Stock Update (NASDAQ:ADBE): Strong Revenue and Earnings Growth Highlight Adobe Systems Incorporated’s Third Quarter


Adobe Systems Incorporated (NASDAQ:ADBE) reported financial results for its third quarter fiscal year 2016 ended Sept. 2, 2016.

Third Quarter Financial Highlights

  • Adobe achieved record quarterly revenue of $1.46 billion, representing year-over-year growth of 20 percent.
  • Diluted earnings per share were $0.54 on a GAAP-basis, and $0.75 on a non-GAAP basis.
  • Digital Media segment revenue was a record $990 million, with Creative revenue growing 39 percent year-over-year to a record $803 million.
  • Strong Creative Cloud and Document Cloud adoption drove Digital Media Annualized Recurring Revenue (“ARR”) to $3.70 billion exiting the quarter, a quarter-over-quarter increase of $285 million.
  • Adobe Marketing Cloud achieved record revenue of $404 million.
  • Year-over-year operating income grew 50 percent and net income grew 55 percent on a GAAP-basis; operating income grew 36 percent and net income grew 37 percent on a non-GAAP basis.
  • Cash flow from operations was a record $518 million, and deferred revenue grew to a record $1.80 billion.
  • The company repurchased approximately 3.5 million shares during the quarter, returning $344 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

“We drove strong revenue and earnings performance in Q3, further distancing ourselves from our competitors,” said Shantanu Narayen, Adobe president and chief executive officer. “Our leadership in cloud-based content and data platforms make us a mission critical partner to the world’s biggest brands as they transform how they engage with their customers.”

“Fiscal 2016 is shaping up to be another great year and Adobe’s record results in Q3 reflect both our market leadership and strong execution,” said Mark Garrett, Adobe executive vice president and chief financial officer. “We are expecting another record quarter in Q4, and the leverage in our operating model is reflected in our increase to earnings targets for the year.” (Original Source)

Shares of Adobe Systems are currently trading at $107.62, up $7.08. or 7.04%. ADBE has a 1-year high of $108.19 and a 1-year low of $71.27. The stock’s 50-day moving average is $100.45 and its 200-day moving average is $96.50.

On the ratings front, Adobe has been the subject of a number of recent research reports. In a report released today, Oppenheimer analyst Brian Schwartz reiterated a Hold rating on ADBE. Separately, on the same day, Pivotal Research’s Brian Wieser maintained a Buy rating on the stock and has a price target of $125.

According to, which ranks over 7,500 financial analysts and bloggers to gauge the performance of their past recommendations, Brian Schwartz and Brian Wieser have a total average return of 20.8% and 11.0% respectively. Schwartz has a success rate of 72% and is ranked #3 out of 4172 analysts, while Wieser has a success rate of 66% and is ranked #249.

The street is mostly Bullish on ADBE stock. Out of 15 analysts who cover the stock, 11 suggest a Buy rating and 4 recommend to Hold the stock. The 12-month average price target assigned to the stock is $116.08, which implies an upside of 9% from current levels.

Adobe Systems, Inc. provides digital marketing and digital media solutions. The company operates its business through three 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. This segment also offers other tools and services, including hobbyist products, such as Adobe Photoshop Elements and Adobe Premiere Elements, Adobe Digital Publishing Suite, Adobe PhoneGap, Adobe Typekit, as well as mobile apps, such as Adobe Photoshop Mix, Adobe Photoshop Sketch and Adobe Premiere Clip that run on tablets and mobile devices. The Digital Media serves professionals, including graphic designers, production artists, web designers and developers, user interface designers, videographers, motion graphic artists, prepress professionals, video game developers, mobile application developers, students and administrators. The Digital Marketing segment offers various solutions, including analytics, social marketing, targeting, media optimization, digital experience management and cross-channel campaign management, as well as premium video delivery and monetization. This segment also offers legacy enterprise software, such as Adobe Connect web conferencing platform and Adobe LiveCycle. The Print and Publishing segment offers legacy products and services for eLearning solutions, technical document publishing, web application development and high-end printing. 

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