Earnings Review and Free Research Report: Adobe Reported Record Revenue, up 26%; EPS Soared 56%

LONDON, UK / ACCESSWIRE / October 3, 2017 / Pro-Trader Daily has just published a free post-earnings coverage on Adobe Systems Inc. (NASDAQ: ADBE), which can be viewed by registering at http://protraderdaily.com/optin/?symbol=ADBE, following the Company's announcement of its third quarter fiscal 2017 financial results on September 19, 2017. The creative software Company outperformed top- and bottom-line expectations and provided guidance for the upcoming quarter. Our daily stock reports are accessible for free, and with those to look forward today you also will be signing up for a complimentary member's account at:

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Earnings Reviewed

For its third quarter fiscal year, 2017 ended September 01, 2017, Adobe achieved record quarterly revenue of $1.84 billion, up 26% compared to revenue of $1.46 billion. On a q-o-q currency perspective, FX increased Company's revenue by $9.6 million. Adobe had $200,000 in hedge gains in the reported quarter versus $13.3 million in hedge gains in Q2 FY17. Adobe's revenue beat analysts' expectations of $1.82 billion.

On a GAAP basis, Adobe's operating income grew 48% to $545.67 million in Q3 FY17 compared to operating income of $369.33 million in Q3 FY16. On a non-GAAP basis, the Company's operating income surged 43% to $700.30 million.

For Q3 FY17, Adobe posted net income of $419.57 million, or $0.84 per diluted share, compared to net income of $270.79 million or $0.54 per diluted share, for Q3 FY16. The Company reported non-GAAP earnings of $1.10 per diluted share versus $0.75 per diluted share for the year-ago same period. Adobe's earnings beat Wall Street's expectations of $1.01 per share.

Segment Results

During Q3 FY17, Adobe's Digital Media segment's revenue jumped 28% to $1.27 billion. The addition of $308 million net new Digital Media Annualized Recurring Revenue (ARR) during the reported quarter grew total Digital Media ARR to $4.87 billion exiting Q3 FY17. Within Digital Media, Adobe delivered Creative revenue of $1.06 billion, which represented growth of 33% on a y-o-y basis. Furthermore, the Company increased Creative ARR by $272 million during the reported quarter and exited Q3 FY17 with $4.32 billion of Creative ARR.

In the reported quarter, Adobe Experience Cloud achieved record revenue of $508 million, which represents 26% y-o-y growth. Notable areas of strength included Adobe Audience Manager, Adobe Campaign, and Adobe Advertising Cloud. The Company noted that it has now approximately $3 billion of annualized ad spend across search, social, display, and video. During Q3 FY17, Mobile data transactions grew to 57% of total Adobe Analytics transactions.

For Q3 FY17, Adobe achieved Document Cloud revenue of $206 million, and Document Cloud ARR grew to $556 million exiting Q3 FY17. Across Creative Cloud and Document Cloud, Acrobat adoption accelerated again when compared to recent quarters, achieving 19% y-o-y unit growth.

Cash Matters

During Q3 FY17, Adobe's cash flow from operations was $704.44 million compared to operating cash flow of $517.89 million for Q3 FY16. The Company's deferred revenue grew to a record $2.2 billion, up 23% y-o-y, primarily driven by strength in Digital Media.

Adobe's trade DSO was 50 days in the reported quarter, which compared to 45 days in the prior year's same quarter and 46 days in Q2 FY17. The Company's cash and short-term investment position exiting Q3 FY17 was $5.4 billion.

Adobe repurchased approximately 2.1 million shares during Q3 FY17, returning $298 million of cash to stockholders. The Company has approximately $2.2 billion remaining of its $2.5 billion stock repurchase authority granted in January 2017.

Outlook

In Q4 FY17, Adobe is targeting revenue of approximately $1.950 billion; net new Digital Media ARR of approximately $330 million; Digital Media segment's revenue growth of approximately 25% on a y-o-y basis; and Adobe Experience Cloud y-o-y revenue growth of approximately 17%. The Company is estimating GAAP earnings per share of approximately $0.86 and non-GAAP earnings per share of approximately $1.15.

For FY17, Adobe is projecting total Digital Media segment growth of approximately 26% on a y-o-y basis; total Adobe Experience Cloud growth of approximately 24%; and total Adobe growth of approximately 24% compared to FY16.

Stock Performance

On Monday, October 02, 2017, the stock closed the trading session at $147.94, slightly down 0.83% from its previous closing price of $149.18. A total volume of 2.33 million shares have exchanged hands, which was higher than the 3-month average volume of 1.99 million shares. Adobe Systems' stock price soared 6.89% in the last three months, 14.16% in the past six months, and 36.30% in the previous twelve months. Furthermore, since the start of the year, shares of the Company have skyrocketed 43.70%. The stock is trading at a PE ratio of 46.54. At Monday's closing price, the stock's net capitalization stands at $73.00 billion.

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