Earnings, outlook easily top consensus as record revenue reported
Adobe Inc. shares declined in the extended session Tuesday after the software company’s results and outlook topped Wall Street expectations but recurring revenue figures barely exceeded consensus estimates.
Adobe ADBE, -3.14% shares fell 4% after hours, following a 0.7% gain in the regular session to close at $645.89. They were down as much premarket Wednesday.
The company reported third-quarter net income of $1.21 billion, or $2.52 a share, compared with $955 million, or $1.97 a share, in the year-ago period. Adjusted earnings were $3.11 a share, compared with $2.57 a share a year ago. Revenue rose to a record $3.94 billion from $3.23 billion in the year-ago quarter.
Analysts surveyed by FactSet had forecast earnings of $3.01 a share on revenue of $3.89 billion, based on Adobe’s forecast of about $3 a share on revenue of about $3.88 billion.
“Adobe had another outstanding quarter as Creative Cloud, Document Cloud and Experience Cloud continue to transform storytelling, learning and conducting business in a digital-first world,” said Shantanu Narayen, president and chief executive of Adobe, in a statement.
Annual recurring revenue, a software-as-a-service metric that shows how much revenue the company can expect based on subscriptions, for digital media was $11.67 billion. Analysts had forecast $11.65 billion.
ARR for Adobe’s creative segment was $9.87 billion, while the Street had forecast $9.86 billion, and ARR for its document cloud segment was $1.79 billion, compared with the Street forecast of $1.79 billion.
“We drove record revenues and strong profitability in the quarter, demonstrating our ability to succeed in a dynamic environment,” said John Murphy, Adobe chief financial officer, in a statement.
Adobe expects fourth-quarter adjusted earnings of about $3.18 a share on revenue of about $4.07 billion, while analysts forecast earnings of $3.08 a share on revenue of $4.04 billion.
Adobe shares are up 36% over the past 12 months, compared with a 33% gain in the S&P 500 index SPX, 1.21%, a 37% rise in the tech-heavy Nasdaq Composite Index COMP, 1.08%, and a 36% increase in the iShares Expanded Tech-Software Sector ETF IGV, 0.95%.