Adobe Systems Hits Estimates, But GAAP Results Lag Last Year's

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Adobe Systems (NAS: ADBE) reported earnings yesterday. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended March 2 (Q1), Adobe Systems met expectations on revenues and met expectations on earnings per share.

Compared to the prior-year quarter, revenue improved slightly, and GAAP earnings per share shrank significantly.

Gross margins expanded, operating margins shrank, and net margins shrank.

Revenue details
Adobe Systems booked revenue of $1.05 billion. The 25 analysts polled by S&P Capital IQ hoped for a top line of $1.05 billion on the same basis. GAAP reported sales were 1.7% higher than the prior-year quarter's $1.03 billion.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Non-GAAP EPS came in at $0.57. The 27 earnings estimates compiled by S&P Capital IQ averaged $0.57 per share on the same basis. GAAP EPS of $0.37 for Q1 were 20% lower than the prior-year quarter's $0.46 per share.

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Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 89.6%, 10 basis points better than the prior-year quarter. Operating margin was 27.4%, 200 basis points worse than the prior-year quarter. Net margin was 17.7%, 510 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $1.11 billion. On the bottom line, the average EPS estimate is $0.60.

Next year's average estimate for revenue is $4.50 billion. The average EPS estimate is $2.43.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 1,830 members rating the stock outperform and 116 members rating it underperform. Among 555 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 527 give Adobe Systems a green thumbs-up, and 28 give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Adobe Systems is outperform, with an average price target of $32.25.

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At the time this article was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Motley Fool newsletter services have recommended buying shares of and creating a diagonal call position in Adobe Systems. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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