The 10-second takeaway
For the quarter ended March 1 (Q1), Adobe Systems beat expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue shrank. Non-GAAP earnings per share dropped significantly. GAAP earnings per share dropped significantly.
Margins contracted across the board.
Adobe Systems notched revenue of $1.01 billion. The 20 analysts polled by S&P Capital IQ predicted revenue of $985.7 million on the same basis. GAAP reported sales were the same as the prior-year quarter's.
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 $0.35. The 21 earnings estimates compiled by S&P Capital IQ predicted $0.31 per share. Non-GAAP EPS of $0.35 for Q1 were 39% lower than the prior-year quarter's $0.57 per share. GAAP EPS of $0.13 for Q1 were 65% lower than the prior-year quarter's $0.37 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 84.5%, 510 basis points worse than the prior-year quarter. Operating margin was 9.7%, much worse than the prior-year quarter. Net margin was 6.5%, much worse than the prior-year quarter. (Margins calculated in GAAP terms.)
Next quarter's average estimate for revenue is $1.01 billion. On the bottom line, the average EPS estimate is $0.34.
Next year's average estimate for revenue is $4.12 billion. The average EPS estimate is $1.45.
The stock has a two-star rating (out of five) at Motley Fool CAPS, with 1,772 members out of 1,892 rating the stock outperform, and 120 members rating it underperform. Among 507 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 480 give Adobe Systems a green thumbs-up, and 27 give it a red thumbs-down.
Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Adobe Systems is hold, with an average price target of $38.24.
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