The 10-second takeaway
For the quarter ended May 31 (Q2), Adobe Systems met expectations on revenues and beat expectations on earnings per share.
Compared to the prior-year quarter, revenue contracted. Non-GAAP earnings per share dropped significantly. GAAP earnings per share dropped significantly.
Margins dropped across the board.
Adobe Systems chalked up revenue of $1.01 billion. The 21 analysts polled by S&P Capital IQ anticipated a top line of $1.01 billion on the same basis. GAAP reported sales were 10% lower than the prior-year quarter's $1.12 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 $0.36. The 26 earnings estimates compiled by S&P Capital IQ anticipated $0.34 per share. Non-GAAP EPS of $0.36 for Q2 were 40% lower than the prior-year quarter's $0.60 per share. GAAP EPS of $0.15 for Q2 were 67% lower than the prior-year quarter's $0.45 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 86.6%, 180 basis points worse than the prior-year quarter. Operating margin was 13.5%, much worse than the prior-year quarter. Net margin was 7.6%, 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 $4.10 billion. The average EPS estimate is $1.45.
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 1,768 members out of 1,889 rating the stock outperform, and 121 members rating it underperform. Among 515 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 487 give Adobe Systems a green thumbs-up, and 28 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 $45.35.
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