Adobe Systems Incorporated (ADBE 0.89%) just capped an excellent fiscal 2015 in its ongoing transition to a subscription-based software model. But similar to its quarterly report three months ago, the creative software provider offered lighter-than-expected guidance for the coming year. But before we get there, let's take a closer look at what Adobe accomplished in its latest quarter.

Adobe Systems results: The raw numbers


Fiscal Q4 2015 Actuals

Fiscal Q4 2014 Actuals

Growth (YOY)


 $1.31 billion

 $1.07 billion


GAAP net income

 $222.7 million

 $88.1 million


GAAP earnings per share (diluted)




Data source: Adobe Systems Incorporated.

What happened with Adobe Systems this quarter?

  • Excluding one-time items, adjusted net income rose 59.4% year over year to $311.9 million, or $0.62 per diluted share.
  • Both Adobe's top and bottom lines came in at the high end of "light" guidance provided in September, which called for revenue of $1.275 billion to $1.325 billion, and adjusted EPS of $0.56 to $0.62.
  • Digital media annualized recurring revenue increased $350 million to $2.99 billion exiting the quarter, including a $310 million increase in creative ARR to $2.6 billion.
  • Added 833,000 net new Creative Cloud subscriptions (accelerating from 684,000 last quarter), leaving Adobe with a total of 6.17 million.
  • Adobe Marketing Cloud revenue was $352 million, reached 30% annual bookings growth for the year, and enjoyed a "stronger-than-expected shift in customer adoption to SaaS-based solutions."
  • Cash flow from operations was $455 million.
  • Deferred revenue increased to a company-record $1.49 billion, up from $1.31 billion last quarter.
  • Adobe repurchased 1.4 million shares for $122 million, bringing total repurchases for the fiscal year to 8.1 million shares for $627 million.

What management had to say 
Adobe CEO Shantanu Narayen stated, "Adobe is driving digital experiences that are fundamental to the transformation of every global brand, government and educational institution. Our record revenue and strong momentum are a reflection of our industry-leading content and data solutions in Digital Media and Digital Marketing."

CFO Mark Garrett also reminded investors of their financial goals, laid out at the company's annual meeting in October: "Our long-term financial targets, including a 20% revenue CAGR through fiscal 2018, show that the benefits of our move to the cloud are just beginning."

Looking forward 
In the meantime, during the subsequent conference call Garrett told investors to expect continued momentum as Adobe heads into its new fiscal year. As such, Adobe is increasing its net new digital media ARR growth target to roughly $1 billion this year (up from $738 million previously), bringing its total target for digital media ARR in fiscal 2016 to $3.875 billion.

Additionally, Adobe anticipates revenue and earnings per share to grow sequentially for each quarter during the year, including sequential growth from fiscal Q4 2015 to the current quarter in both Creative and Marketing Cloud. As a result, Adobe is targeting fiscal first-quarter 2016 revenue of $1.30 billion to $1.35 billion, GAAP earnings per share of $0.33 to $0.39, and adjusted EPS of $0.56 to $0.62. For perspective, Wall Street's consensus estimates predicted roughly the same revenue would result in adjusted earnings per share near the high end of Adobe's expected range.

But even putting aside Adobe's propensity for under-promising and over-delivering, that shouldn't be terribly concerning given Adobe's ambitious share repurchase efforts. More than anything, I think this quarter represented another impressive performance from Adobe, as it continues to demonstrate accelerating momentum in its transition to the cloud.