Adobe Inc. (Nasdaq: ADBE) reported better-than-anticipated fiscal 2023 first-quarter results. The company also issued upbeat second-quarter results while lifting its FY 2023 EPS outlook. The stock of Adobe ended Thursday’s trading session at $353.29, up $19.68 or 5.90% from its prior close.
The San Jose, California-based company reported first-quarter revenues of $4.66 billion, an increase from $4.26 billion in the similar quarter last year.
For the quarter that ended March 3, 2023, Adobe posted a net income of $1.25 billion, or $2.71 per share, compared with a net income of $1.27 billion, or $2.66 per share, in the quarter that ended March 4, 2022.
Excluding stock-based and deferred compensation expenses, amortization of intangibles, acquisition-related expenses, investment (gains) losses, and income tax adjustments, among others, the Q1 2023 non-GAAP net income was $1.75 billion, or $3.80 per share, up from $1.60 billion, or $3.37 per share, in Q1 2022.
Analysts surveyed by Refinitiv had anticipated the company to post earnings of $3.68 per share on revenues of $4.62 billion.
Commenting on the result, Dan Durn, executive vice president and CFO, Adobe, stated “Our strong engine of innovation combined with world-class operational rigor drove profitable growth in Q1, setting us up to deliver another strong fiscal year.”
Segment wise:
- Subscription revenues were $4.37 billion, up 10.50% from last year.
- Product revenues fell to $120 million from $145 million in the prior-year period.
- Services and other revenues were $162 million, almost unchanged from last year.
By the nature of business:
- Digital Media segment revenue was $3.40 billion, an increase of 9% on a y-o-y basis and greater than the $3.36 billion forecast by StreetAccount analysts. Specifically, Creative revenue rose by 8% to $2.76 billion. Likewise, Document Cloud revenue surged 13% to $634 million.
- Digital Experience segment revenue grew by 11% y-o-y to $1.18 billion, surpassing the StreetAccount consensus of $1.17 billion.
Looking ahead, Adobe projects 2Q 2023 non-GAAP earnings of between $3.75 and $3.80 per share. Also, the company expects Q2 revenues in the range of $4.75 billion to $4.78 billion. Analysts surveyed by Refinitiv anticipate Q2 non-GAAP earnings of $3.76 per share on revenues of $4.76 billion.
The company now expects FY 2023 non-GAAP earnings in the range of $15.30 to $15.60 per share, up from the previous guidance range of between $15.15 and $15.45 per share. Adobe also upwardly revised its Digital Media ARR (annualized recurring revenue) to $1.70 billion from its prior level of $1.65 billion. Analysts surveyed by Refinitiv are forecasting non-GAAP earnings of $15.31 per share.
The quarterly earnings beat and upward revision of FY23 EPS are expected to keep the stock of Adobe slightly bullish in the short term.
The historical price chart indicates that the stock of Adobe is rising after testing the support level of $350. The next resistance is anticipated only near 425. Additionally, the stochastic indicator is rising toward the bullish zone. Therefore, we anticipate the share price of Adobe to remain in an uptrend in the short term.
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