US software firm Adobe $ADBE+1.4% reports 3Q results, outlook is within analysts' expectations. However, investors were expecting a revenue increase in AI products.
Results
Subscription revenue increased 12% y-o-y to USD 4.63bn, against analyst estimates of USD 4.57bn.
Product revenue decreased 24% year-over-year to $96 million. Product sales were down USD 96 million, compared to the USD 124 million estimate. USD 250 MILLION.
Research and development expenses were EUR 881 million. Research and development was USD 881 million, up 14% year-on-year. Analysts had estimated it at EUR 856.7 million. USD 856 MILLION.
Services and other revenues were $163 million. Services and other services were USD 163.6 million, compared to the USD 169.9 million estimate. USD. Thus, they fell by 8.9% year-on-year.
The company has remaining contracted commitments of USD 15.72 billion, up 11% year-on-year.
Revenue from the Digital Media segment was USD 3.59 billion, up 11% year-on-year (14% excluding the impact of currency movements). The Creative segment generated revenues of USD 2.91 billion and grew by the same figures year-on-year. Document Cloud revenue was $685 million. The document document business was USD 688m and grew by 13% year-on-year (15% at constant currency rates).
Adobe's incremental recurring annualized revenue was $464 million. USD 466.0 million, compared to analyst consensus of USD 411.3 million. USD 4.6 BILLION. As a result, annualized revenues from Digital Media are now $14.6 billion, from the Creative segment $11.97 billion and from Document Cloud $2.63 billion.
The company repurchased approximately 2.1 million of its shares during the quarter.
Outlook
Adobe expects 4Q revenue between USD 4.98bn and USD 5.03bn, analysts had estimated USD 5bn.
It also expects adjusted earnings per share in the range of $4.10 to $4.15, analysts were expecting $4.06.
It expects digital media revenue in the range of $3.67 billion - $3.70 billion, analysts' consensus was $3.66 billion. It expects new annualized recurring revenue from this segment to be around $520 million. USD 520 MILLION.
It expects revenue from digital experiences to be between USD 1.25bn and USD 1.27bn in 4Q.
CEO and CFO commentary
Shantanu Narayen, CEO of the company said: "The recent launches of Firefly, Express, Creative Cloud and GenStudio deliver the magic of Abdoba to millions of users."
Adobe CFO Dan Durn commented on the results, "Adobe delivered world-class margins and earnings in the third quarter while investing significantly in our technology platforms [...] Our innovation engine, global reach and highly rigorous operations position us to capture the big opportunities ahead."
Shares
Adobe stock closed yesterday at $552.16 per share. It weakened 1.82% to $542.13 per share in the pre-burst period.
Following the results, analyst Saket Kalia raised his target price on the stock to $640 from $620 per share and maintained an equal-weight recommendation.
Thanks for the summary. I see the stock is up nicely this year, but after earnings the stock is down.
Investors are getting too greedy... :)
Thanks for the summary. Investors are reacting negatively to positive results and the stock is sinking. It's holding up nicely though at $521 support.