Adobe (ADBE) Q4 2022 Earnings

Shantanu Narayen, CEO of Adobe

Mark Neuling | CNBC

Adobe Shares rose 6% in extended trading Thursday after the design software maker reported fiscal fourth-quarter earnings and guidance that beat analysts’ expectations.

Here’s how the company did it:

  • Earnings: $3.60 per share, adjusted, vs. $3.50 per share as expected by analysts, according to Refinitiv.
  • Income: 4.53 billion dollars, vs. $4.53 billion as analysts expected, according to Refinitiv.

Total revenue grew 10% year over year in the quarter, which ended in December. 2, according to a statement. In the previous quarter, revenue rose 13%. Net income of $1.18 billion was down slightly from $1.23 billion in the year-ago quarter.

“We delivered record operating cash flows with a focus on profitability,” CEO Shantanu Narayen told analysts on a conference call. He said the company remains cautious and will not be immune to a worsening economy.

As for guidance, Adobe called for $3.65 to $3.70 in adjusted earnings per share on revenue of $4.60 billion to $4.64 billion in the fiscal first quarter. Analysts polled by Refinitiv had expected $3.64 in adjusted earnings per share and $4.64 billion in revenue. The numbers do not include the impact of Figma. The company maintained its full-year 2023 guidance.

Adobe’s Digital Media business, which includes Creative Cloud design software subscriptions, contributed $3.3 billion in revenue, missing the StreetAccount consensus of $3.31 billion. Creative revenue grew 8% in the quarter. The Digital Experience unit, which includes Adobe’s marketing software, generated revenue of $1.15 billion, slightly above the StreetAccount consensus of $1.14 billion.

The digital experience business managed to close “numerous transformational deals spanning our portfolio of solutions,” Anil Chakravarthy, president of the division, said on the call.

During the quarter, Adobe said it would buy design software startup Figma for about $20 billion in the 40-year-old public company’s biggest transaction to date.

“Overall, the regulatory process is proceeding as expected,” said David Wadhwani, president of the Digital Media business. The US Department of Justice and the UK Competition and Markets Authority are reviewing the deal, and Adobe still expects it to close in 2023, Wadhwani said.

One analyst asked how Figma is handling the current economic environment. But for now, FIgma remains a private company, and Adobe can’t talk about Figma’s latest performance, Narayen said.

Stripping out the effect of the after-hours move, Adobe shares are down 42% this year, while the S&P 500 is down 18% over the same period.

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