter of 2016 ended on March 4th, the company reported diluted GAAP earnings of $0.50, with non-GAAP earnings per share of $0.66, an increase of +50 percent over last year’s first quarter. Revenue came to $1.38 billion, an increase of +25 percent over the same period one year ago. Analysts were expecting earnings per share of $0.61 on revenue of $1.34 billion.

In the company’s press release, Adobe Chief Executive Officer Shantanu Narayen noted that, “Every day, more brands, government agencies and educational institutions globally are choosing to base their digital strategies on Adobe’s content and data platforms. Our exceptional performance in Q1 is an indicator of the strong momentum we are seeing across our cloud businesses as we drive the experience economy.”

The strong increase in Adobe’s first quarter earnings was in large part due to its Digital Media, Creative Cloud and Marketing Cloud segments. Digital Media grew by +33 percent year over year to $932 million, while Creative revenue came to $733 million, an increase of +44 percent year over year.

Adobe Marketing Cloud showed strong bookings growth, in addition to record revenue of $377 million, which showed a year on year growth rate of +21 percent. The company’s Creative Cloud adoption drove its Digital Media Annualized Recurring Revenue to $3.13 billion, up +$246 million.

Net income increased +200 percent year over year on a GAAP basis, while operating income grew +78 percent. The company bought back 1.5 million of its shares in the quarter, returning $133 million back to stockholders.

For Adobe’s second quarter, the company is looking for adjusted earnings per share of $0.64 to $0.70, roughly a +35 to +45 percent increase over last year’s second quarter. The analyst consensus was for guidance of $0.65 for the quarter. Adobe stock is trading just under its yearly high of $96.42 in this morning’s premarket, showing investor’s bullish sentiment after having traded as high as $97 per share in yesterday’s aftermarket.

Other News About ADBE

Adobe Uses Vast Digital Data for More Accurate Analysis of U.S. Economy

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Adobe Named a Leader in IDC MarketScape: Worldwide Marketing Cloud Platforms 2016

Adobe was invited to participate in an independent report assessing the capability and strategy of nine leading marketing cloud platforms.

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Published on Mar 18, 2016
By Jay Hawk
Jay Hawk
Jay Hawk enjoyed a 12-year professional financial markets career incorporating extensive first hand futures and options experience obtained by trading in the stock, commodity and forex markets on U.S. exchanges. Since retiring as a full-time financial market professional, he has been actively trading stock, commodities, forex and options for his own account and managing funds for others, as well as writing financial market commentary and educational articles.

Copyrighted 2016. Content published with author's permission.

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