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Adobe (ADBE) Gears Up for Q2 Earnings: What's in the Cards?
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Adobe Systems Inc. (ADBE - Free Report) is set to report fiscal second-quarter 2020 results on Jun 11. In the last reported quarter, the software giant delivered a positive earnings surprise of 2.3%.
For the fiscal second quarter, the Zacks Consensus Estimate for earnings has increased 0.4% to $2.35 per share over the past 30 days. This indicates growth of 28.4% from the year-ago reported figure.
The consensus mark for revenues is pegged at $3.17 billion, implying growth of 15.7% from the year-ago reported figure.
Let’s see how things have shaped up for this announcement.
Demand for Adobe’s Digital Media Solutions is expected to have increased in the fiscal second quarter. Impressive growth in Creative Cloud and Document Cloud business lines is likely to have resulted in strong Digital Media ARR (Annualized Recurring Revenues) in the to-be-reported quarter.
Markedly, the segment comprises Creative Cloud and Document Cloud (DC). Net new subscriptions, adoption of enterprise services and focus on high-potential segments like education are likely to have driven Creative ARR in the fiscal first quarter.
DC ARR is expected to have increased in the quarter to be reported, driven by solid enterprise adoption of Acrobat and Document Cloud services, as well as strong performance of Adobe Sign.
The Zacks Consensus Estimate for Digital Media is pegged at $2.25 billion, indicating growth of 3.5% year over year.
Strength in Digital Marketing Business
Within the Digital Marketing segment, Adobe Experience Cloud revenues are anticipated to have improved in the quarter to be reported. Adobe Experience Cloud includes Adobe Marketing Cloud, Adobe Analytics Cloud and Adobe Advertising Cloud.
The ever-increasing demand for data and insights, content and personalization, customer journey management, commerce and advertising should have expanded revenues in this segment.
New capabilities in Adobe Target are expected to have further enhanced customer recommendation and targeting, as well as boosted revenues from this segment.
Notably, it has been able to create a niche for itself in the cloud software market. Strong demand for the company’s innovative solutions and products, strength across geographies, along with growing subscription for cloud application are likely to reflect on the to-be-reported quarter’s results.
The Zacks Consensus Estimate for Digital Experience is pegged at $869 million, indicating growth of 1.3% year over year.
Guidance
For second-quarter fiscal 2020, Adobe expects year-over-year revenue growth of 19% and 12% from Digital Media and Digital Experience segments, respectively. Management expects total revenues and non-GAAP earnings to be $3.175 billion and $2.35 per share, respectively.
What Our Model Says
Our proven model does not predict an earnings beat for Adobe this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here as you will see below.
Earnings ESP: The company has an Earnings ESP of -0.43%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Currently, Adobe has a Zacks Rank #3.
Stocks to Consider
You may consider the following stocks with a positive Earnings ESP and a favorable Zacks Rank:
Carnival Corporation (CCL - Free Report) has an Earnings ESP of +2.13% and a Zacks Rank #3.
Commercial Metals Company (CMC - Free Report) has an Earnings ESP of +17.65% and a Zacks Rank #3.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
Image: Bigstock
Adobe (ADBE) Gears Up for Q2 Earnings: What's in the Cards?
Adobe Systems Inc. (ADBE - Free Report) is set to report fiscal second-quarter 2020 results on Jun 11. In the last reported quarter, the software giant delivered a positive earnings surprise of 2.3%.
For the fiscal second quarter, the Zacks Consensus Estimate for earnings has increased 0.4% to $2.35 per share over the past 30 days. This indicates growth of 28.4% from the year-ago reported figure.
The consensus mark for revenues is pegged at $3.17 billion, implying growth of 15.7% from the year-ago reported figure.
Let’s see how things have shaped up for this announcement.
Adobe Systems Incorporated Price and EPS Surprise
Adobe Systems Incorporated price-eps-surprise | Adobe Systems Incorporated Quote
Focus on Digital Media Business
Demand for Adobe’s Digital Media Solutions is expected to have increased in the fiscal second quarter. Impressive growth in Creative Cloud and Document Cloud business lines is likely to have resulted in strong Digital Media ARR (Annualized Recurring Revenues) in the to-be-reported quarter.
Markedly, the segment comprises Creative Cloud and Document Cloud (DC). Net new subscriptions, adoption of enterprise services and focus on high-potential segments like education are likely to have driven Creative ARR in the fiscal first quarter.
DC ARR is expected to have increased in the quarter to be reported, driven by solid enterprise adoption of Acrobat and Document Cloud services, as well as strong performance of Adobe Sign.
The Zacks Consensus Estimate for Digital Media is pegged at $2.25 billion, indicating growth of 3.5% year over year.
Strength in Digital Marketing Business
Within the Digital Marketing segment, Adobe Experience Cloud revenues are anticipated to have improved in the quarter to be reported. Adobe Experience Cloud includes Adobe Marketing Cloud, Adobe Analytics Cloud and Adobe Advertising Cloud.
The ever-increasing demand for data and insights, content and personalization, customer journey management, commerce and advertising should have expanded revenues in this segment.
New capabilities in Adobe Target are expected to have further enhanced customer recommendation and targeting, as well as boosted revenues from this segment.
Notably, it has been able to create a niche for itself in the cloud software market. Strong demand for the company’s innovative solutions and products, strength across geographies, along with growing subscription for cloud application are likely to reflect on the to-be-reported quarter’s results.
The Zacks Consensus Estimate for Digital Experience is pegged at $869 million, indicating growth of 1.3% year over year.
Guidance
For second-quarter fiscal 2020, Adobe expects year-over-year revenue growth of 19% and 12% from Digital Media and Digital Experience segments, respectively. Management expects total revenues and non-GAAP earnings to be $3.175 billion and $2.35 per share, respectively.
What Our Model Says
Our proven model does not predict an earnings beat for Adobe this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That is not the case here as you will see below.
Earnings ESP: The company has an Earnings ESP of -0.43%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Currently, Adobe has a Zacks Rank #3.
Stocks to Consider
You may consider the following stocks with a positive Earnings ESP and a favorable Zacks Rank:
Micron Technology, Inc. (MU - Free Report) has an Earnings ESP of +5.16% and carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Carnival Corporation (CCL - Free Report) has an Earnings ESP of +2.13% and a Zacks Rank #3.
Commercial Metals Company (CMC - Free Report) has an Earnings ESP of +17.65% and a Zacks Rank #3.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>