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Will Adobe's (ADBE) Q3 Earnings Gain From Digital Media?
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Adobe’s (ADBE - Free Report) third-quarter fiscal 2022 results, which are scheduled to be released on Sep 15, 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’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 $3.2 billion in second-quarter fiscal 2022, which improved 15% on a year-over-year basis.
For third-quarter fiscal 2022, Adobe expects year-over-year revenue growth of 13% from Digital Media. The Zacks Consensus Estimate for Digital Media revenues for the quarter under review is pegged at $3.24 billion, suggesting a 13.2% rise from the year-ago quarter’s reported figure.
Click here to know how the company’s overall fiscal third-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 types, 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.
The company’s launch of a feature called Photo Restoration Neutral Filter in Photoshop is likely to have continued boosting the adoption rate of Photoshop in the quarter under review.
Increasing traffic on the Adobe Express platform is expected to have aided the performance of Creative Cloud.
The Zacks Consensus Estimate for fiscal third-quarter Creative Cloud revenues is pegged at $2.66 billion, suggesting an improvement of 12.1% from the year-ago quarter’s reported figure.
The increasing uptake of Acrobat, Adobe Sensei and strong momentum across Acrobat Web services is anticipated to have contributed well to Document Cloud revenues 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 third-quarter Document Cloud revenues is pegged at $582 million, indicating an improvement of 18.1% 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 $430 million for the quarter under review.
However, the ongoing tensions between Russia and Ukraine are anticipated to have affected Digital Media ARR in the fiscal third quarter.
Image: Bigstock
Will Adobe's (ADBE) Q3 Earnings Gain From Digital Media?
Adobe’s (ADBE - Free Report) third-quarter fiscal 2022 results, which are scheduled to be released on Sep 15, 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’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 $3.2 billion in second-quarter fiscal 2022, which improved 15% on a year-over-year basis.
For third-quarter fiscal 2022, Adobe expects year-over-year revenue growth of 13% from Digital Media. The Zacks Consensus Estimate for Digital Media revenues for the quarter under review is pegged at $3.24 billion, suggesting a 13.2% rise from the year-ago quarter’s reported figure.
Click here to know how the company’s overall fiscal third-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.
The growing proliferation of 3D and the Metaverse platform, which have been creating demand for new content types, 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.
The company’s launch of a feature called Photo Restoration Neutral Filter in Photoshop is likely to have continued boosting the adoption rate of Photoshop in the quarter under review.
Increasing traffic on the Adobe Express platform is expected to have aided the performance of Creative Cloud.
The Zacks Consensus Estimate for fiscal third-quarter Creative Cloud revenues is pegged at $2.66 billion, suggesting an improvement of 12.1% from the year-ago quarter’s reported figure.
The increasing uptake of Acrobat, Adobe Sensei and strong momentum across Acrobat Web services is anticipated to have contributed well to Document Cloud revenues 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 third-quarter Document Cloud revenues is pegged at $582 million, indicating an improvement of 18.1% 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 $430 million for the quarter under review.
However, the ongoing tensions between Russia and Ukraine are anticipated to have affected Digital Media ARR in the fiscal third quarter.
Zacks Rank & Stocks to Consider
Currently, Adobe carries a Zacks Rank #4 (Sell).
Investors interested in the broader technology sector can consider some better-ranked stocks like Monolithic Power Systems (MPWR - Free Report) , Teradata (TDC - Free Report) and IPG Photonics (IPGP - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Monolithic Power Systems has lost 9.4% in the year-to-date period. The long-term earnings growth rate for MPWR is currently projected at 25%.
Teradata has lost 22.5% in the year-to-date period. The long-term earnings growth rate for TDC is currently projected at 27.4%.
IPG Photonics has lost 48.4% in the year-to-date period. The long-term earnings growth rate for IPGP is currently projected at 4.3%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.