Adobe Systems Incorporated (ADBE) Announces Q1 Fiscal Year 2017 Financial Results


Adobe Systems Incorporated (NASDAQ:ADBE) reported financial results for its first quarter fiscal year 2017 ended March 3, 2017.

Financial Highlights

  • Adobe achieved record quarterly revenue of $1.68 billion in its first quarter of fiscal year 2017.
  • Diluted earnings per share was $0.80 on a GAAP-basis, and $0.94 on a non-GAAP basis.
  • Digital Media segment revenue was $1.14 billion, with record Creative revenue growing to $942 million.
  • Strong Creative Cloud and Document Cloud adoption and retention drove Digital Media Annualized Recurring Revenue (“ARR”) to $4.25 billion exiting the quarter, a quarter-over-quarter increase of $265 million.
  • Adobe Marketing Cloud achieved record revenue of $477 million.
  • Operating income grew 52 percent and net income grew 57 percent year-over-year on a GAAP-basis; operating income grew 40 percent and net income grew 42 percent year-over-year on a non-GAAP basis.
  • Cash flow from operations was a record $730 million, and deferred revenue grew to approximately $2.1 billion.
  • The company repurchased approximately 2.2 million shares during the quarter, returning $238 million of cash to stockholders.

A reconciliation between GAAP and non-GAAP results is provided at the end of this press release and on Adobe’s website.

Executive Quotes

“Whether you’re a designer, student, enterprise or government agency, reimagining your customer experience has become a critical part of every digital transformation strategy,” said Shantanu Narayen, president and CEO of Adobe. “Adobe’s mission to help our customers design and deliver great experiences has never been more relevant as is reflected in our outstanding Q1 results.”

“Adobe achieved record revenue, profit and cash flow in Q1,” said Mark Garrett, Adobe executive vice president and chief financial officer. “Our solid execution and business momentum combined with strong market tailwinds give us confidence in our ability to continue to deliver strong financial results. We remain bullish about our prospects for the rest of 2017 and beyond.”

Shares of Adobe are up nearly 4% to $127.23 in after-hours trading. ADBE has a 1-year high of $127.23 and a 1-year low of $87.25. The stock’s 50-day moving average is $117.78 and its 200-day moving average is $108.77.

On the ratings front, ADBE has been the subject of a number of recent research reports. In a report released yesterday, RBC analyst Ross MacMillan reiterated a Buy rating on ADBE, with a price target of $130, which represents a potential upside of 5% from where the stock is currently trading. On March 10, Cowen’s Derrick Wood reiterated a Buy rating on the stock and has a price target of $140.

According to TipRanks.com, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Ross MacMillan and Derrick Wood have a yearly average return of 20.1% and 3.9% respectively. MacMillan has a success rate of 80% and is ranked #16 out of 4545 analysts, while Wood has a success rate of 67% and is ranked #1436.

Sentiment on the street is mostly bullish on ADBE stock. Out of 6 analysts who cover the stock, 4 suggest a Buy rating and 2 recommend to Hold the stock. The 12-month average price target assigned to the stock is $119.60, which represents a slight downside potential from current levels.

Adobe Systems, Inc. engages in the provision of digital marketing and digital media solutions. It operates through the following segments: Digital Media, Digital Marketing, and Print and Publishing. The Digital Media segment offers creative cloud services, which allow members to download and install the latest versions of products, such as Adobe Photoshop, Adobe Illustrator, Adobe Premiere Pro, Adobe Photoshop Lightroom and Adobe InDesign, as well as utilize other tools, such as Adobe Acrobat. The Digital Marketing segment offers solutions, including analytics, social marketing, targeting, media optimization, digital experience management, and cross-channel campaign management, as well as premium video delivery and monetization. The Print and Publishing segment offers legacy products and services for eLearning solutions, technical document publishing, web application development, and high-end printing.