On Sept. 17, creativity software maker Adobe Systems
- Adobe blew its own guidance away, leaving the upper end of the revenue guidance range $52 million behind and eating the company's dust. The GAAP-diluted EPS came in at $0.34 -- well ahead of its target of $0.28-$0.31.
- The company spent $727 million on share repurchases this quarter and bought back about 9 million shares above and beyond expectations, and up from $34.9 million a year ago.
- Management expects to do at least this well in the fourth quarter on every count. Revenues and margins are supposed to grow, and the buyback continues.
- All these good things are happening because the recent round of updated software releases is doing astonishingly well in the marketplace. The sales directors responsible for Corel
(NASDAQ:CREL) Draw and Microsoft(NASDAQ:MSFT) SilverLight clearly live in interesting times right now -- in the Chinese sense of that phrase.
(Figures in millions, except per-share data)
Income Statement Highlights
|
Q3 2007 |
Q3 2006 |
Change |
|
|---|---|---|---|
|
Sales |
$852 |
$602 |
41.4% |
|
Net Profit |
$205 |
$94 |
117.4% |
|
EPS |
$0.34 |
$0.16 |
112.5% |
|
Diluted Shares |
597.3 |
600.9 |
(0.6%) |
Get back to basics with the income statement.
Margin Checkup
|
Q3 2007 |
Q3 2006 |
Change* |
|
|---|---|---|---|
|
Gross Margin |
89.1% |
88.5% |
0.7 |
|
Operating Margin |
29.9% |
18.3% |
11.7 |
|
Net Margin |
24.1% |
15.7% |
8.4 |
Margins are the earnings engine.
Balance Sheet Highlights
|
Assets |
Q3 2007 |
Q3 2006 |
Change |
|---|---|---|---|
|
Cash + ST Invest. |
$1,956 |
$1,986 |
(1.5%) |
|
Accounts Rec. |
$261 |
$285 |
(8.3%) |
|
Inventory |
$0 |
$0 |
N/A |
|
Liabilities |
Q3 2007 |
Q3 2006 |
Change |
|---|---|---|---|
|
Accounts Payable |
$64 |
$39 |
66.7% |
|
Long-Term Debt |
$0 |
$0 |
N/A |
The balance sheet reflects the company's health.
Cash Flow Highlights
|
Q3 2007 |
Q3 2006 |
Change |
|
|---|---|---|---|
|
Cash From Ops. |
$425 |
$191 |
122.1% |
|
Capital Expenditures |
$32 |
$19 |
70.6% |
|
Free Cash Flow |
$393 |
$173 |
127.7% |
|
$255 |
$150 |
69.8% |
Free cash flow is a Fool's best friend.
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