The 10-second takeaway
For the quarter ended Aug. 31 (Q3), Adobe Systems missed estimates on revenues and met expectations on earnings per share.
Compared to the prior-year quarter, revenue grew and GAAP earnings per share expanded.
Margins contracted across the board.
Adobe Systems chalked up revenue of $1.08 billion. The 23 analysts polled by S&P Capital IQ expected to see a top line of $1.10 billion on the same basis. GAAP reported sales were 6.6% higher than the prior-year quarter's $1.01 billion.
Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.
EPS came in at $0.58. The 24 earnings estimates compiled by S&P Capital IQ anticipated $0.58 per share. GAAP EPS of $0.40 for Q3 were 2.6% higher than the prior-year quarter's $0.39 per share.
Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.
For the quarter, gross margin was 88.9%, 80 basis points worse than the prior-year quarter. Operating margin was 26.0%, 140 basis points worse than the prior-year quarter. Net margin was 18.6%, 70 basis points worse than the prior-year quarter.
Next quarter's average estimate for revenue is $1.10 billion. On the bottom line, the average EPS estimate is $0.57.
Next year's average estimate for revenue is $4.35 billion. The average EPS estimate is $2.32.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 1,792 members out of 1,911 rating the stock outperform, and 119 members rating it underperform. Among 489 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 460 give Adobe Systems a green thumbs-up, and 29 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Adobe Systems is outperform, with an average price target of $33.85.
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Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor of Motley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. The Motley Fool has no positions in the stocks mentioned above. Motley Fool newsletter services recommend Adobe Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.