- Adobe reported an adjusted earnings per share (EPS) of $5.31 for Q3, surpassing estimates of $5.18 and marking an increase from $4.65 year-over-year (y/y).
- Revenue reached $5.99 billion, showing an 11% growth y/y and beating the estimated $5.91 billion.
- Digital experience revenue rose by 9.6% y/y to $1.48 billion, slightly above the expected $1.46 billion.
- Subscription revenue grew 12% y/y, totaling $5.79 billion, and exceeded the estimate of $5.69 billion.
- Product revenue decreased 17% y/y with a total of $68 million, which was below the expected $83.5 million.
- Remaining performance obligations increased 13% y/y, reaching $20.44 billion, which was higher than the forecasted $19.99 billion.
- Digital media annualized recurring revenue grew 11% y/y to $18.59 billion, slightly above the estimate of $18.57 billion.
- Research and development (R&D) expenses were $1.09 billion, a 6.5% increase y/y, aligning with expectations.
- Adjusted operating income rose 10% y/y to $2.77 billion, surpassing the expected $2.69 billion.
- Services and other revenue saw a decline of 12% y/y to $129 million, falling short of the forecasted $133.6 million.
- Adobe’s confidence in its customer strategy, AI product innovation, and market execution led to an increase in the FY25 revenue and EPS targets.
- Adobe’s shares increased by 4.2% in post-market trading, reaching $365.43 with 34,867 shares traded.
- Analyst ratings include 31 buys, 13 holds, and 2 sells.
Adobe Systems on Smartkarma
Analyst coverage of Adobe Systems on Smartkarma by Baptista Research showcases a bullish sentiment towards the company’s future prospects. In one report titled “Adobe Has The Potential To Turn AI Into Billions—Can Firefly & GenStudio Redefine Creative Monetization?“, the analysts highlight Adobe Inc.’s strong performance in the second quarter of fiscal year 2025. The company’s total revenue saw an 11% increase year-over-year, with significant contributions from its Digital Media sector, which reached $4.35 billion in revenue, and an annual recurring revenue (ARR) of $18.09 billion, reflecting a 12.1% growth.
In another report titled “Adobe’s Gen AI Playbook: The $200 Billion Opportunity You Can’t Ignore!“, Baptista Research further praises Adobe’s robust performance in Q1 of fiscal year 2025. With a record $5.71 billion in revenue, marking an 11% year-over-year increase, Adobe also saw growth in its earnings per share by 13% year-over-year. The reports emphasize the essential role of Adobe’s products in the global digital economy and reaffirm the company’s fiscal ’25 targets given its strong quarterly performance.
A look at Adobe Systems Smart Scores
| Factor | Score | Magnitude |
|---|---|---|
| Value | 2 | |
| Dividend | 1 | |
| Growth | 4 | |
| Resilience | 4 | |
| Momentum | 2 | |
| OVERALL SMART SCORE | 2.6 |
Smart Score is a compound score for the Company indicating its overall outlook. It is derived by taking an equally weighted average of underlying Factor scores computed by Smartkarma
Based on Smartkarma Smart Scores, Adobe Systems shows a promising long-term outlook. With a solid score in Growth and Resilience categories, the company is positioned for expansion and durability in the market. Growth score of 4 signifies strong growth potential for Adobe, indicating positive future performance in terms of revenue and market presence. Furthermore, a resilience score of 4 suggests that Adobe has the ability to withstand economic downturns and market volatility, underlining its stability.
Although Adobe Systems scores lower in Value and Momentum categories, with scores of 2 and 2 respectively, the company’s overall outlook remains optimistic. While value and momentum may not be its strong suits currently, the robust growth and resilience scores indicate a promising trajectory for Adobe Systems, making it an intriguing prospect for long-term investors seeking potential growth opportunities in the software industry.
Disclaimer: This article by Smartkarma is general in nature and based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Note that our articles may not factor in the latest price-sensitive company announcements or qualitative material.
While all reasonable care has been taken in the preparation, Smartkarma makes no assurance about the accuracy of any generated data or content. All content is indicative only and should be independently checked for accuracy and confirmed before use. Smartkarma accepts no responsibility for any loss or damage caused as a result of any inaccuracy or error within the Lab online tools or generated data.
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