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For the first quarter, Adobe reported an adjusted EPS of $3.37, up from $3.14 in the year-ago period and slightly above the consensus estimates of $3.34. Revenue came in at $4.26 billion in the quarter, up 9.1% YoY and compared to the analyst consensus of $4.24 billion.
Adobes Q1 results reflect the companys strong execution and resilience through unprecedented circumstances, said Dan Durn, CFO of Adobe.
Digital media revenue hit $3.11 billion, up 8.7% YoY, and in line with analyst expectations. Digital experience revenue came in at $1.06 billion, up 13% YoY and just above the consensus projection of $1.04 billion.
For the second fiscal quarter, Adobe expects adjusted EPS of about $3.30, below the consensus estimates of $3.35 per share. The company expects revenue of about $4.34 billion in FQ2, missing the analyst expectations of $4.4 billion.
Adobe expects Digital Media revenue to rise around 13% in the quarter and estimates Digital Experience segment revenue and Digital Experience subscription revenue to grow about 15% and 17%, respectively.
The company also said it has reduced its Digital Media ARR balance by $75 million, which practically represents Adobes ARR for existing business in Russia and Belarus. Additionally, Adobe reduced ARR by an additional $12 million for its Digital Media services in Ukraine while it will continue to operate in this country.
These actions result in a total ARR cut of $87 million and an expected revenue impact of $75 million for fiscal year 2022, the company added.
Goldman Sachs analyst Kash Rangan lowered the price target on Adobe to $605.00 per share from $700.00. The analyst believes the company can still double its revenues in the long-term to potentially enter the top ranks of software companies to reach $40bn+ of revenues.
He shares four reasons why he remains positive on ADBE stock.
Stifel analyst Parker Lane has maintained a Buy rating and $600.00 target price on ADBE shares following a beat quarter.
We believe ADBE is well positioned for continued penetration of its TAM and can effectively navigate these near-term headwinds, Lane said in a client note.
Similarly, BMO analyst Keith Bachman sees Adobe stock as attractively valued, particularly relative to our expectations for mid-teens FY23 growth.
By Senad Karaahmetovic
