Published - December 16, 2022 @ 11:25 AM (EET)
On Thursday, Adobe announced fourth-quarter earnings and gave guidance that exceeded Wall Street estimates.
While the stock is down 42% so far this year, shares of the software company rose 6% in extended trading following the results, a clear indication that investors are relieved that Adobe didn't show intensifying effects from the softening economy.
Various business software companies, including Salesforce Inc (NYSE:CRM), and Okta Inc (NASDAQ:OKTA), have indicated in recent months that customers are being more cautious about their spending plans.
QUARTERLY RESULTS
In the quarter ending 2 December, total revenue grew 10% year-over-year to $4.53 billion on continued demand for its creative design and analytics software.
Sales in digital media, which includes Photoshop and other signature software, increased 10% to $3.3 billion. Digital experiences, including analytics and marketing, climbed 14% to $1.15 billion.
The full-year guidance was the same as the company's previous guidance in October. The software giant expects revenue in fiscal 2023 to be $19.2 billion and profit, excluding some items, to reach between $15.15 and $15.45 a share.
In the first quarter, Adobe called for $4.60 billion to $4.64 billion in revenue and said it expects adjusted earnings of $3.65 to $3.70. However, the results did not include Figma Inc., the design platform Adobe (NASDAQ:ADBE) recently agreed to buy.
Despite regulatory review in the US, UK, and Europe, Adobe expects the $20 billion purchase to complete next year. The proposed acquisition would be one of the most expensive purchases ever of a private software maker.
Adobe chairman and CEO Shantanu Narayen commented on the results,
"Adobe drove record revenue and operating income in fiscal 2022." He added, "Our marketing opportunity, unparalleled innovation, operational rigor, and exceptional talent position us well to drive our next decade of growth."
PRICE TARGET: Based on 35 analysts' ratings covered by Refinitiv, Adobe stock is considered a Buy (19 Buys, 16 Holds). In addition, the average price target of $372.67 implies an upside potential of 9.58%.
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