Adobe Systems Earnings: Margins SHRINK as Investors Worry About Costs

Rising costs hurt S&P 500 (NYSE:SPY) component Adobe Systems Incorporated (NASDAQ:ADBE) in the second quarter as profit dropped from a year earlier. Adobe Systems offers a line of creative, business, web, and mobile software and services used by creative professionals, knowledge workers, consumers, original equipment manufacturers, developers, and enterprises.

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Adobe Systems Incorporated Earnings Cheat Sheet

Results: Net income for Adobe Systems Incorporated fell to $223.9 million (45 cents per share) vs. $229.4 million (45 cents per share) a year earlier. This is a decline of 2.4% from the year-earlier quarter.

Revenue: Rose 9.9% to $1.12 billion from the year-earlier quarter.

Actual vs. Wall St. Expectations: Adobe Systems Incorporated fell short of the mean analyst estimate of 48 cents per share. Analysts were expecting revenue of $1.11 billion.

Quoting Management: “Our strong Q2 results were driven by the successful launch of Creative Cloud and Creative Suite six, strong Acrobat revenue and 35 percent year-over-year revenue growth in our Digital Marketing Suite business,” said Shantanu Narayen, president and CEO of Adobe. “These results demonstrate our leadership in the Digital Media and Digital Marketing markets.”

Key Stats:

For each of the last four quarters, the company has seen its net income fall. In the first quarter, net income fell 21.1% while the figure fell 35.4% in the fourth quarter of the last fiscal year and 15.2% in the third quarter of the last fiscal year.

Revenue has risen for the last four quarters. Revenue increased 1.7% to $1.05 billion in the first quarter. The figure rose 14.3% in the fourth quarter of the last fiscal year from the year earlier and climbed 2.3% in the third quarter of the last fiscal year from the year-ago quarter.

The company has now fallen short of estimates in the last two quarters. In the first quarter, it missed expectations by 4 cents with net income of 42 cents versus a mean estimate of net income of 46 cents per share.

Looking Forward: The average estimate for the third quarter remains unchanged at 49 cents a share. For the fiscal year, the average estimate has moved down from $1.99 a share to $1.98 over the last sixty days.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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