Adobe tops estimates on digital media business momentum

June 14, 2018 | By | Reply More

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Adobe’s shares, which have gained over 47% so far this year, fell 3.5% at USD$249(RM992) in extended trading after the company forecast third-quarter revenue nearly in line with estimates.

Adobe company logos are seen in this picture illustration taken in Vienna. (Reuters pic)

BENGALURU: Adobe Systems Inc topped analysts’ profit and revenue estimates for the eighth straight quarter driven by strength in its digital media business, which houses its flagship product Creative Cloud.

Adobe’s shares, which have gained over 47% so far this year, fell 3.5% at USD$249(RM992) in extended trading after the company forecast third-quarter revenue nearly in line with estimates.

The maker of image-editing software Photoshop said it expects third-quarter revenue of USD$2.24 billion (RM8.9 billion) and adjusted earnings of USD$1.68(RM6.70) per share. This compares with analysts’ estimate of a revenue of USD$2.22 billion(RM8.8 billion) and adjusted earnings of USD$1.61(RM6.42) per share.

“The third-quarter guidance looks to be an in-line guide, which we would expect them to beat given how strong the business is. But, it is nothing we are worried about,” said Christopher Rossbach, chief investment officer at private investment firm J Stern, which holds a position in Adobe.

Last month, in a move to bolster its Experience Cloud business, Adobe agreed to buy e-commerce services provider Magento Commerce from private equity firm Permira for USD$1.68 billion(RM6.7 billion).

“We expect the closing of Magento to be slightly dilutive to our Q3 GAAP earnings per share target”, Chief Financial Officer John Murphy said on a conference call with analysts.

Adobe’s second-quarter net income rose to USD$663.2 million(RM2.6 billion), or USD$1.33(RM5.30) per share, from USD$374.4 million(RM1.5 billion), or 75 cents(RM2.99) per share, a year earlier.

The company’s digital media business, that includes Creative Cloud, posted revenue of USD$1.55 billion(RM6.2 billion), compared with USD$1.21 billion(RM4.8 million), a year earlier.

Revenue in Adobe’s Experience Cloud business, which provides services including analytics, advertising and marketing, rose to USD$586 million(RM2.33 billion), above estimates of USD$570.4 million(RM2.3 billion).

Adobe’s quarterly revenue rose to USD$2.20 billion(RM8.76 billion) from USD$1.77 billion(RM7.05 billion), beating analysts’ estimate of USD$2.16 billion(RM8.16 billion).

Excluding certain items, Adobe earned USD$1.66(RM6.62) per share, beating analysts’ estimate of USD1.54(RM6.14) per share.


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