After Adobe (NASDAQ:ADBE) posted quarterly earnings that topped its own guidance and Street estimates, shares of the content development and marketing software company rallied in late trading Wednesday.
The company also raised its outlook on some of its fiscal 2023 targets and issued its forecast for the second quarter. Shares rose about 5% to $349.50 following the earnings release.
According to a statement, for the quarter that ended on 3 March, revenue climbed 9% year-over-year, while net income fell slightly to $1.25 billion.
Adobe's Digital Media segment, including its Creative Cloud design software bundle, generated revenue of $3.4 billion, up 9% from a year ago, beating the $3.36 billion consensus among analysts polled by StreetAccount.
The Digital Experience segment, featuring Marketo marketing software, added $1.18 billion in revenue, slightly above estimates of $1.17 billion.
"Adobe drove record first-quarter revenue, and we are raising our annual targets based on the tremendous market opportunity and continued confidence in our execution," said chairman and CEO Santanu Narayen in the release.
In the second quarter, the software maker expects revenue between $4.75 billion and $4.78 billion and adjusted earnings between $3.75 and $3.80 a share.
For the full year, the company upgraded guidance on earnings per share from $15.15 to $15.45 previously to between $15.30 and $15.60. The midpoint of $15.45 topped Wall Street's goal of $15.29.
Meanwhile, despite ongoing challenges, the company continues to engage with US, UK, and Europe regulators on its pending $20 billion purchase of design software startup Figma. Adobe expects to close the acquisition by the end of 2023.
"The potential combination continues to be well-received by customers, industry analysts, and partners," Narayen said.
Goldman Sachs analyst Kash Rangan said the results were "solid," reiterating a Buy rating and a $475 per share price target. He noted, "this is one of the first prints in software that suggest elevated conviction in FY targets based on 2023 demand activity."
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