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The bright guidelines of the software giant Adobe overshadowed the strong report for the second fiscal quarter.
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Adobe
The stock lost ground at the end of trading on Thursday after the provider of software for creativity, marketing and documents provided softer than expected guidance for the quarter of August and for the entire fiscal year ending in November. Adobe is feeling the effects of both the growing headwinds from negative exchange rates and the effects of the war in Ukraine.
Shares of Adobe (ticker: ADBE) fell 4.4% to $ 349 in late trading. At the regular session on Thursday, shares fell 3.1%.
For the second fiscal quarter ended June 3, Adobe (ticker: ADBE) reported revenue of $ 4.39 billion, up 14% or 15% from exchange rate adjustments and slightly ahead of its target. of $ 4.34 billion. Adjusted earnings were $ 3.35 per share, nickel above the company’s forecast. According to generally accepted accounting principles, the company earned $ 2.49 per share. Adobe said it bought back 1.9 million shares in the quarter.
CEO Shantanu Naraen said in a statement that the company sees “strong demand” in its business. Revenues in the digital media segment are $ 3.2 billion, an increase of 15%. Creative software revenue was $ 2.61 billion, up 12%, while DocumentCloud’s revenue was $ 595 million, up 27%.
Although the reported results were good, the guidelines were disappointing, albeit largely due to non-functioning factors. For the quarter for August, Adobe expects revenue of $ 4.43 billion, with earnings outside GAAP of $ 3.33 per share; The street consensus was for $ 4.51 billion in revenue and $ 3.40 per GAAP earnings per share. Based on GAAP, Adobe sees earnings of $ 2.35 per share.
For the full year, Adobe already saw revenue of $ 17.65 billion, lower than the previous forecast of $ 17.90 billion, with non-GAAP earnings of $ 13.50 per share, compared to $ 13.70 before.
The company said its outlook was clouded by a number of factors, including higher effective tax rates coupled with lower-than-expected tax breaks related to stock-based compensation, the impact of the war in Ukraine, including Adobe’s decision to suspend all new sales in Russia and Belarus, and the expected resistance of $ 175 million from negative exchange rates spread over the last two quarters of the fiscal year.
In an interview, Adobe Chief Financial Officer Dan Dern noted that the company’s full prospects have been reduced by about $ 75 million to reflect the company’s exit from Russia and Belarus, and about $ 12 million to reflect a decision to automatically renew customers. in Ukraine free of charge. He said the tax issue related to stock-based compensation is expected to hit earnings by about 25 cents a share.
Dern noted that all of these factors combined should theoretically reduce earnings prospects by 60 to 70 cents a share, but he noted that the company actually reduced the guidelines by only 20 cents as the company achieved operational efficiencies. And he stressed that all these one-off factors aside, there has been no change in the fundamental perspective of the company.
Write to Eric J. Sawitz at eric.savitz@barrons.com
