Adobe Systems (ADBE) Tops Q3 EPS by 16c, Revenues Beat; Offers 4Q EPS/Revenue Guidance

Adobe Systems (NASDAQ: ADBE) reported Q3 EPS of $2.57, $0.16 better than the analyst estimate of $2.41. Revenue for the quarter came in at $3.23 billion versus the consensus estimate of $3.16 billion.

Third Quarter Fiscal Year 2020 Financial Highlights

• Adobe achieved record quarterly revenue of $3.23 billion in its third quarter of fiscal year 2020, which represents 14 percent year-over-year growth. Diluted earnings per share was $1.97 on a GAAP basis, representing 22 percent year-over-year growth, and $2.57 on a non-GAAP basis, representing 25 percent year-over-year growth.
• Digital Media segment revenue was $2.34 billion, which represents 19 percent year-over-year growth. Creative revenue grew to $1.96 billion, representing 19 percent year-over-year growth. Document Cloud revenue was $375 million, representing 22 percent year-over-year growth.
• Digital Media Annualized Recurring Revenue (“ARR”) increased $458 million quarter-over-quarter to $9.63 billion exiting the quarter, representing 24 percent year-over-year growth on a constant-currency basis. Creative ARR grew to $8.29 billion, and Document Cloud ARR grew to $1.34 billion.
• Digital Experience segment revenue was $838 million. Digital Experience subscription revenue was $729 million, representing 7 percent year-over-year growth. Digital Experience subscription revenue, excluding Advertising Cloud revenue, grew 14 percent year-over-year.
• GAAP operating income in the third quarter was $1.07 billion, and non-GAAP operating income was $1.40 billion. GAAP net income was $955 million, and non-GAAP net income was $1.25 billion.
• Cash flows from operations were a record $1.44 billion.
• Remaining Performance Obligation (“RPO”) exiting the quarter was $10.34 billion, representing 18 percent year-over-year growth.
• Adobe repurchased approximately 1.5 million shares during the quarter.

Executive Quotes

“Adobe delivered the best Q3 in our history in a challenging macroeconomic environment, demonstrating the global demand for our innovative solutions,” said Shantanu Narayen, president and CEO, Adobe. “We are confident that our leadership in the creative, document and customer experience management categories will drive continued momentum in 2020 and beyond.”

“Adobe drove outstanding performance in Q3, highlighted by growth in Creative Cloud and Document Cloud ARR, Digital Experience subscription revenue and record operating cash flows,” said John Murphy, executive vice president and CFO, Adobe. “The resilience of our recurring business model and a strong book of business is driving sustained long-term growth.”

GUIDANCE:

Adobe Systems sees Q4 2020 EPS of $2.64, versus the consensus of $2.64. Adobe Systems sees Q4 2020 revenue of $3.35 billion, versus the consensus of $3.36 billion.

For earnings history and earnings-related data on Adobe Systems (ADBE) click here.

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