Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of diversified software company Adobe Systems Incorporated (NASDAQ:ADBE) popped 10% today after its quarterly results impressed Wall Street.
So what: Adobe's Q4 results -- profit sank 70% on a revenue decline of 10% -- and current-quarter guidance missed analyst estimates, but whopping subscription growth reinforces optimism over the company's longer-term prospects. In fact, subscription-based revenue spiked 85% as Adobe added 402,000 Creative Cloud subscribers, up from the gain of 331,000 in Q3, suggesting that its cloud momentum isn't about to slow anytime soon.
Now what: Management now sees Q4 EPS of $0.22-$0.28 on revenue of $950 million-$1 billion, versus the consensus estimate of $0.33 and $1.02 billion. "Creative Cloud and Adobe Marketing Cloud are the clear market leaders and are poised for accelerated growth," said President and CEO Shantanu Narayen. "As a result, we are well-positioned to begin returning value to shareholders while continuing to focus on design wins and further invest in our business and our next-generation products." With the stock surging to another 52-week high today and trading at a forward P/E around 30, however, much of that bullishness might already be baked into the price.
Fool contributor Brian Pacampara has no position in any stocks mentioned. The Motley Fool recommends 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.
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