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Adobe’s Success Story Continues with Its Fiscal 4Q16 Results

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Adobe’s Success Story Continues with Its Fiscal 4Q16 Results PART 1 OF 7

Adobe’s Fiscal 4Q16 Results Beat Analysts’ Estimates Again

Adobe’s fiscal 4Q16 results marked 11 straight quarters of revenue growth

Adobe (ADBE), one of the first software companies to transition toward the subscription model, announced its fiscal 4Q16 and fiscal 2016 earnings on December 15, 2016. As expected, Adobe continued its success story with its results. Adobe reported revenues and non-GAAP1 EPS (earnings per share) of ~$1.6 billion and $0.90, respectively, which beat analysts’ expectations by $20 million and $0.04, respectively.

In fiscal 4Q16, Adobe’s revenue and EPS grew ~23% and 45%, respectively, on a YoY (year-over-year) basis. Fiscal 4Q16 marked the 11th consecutive quarter of revenue growth for Adobe. For fiscal 2016, Adobe’s revenue grew 22% to ~$5.9 billion.
Adobe’s Fiscal 4Q16 Results Beat Analysts’ Estimates Again

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Adobe’s subscription revenue is consistently growing

The chart above shows Adobe’s quarterly revenue growth, which has shown an upward trend in the last two years. In fiscal 4Q16, subscriptions contributed ~78.5% toward Adobe’s overall revenues, compared to ~69.5% in fiscal 4Q15.

Adobe’s subscription revenue grew 39% in 3Q16. The increase in subscription revenue made up for the 22% decline in Adobe’s product revenue. It is this consistent increase in subscription revenue that enabled Adobe to exceed analysts’ expectations. In its earnings call, Adobe stated that 82% of its revenue in fiscal 4Q16 was recurring.

Adobe’s peer IBM (IBM) has not reported revenue growth for 18 straight quarters. Similarly, Oracle (ORCL) which announced its fiscal 2Q17 results on the same day as Adobe, again failed to report revenue growth. Adobe’s continued growth indicates its successful transition toward the subscription model.

  1. generally accepted accounting principles
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