Enterprise software giant Adobe Systems Inc. (Nasdaq: ADBE) reported fiscal 2019 fourth-quarter profit and revenues that exceeded Wall Street estimates. The company also issued a decent fiscal 2020 and 1Q 2020 earnings and revenue outlook. The stock hit a new yearly high of $321.61 before ending the Friday trading session at $317.94, reflecting a gain of $11.98 or 3.92% from the prior close.
San Jose, California-based Adobe, reported Q4 2019 revenues of $2.99 billion, an increase of 21% from $2.46 billion in the corresponding quarter of fiscal 2019. Analysts polled by Thomson Reuters anticipated revenues of $2.97 billion for the quarter.
For the fourth quarter, profit increased to $851.86 million, or $1.76 per share, from $678.24 million, or $1.39 per share, in the prior-year period. Excluding charges, adjusted earnings for the fourth quarter ended November 29, 2019, increased to $1.117 billion or $2.29 per share, from $906.20 million, or $1.83 per share last year.
The consensus estimate of analysts was $2.26 per share for the quarter. For fiscal 2019, the company reported a new milestone revenue of $11.17 billion – an increase from $9.03 billion in fiscal 2018.
Executive vice president and CFO of Adobe, John Murphy, is optimistic about the future growth prospects of the company. Murphy said, “Adobe delivered another year of strong revenue growth and expanding profitability resulting in record earnings. We are bullish about our opportunities and our ability to continue to deliver strong top-and bottom-line growth.”
Segment-wise,
- The Digital Media division generated a 22% y-o-y increase in revenue to $2.08 billion. Specifically, Creative revenue was $1.74 billion, while Document Cloud revenue was $339 million. Refinitiv analysts had anticipated revenues of $2.05 billion.
- Digital Experience division posted revenue of $889 million, up 24% from last year.
The company has been concentrating on cloud-based subscriptions to increase revenue. Adobe’s Creative Cloud software-as-a-service offering enables users to gain access to many of its software for a monthly or yearly subscription.
It is a well-known fact that the Cloud market is dominated by software behemoths such as Microsoft and Salesforce.com. Still, Adobe has managed to carve a niche for itself by offering design and creativity-related software such as Photoshop and Illustrator.
Going forward, Adobe anticipates fiscal 2020 first-quarter revenues of roughly $3.04 billion and adjusted earnings of $2.23 per share. Analysts currently expect earnings of $2.23 per share on revenues of $3.09 billion.
For fiscal 2020, Adobe anticipates revenues of roughly $13.15 billion and earnings of $9.75 per share. The Street analysts expect earnings of $9.76 per share on revenues of $13.16 billion.
The upbeat quarterly results are anticipated to keep the stock bullish in the short-term.
Technically, the stock is receiving solid support from its 50-day moving average, as shown in the image below. The stochastic oscillator is in the bullish region. Therefore, we are anticipating the uptrend to continue in the short-term.
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