Adobe’s 4Q15 and 2015 Results Could Beat Analyst Expectations



Analysts’ expectations for Adobe’s fiscal 4Q15 and 2015

On December 10, 2015, Adobe (ADBE) is slated to announce its fiscal 4Q15 and fiscal 2015 earnings. Oracle (ORCL) is expected to announce its fiscal 2Q16 results on December 16, 2015. Adobe’s fiscal 3Q15 results exceeded analysts’ estimates for both revenues and non-GAAP (generally accepted accounting principles) EPS (earnings per share).

For fiscal 4Q15, analysts expect the company to report revenue and earnings per share or EPS of $1.32 billion and $0.62 per share, respectively. For fiscal 2015, Adobe’s revenues and EPS are expected to come in at $4.8 billion and $2.07 per share, respectively.

For fiscal 4Q15, Adobe expects revenues and non-GAAP EPS to be $1.3 billion and $0.56–$0.62, respectively. For fiscal 2015, Adobe expects revenues and EPS of $5.7 billion and $2.70, respectively.

If the company’s revenues for fiscal 4Q15 and fiscal 2015 are in line with analysts’ estimates, they will translate to 22% and 16% year-over-year growth, respectively.

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Adobe’s fiscal 3Q15 performance

In fiscal 3Q15, Adobe’s revenue rose 21%. Revenue from its subscriptions and services rose 54.5% and 4.1%, respectively. For the nine months ended fiscal 3Q15, Adobe’s deferred revenue increased ~13%, mainly due to an increase in customer subscriptions and digital marketing hosted services. However, product revenue fell 21.1%.

Though the company’s gross margin of 84.3% remained more or less the same with the previous year’s $84.3%, Adobe was able to enhance its operating income by reducing operating expenses. Its operating margin improved from 11.1% in 3Q13 to 7.4% in 3Q14 and 20.2% in 3Q15. Among its peers, Autodesk (ADSK) and Salesforce’s (CRM), Adobe showed the biggest increase in operating margins. Autodesk’s operating margins fell from 12.3% in 3Q13 to 2.4% in 3Q14 and -2.5% in 3Q15 while Salesforce’s operating margin rose from -9.1% in 3Q13 to -1.6% in 3Q14 and 2.5% in 3Q15. Adobe’s cash flow from operations grew 34% to $360 million in fiscal 3Q15.

If you’re bullish about Adobe’s prospects, whose offerings are available on Microsoft (MSFT) Windows as well as Apple (AAPL) iOS, you can consider investing in the PowerShares QQQ (QQQ) to gain exposure to the stock. ADBE only makes up 0.83% of QQQ, but investors who would like application software exposure could consider this ETF as application software makes up ~24% of QQQ.


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