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Will Adobe's (ADBE) Q1 Earnings Gain From Digital Media?
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Adobe’s (ADBE - Free Report) first-quarter fiscal 2023 results, which are scheduled to be released on Mar 15, are likely to reflect the strength of its Digital Media segment.
Digital Media has been the key driver behind the company’s growth, on the back of its Creative family of products and Document Services products.
The company’s persistent efforts to strengthen its content management capabilities are expected to have continued driving growth in the Digital Media segment in the to-be-reported quarter.
Notably, the segment under discussion generated revenues of $3.3 billion in fourth-quarter fiscal 2022, which improved 10% on a year-over-year basis.
For first-quarter fiscal 2023, Adobe expects Digital Media revenues in the band of $3.350-$3.375 billion. The Zacks Consensus Estimate for the same is pegged at $3.36 billion, suggesting an 8% rise from the year-ago quarter’s reported figure.
Click here to know how the company’s overall fiscal first-quarter results are likely to be.
Solid momentum across Adobe Creative Cloud and Document Cloud is expected to have driven top-line growth for the Digital Media segment in the to-be-reported quarter.
The growing proliferation of 3D and the Metaverse platform, which have been creating demand for new content categories and styles, is anticipated to have been a major tailwind. Strong momentum across mobile applications is expected to have contributed well to Creative Cloud’s revenue growth.
Positive contributions from the Frame.io acquisition and its integration with creative software like Adobe Photoshop, Adobe Premier Pro, After Effects and other Adobe Creative Cloud applications are likely to have driven growth.
Increasing traffic on the Adobe Express platform is expected to have aided the performance of Creative Cloud.
The Zacks Consensus Estimate for fiscal first-quarter Creative Cloud revenues is pegged at $2.73 billion, suggesting an improvement of 9.3% from the year-ago quarter’s reported figure.
The increasing uptake of Acrobat, Adobe Sensei and strong momentum across Acrobat Web services are anticipated to have contributed well to Document Cloud’s revenue growth.
The rising demand for Acrobat Mobile and Adobe Scan, along with strength across Adobe Sign, is expected to have benefited Document Cloud in the quarter under review.
Integration between Acrobat and Adobe Express is likely to have continued bolstering the demand for PDFs.
The Zacks Consensus Estimate for fiscal first-quarter Document Cloud revenues is pegged at $630 million, indicating an improvement of 12.1% from the year-ago quarter’s reported figure.
All the above-mentioned factors are expected to have contributed well to Creative annualized recurring revenues (“ARR”) and Document Cloud ARR, which, in turn, are anticipated to have driven growth in Digital Media ARR in the to-be-reported quarter.
The company’s net new ARR in the Digital Media segment is projected to be $375 million for the quarter under review.
However, the ongoing tensions between Russia and Ukraine are anticipated to have continued affecting the Digital Media segment in the first quarter of fiscal 2023.
Image: Bigstock
Will Adobe's (ADBE) Q1 Earnings Gain From Digital Media?
Adobe’s (ADBE - Free Report) first-quarter fiscal 2023 results, which are scheduled to be released on Mar 15, are likely to reflect the strength of its Digital Media segment.
Digital Media has been the key driver behind the company’s growth, on the back of its Creative family of products and Document Services products.
The company’s persistent efforts to strengthen its content management capabilities are expected to have continued driving growth in the Digital Media segment in the to-be-reported quarter.
Notably, the segment under discussion generated revenues of $3.3 billion in fourth-quarter fiscal 2022, which improved 10% on a year-over-year basis.
For first-quarter fiscal 2023, Adobe expects Digital Media revenues in the band of $3.350-$3.375 billion. The Zacks Consensus Estimate for the same is pegged at $3.36 billion, suggesting an 8% rise from the year-ago quarter’s reported figure.
Click here to know how the company’s overall fiscal first-quarter results are likely to be.
Adobe Inc. Price and Consensus
Adobe Inc. price-consensus-chart | Adobe Inc. Quote
Factors to Consider
Solid momentum across Adobe Creative Cloud and Document Cloud is expected to have driven top-line growth for the Digital Media segment in the to-be-reported quarter.
The growing proliferation of 3D and the Metaverse platform, which have been creating demand for new content categories and styles, is anticipated to have been a major tailwind. Strong momentum across mobile applications is expected to have contributed well to Creative Cloud’s revenue growth.
Positive contributions from the Frame.io acquisition and its integration with creative software like Adobe Photoshop, Adobe Premier Pro, After Effects and other Adobe Creative Cloud applications are likely to have driven growth.
Increasing traffic on the Adobe Express platform is expected to have aided the performance of Creative Cloud.
The Zacks Consensus Estimate for fiscal first-quarter Creative Cloud revenues is pegged at $2.73 billion, suggesting an improvement of 9.3% from the year-ago quarter’s reported figure.
The increasing uptake of Acrobat, Adobe Sensei and strong momentum across Acrobat Web services are anticipated to have contributed well to Document Cloud’s revenue growth.
The rising demand for Acrobat Mobile and Adobe Scan, along with strength across Adobe Sign, is expected to have benefited Document Cloud in the quarter under review.
Integration between Acrobat and Adobe Express is likely to have continued bolstering the demand for PDFs.
The Zacks Consensus Estimate for fiscal first-quarter Document Cloud revenues is pegged at $630 million, indicating an improvement of 12.1% from the year-ago quarter’s reported figure.
All the above-mentioned factors are expected to have contributed well to Creative annualized recurring revenues (“ARR”) and Document Cloud ARR, which, in turn, are anticipated to have driven growth in Digital Media ARR in the to-be-reported quarter.
The company’s net new ARR in the Digital Media segment is projected to be $375 million for the quarter under review.
However, the ongoing tensions between Russia and Ukraine are anticipated to have continued affecting the Digital Media segment in the first quarter of fiscal 2023.
Zacks Rank & Stocks to Consider
Currently, Adobe carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the broader technology sector are Arista Networks (ANET - Free Report) , Salesforce (CRM - Free Report) and Analog Devices (ADI - Free Report) . While Arista Networks and Salesforce sport a Zacks Rank #1 (Strong Buy), Analog Devices carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arista Networks shares have gained 27.4% in the past year. The long-term earnings growth rate for ANET is currently projected at 14.17%.
Salesforce shares have lost 9.1% in the past year. CRM’s long-term earnings growth rate is currently projected at 16.75%.
Analog Devices shares have gained 25.4% in the past year. The long-term earnings growth rate for ADI is currently projected at 12.25%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.