Adobe 3Q15 Earnings Remained Outstanding



Operations income high despite negligible growth in gross margin

Adobe Systems, a solutions provider for multimedia software, declared its 3Q15 results on September 17, 2015. Adobe’s quarterly results remain outstanding, with revenue showing an increase of 21%. Revenue from its subscriptions and services saw increases of 54.46% and 4.11%, respectively. However, there has been a 21.14% decline in revenue from its products.

Little change can be seen in the company’s gross margin of 84.32% compared to the previous year’s 84.31%, an increase of 1 basis point. Despite negligible growth in its gross margin, Adobe has made huge growth in its operating income by reducing core expenses from operations.

Article continues below advertisement

Adobe gained operational efficiency

Income from operations stood at $246 million compared to $74 million in the same period of the previous quarter on a GAAP (Generally Accepted Accounting Principle) basis. This is an increase of 231.67%.

Adobe has managed to reduce the relative expenses generated from its core operations. The majority of the remaining reductions are Sales and Marketing Expenses reduction by six percentage points, General and Administrative Expenses reduction by four percentage points, and Research and Development Expenses reduction by three percentage points.

Had expenses from non-core operations been favorable to Adobe, they would have broadened the bottom line to a larger extent. However, the company has made an increase in net income to $232 million compared to $62 million in the same period of the previous year on a GAAP basis.

Interest and investment expenses of $16 million and $13 million, respectively, have slightly lowered Adobe’s net income value. The company reported that floating rates and currency fluctuation have made an impact of $1.3 million on interest expenses and unrealized investment losses.

Adobe reported diluted earnings per share (EPS) of $0.34 in 3Q15 compared to $0.09 in the same period of the previous quarter on a GAAP basis.

First Trust ISE Cloud Computing Index ETF (SKYY) is a portfolio of 36 stocks. Its top four stocks, Amazon (AMZN), Netflix (NFLX), Facebook (FB), and Google (GOOG), constitute 4.98%, 4.54%, 4.54%, and 4.52% of SKYY, respectively.


More From Market Realist