Founder and CEO at Estimize, former Quant Hedge Fund Manager

Adobe Systems Inc. ( ADBE ) Information Technology - Software | Reports December 15, After Market Closes

Key Takeaways

• The Estimize consensus is looking for earnings per share of 87 cents on $1.59 billion in revenue, 1 cent higher than Wall Street on the bottom line and right in line on the top
• Record growth continues to be driven by increasing adoption of its Creative Cloud and Marketing Cloud products
• Slowing growth, lower end market demand and increasing competition pose a problem in the quarter to be reported and future quarters
• What are you expecting for ADBE ? Get your estimate in here !

Adobe Systems kicks off the fourth quarter when it releases its quarterly results tomorrow after the closing bell. The significant strides Adobe made in the Creative Cloud and Marketing Cloud businesses continue to translate into robust financial performance. Earnings and revenue for each of the past 10 quarters have exceeded analysts expectations but also led to positive stock movement. On the year, shares increased by 13%, which is roughly in line with the broader S&P 500. Investors expect the fourth quarter to accomplish 2 major things; beat target estimates and push share prices higher.

Analysts at Estimize believe Adobe will deliver 87 cents per share on the bottom line, roughly 39% higher than Q4 2015. That estimate edged higher by about 10% since Adobe’s most recent report in September. Revenue for the period is forecasted to grow by 21% to $1.59 billion , marking 6 consecutive quarters of 20% top line growth. Given the company’s recent success, shares tend to jump by 2% immediately following an earnings report.
A large portion of Adobe’s recent gains are driven by innovation in the Creative Cloud and Marketing Cloud businesses. Creative Cloud continues to see increasing adoption rates, driving digital media annualized recurring revenue to $3.70 billion in the second quarter, a $285 million increase quarter of quarter. Meanwhile, Adobe Marketing Cloud recorded historic revenue of $404 million. Strong adoption rates continue to drive robust revenue, profit and cash flow in recent quarterly reports. This should continue to serve as a catalyst for future reports.

That said, investors will be carefully watching the company’s annualized recurring revenue. If this begins to slow down it indicates that users are letting their subscriptions expire or the company isn’t doing a good job of upselling its existing user base. Moreover, lower end market demand and increasing competition from companies like Microsoft could weigh down earnings.
Do you think ADBE can beat estimates? There is still time to get your estimate in here !

Photo Credit: Charis Tsevis