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Will Digital Media Strength Aid Adobe's (ADBE) Q2 Earnings?
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Adobe’s (ADBE - Free Report) second-quarter fiscal 2022 results, which are scheduled to be released on Jun 16, are likely to reflect its Digital Media segment’s strength.
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 helps content creators, app and game developers, and creative professionals such as graphic designers, photographers and video editors to generate, publish and promote their content anywhere with its robust Digital Media solutions.
We believe that the company’s persistent efforts toward strengthening its content management capabilities are expected to have continued driving growth in the Digital Media segment.
Notably, the segment under discussion generated revenues of $3.11 billion in first-quarter fiscal 2022, which improved 9% on a year-over-year basis.
For second-quarter fiscal 2022, Adobe expects year-over-year revenue growth of 13% for Digital Media. The Zacks Consensus Estimate for Digital Media revenues for the quarter under review is pegged at $3.15 billion, suggesting a 13.1% rise from the year-ago quarter’s reported figure.
Click here to know how the company’s overall fiscal second-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.
Positive contributions from the acquisition of a cloud-enabled video review and collaboration platform named Frame.io are likely to have continued aiding the segment’s performance. In the quarter under review, the company made Frame.io’s video collaboration platform available for Creative Cloud users.
Apart from this, the growing monthly active user base of Creative Cloud Express and the new AI-powered innovations in Premiere Pro, which help merge music into videos and accelerate transcription, are expected to have accelerated growth in Creative revenues in the quarter under review. The rising proliferation of Metaverse is also likely to have aided the performance of Creative Cloud.
Notably, the Zacks Consensus Estimate for fiscal second-quarter Creative Cloud revenues is pegged at $2.6 billion, suggesting an improvement of 11.7% from the year-ago quarter’s reported figure.
A spike in the searches for document actions is likely to have benefited Acrobat Web. The new sign integration with Adobe Commerce and Workfront and the signature feature in Acrobat are expected to have aided the adoption of Adobe Sign. Strong momentum in Acrobat PDFs on mobile is expected to have been beneficial. The robust Document Cloud enterprise business is likely to have been another positive. All these are anticipated to have contributed well to Document Cloud revenues.
The Zacks Consensus Estimate for fiscal fourth-quarter Document Cloud revenues is pegged at $560 million, indicating an improvement of 19.4% from the year-ago quarter’s reported figure.
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.
Notably, Adobe’s projection for fiscal second-quarter Digital Media ARR is pegged at $440 million of net new ARR.
The Zacks Consensus Estimate for total Digital Media ARR is pegged at $12.9 billion, indicating year-over-year growth of 15.3%.
However, given the ongoing tensions between Russia and Ukraine, Adobe reduced its Digital Media ARR balance by $75 million, equivalent to the total ARR in both countries. Further, it announced a reduction of $12 million in the Digital Media ARR, which represents the company’s total ARR in Ukraine. Hence, the figure is likely to decline $87 million.
Zacks Rank & Stocks to Consider
Currently, Adobe carries a Zacks Rank #4 (Sell).
Investors interested in the broader Zacks Computer & Technology sector can consider some better-ranked stocks like Avnet (AVT - Free Report) , Aspen Technology (AZPN - Free Report) and Amdocs (DOX - Free Report) . While Avnet and Aspen Technology currently sport a Zacks Rank #1 (Strong Buy), Amdocs carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Avnet has gained 7.9% in the year-to-date period. The long-term earnings growth rate for AVT is currently projected at 37.2%.
Aspen Technology has returned 21.1% in the year-to-date period. The long-term earnings growth rate for AZPN is currently projected at 18.4%.
Amdocs has gained 5.2% in the year-to-date period. The long-term earnings growth rate for DOX is currently projected at 10%.
Image: Bigstock
Will Digital Media Strength Aid Adobe's (ADBE) Q2 Earnings?
Adobe’s (ADBE - Free Report) second-quarter fiscal 2022 results, which are scheduled to be released on Jun 16, are likely to reflect its Digital Media segment’s strength.
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 helps content creators, app and game developers, and creative professionals such as graphic designers, photographers and video editors to generate, publish and promote their content anywhere with its robust Digital Media solutions.
We believe that the company’s persistent efforts toward strengthening its content management capabilities are expected to have continued driving growth in the Digital Media segment.
Notably, the segment under discussion generated revenues of $3.11 billion in first-quarter fiscal 2022, which improved 9% on a year-over-year basis.
For second-quarter fiscal 2022, Adobe expects year-over-year revenue growth of 13% for Digital Media. The Zacks Consensus Estimate for Digital Media revenues for the quarter under review is pegged at $3.15 billion, suggesting a 13.1% rise from the year-ago quarter’s reported figure.
Click here to know how the company’s overall fiscal second-quarter results are likely to be.
Adobe Inc. Price and EPS Surprise
Adobe Inc. price-eps-surprise | 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.
Positive contributions from the acquisition of a cloud-enabled video review and collaboration platform named Frame.io are likely to have continued aiding the segment’s performance. In the quarter under review, the company made Frame.io’s video collaboration platform available for Creative Cloud users.
Apart from this, the growing monthly active user base of Creative Cloud Express and the new AI-powered innovations in Premiere Pro, which help merge music into videos and accelerate transcription, are expected to have accelerated growth in Creative revenues in the quarter under review. The rising proliferation of Metaverse is also likely to have aided the performance of Creative Cloud.
Notably, the Zacks Consensus Estimate for fiscal second-quarter Creative Cloud revenues is pegged at $2.6 billion, suggesting an improvement of 11.7% from the year-ago quarter’s reported figure.
A spike in the searches for document actions is likely to have benefited Acrobat Web. The new sign integration with Adobe Commerce and Workfront and the signature feature in Acrobat are expected to have aided the adoption of Adobe Sign. Strong momentum in Acrobat PDFs on mobile is expected to have been beneficial. The robust Document Cloud enterprise business is likely to have been another positive. All these are anticipated to have contributed well to Document Cloud revenues.
The Zacks Consensus Estimate for fiscal fourth-quarter Document Cloud revenues is pegged at $560 million, indicating an improvement of 19.4% from the year-ago quarter’s reported figure.
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.
Notably, Adobe’s projection for fiscal second-quarter Digital Media ARR is pegged at $440 million of net new ARR.
The Zacks Consensus Estimate for total Digital Media ARR is pegged at $12.9 billion, indicating year-over-year growth of 15.3%.
However, given the ongoing tensions between Russia and Ukraine, Adobe reduced its Digital Media ARR balance by $75 million, equivalent to the total ARR in both countries. Further, it announced a reduction of $12 million in the Digital Media ARR, which represents the company’s total ARR in Ukraine. Hence, the figure is likely to decline $87 million.
Zacks Rank & Stocks to Consider
Currently, Adobe carries a Zacks Rank #4 (Sell).
Investors interested in the broader Zacks Computer & Technology sector can consider some better-ranked stocks like Avnet (AVT - Free Report) , Aspen Technology (AZPN - Free Report) and Amdocs (DOX - Free Report) . While Avnet and Aspen Technology currently sport a Zacks Rank #1 (Strong Buy), Amdocs carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Avnet has gained 7.9% in the year-to-date period. The long-term earnings growth rate for AVT is currently projected at 37.2%.
Aspen Technology has returned 21.1% in the year-to-date period. The long-term earnings growth rate for AZPN is currently projected at 18.4%.
Amdocs has gained 5.2% in the year-to-date period. The long-term earnings growth rate for DOX is currently projected at 10%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.