Adobe Systems Beats on EPS But GAAP Results Lag

Seth Jayson, The Motley Fool
Updated

Adobe Systems (NAS: ADBE) reported earnings on June 18. Here are the numbers you need to know.

The 10-second takeaway
 For the quarter ended May 31 (Q2), Adobe Systems met expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue contracted. Non-GAAP earnings per share dropped significantly. GAAP earnings per share dropped significantly.


Margins dropped across the board.

Revenue details
 Adobe Systems chalked up revenue of $1.01 billion. The 21 analysts polled by S&P Capital IQ anticipated a top line of $1.01 billion on the same basis. GAAP reported sales were 10% lower than the prior-year quarter's $1.12 billion.

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

EPS details
 EPS came in at $0.36. The 26 earnings estimates compiled by S&P Capital IQ anticipated $0.34 per share. Non-GAAP EPS of $0.36 for Q2 were 40% lower than the prior-year quarter's $0.60 per share. GAAP EPS of $0.15 for Q2 were 67% lower than the prior-year quarter's $0.45 per share.

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 86.6%, 180 basis points worse than the prior-year quarter. Operating margin was 13.5%, much worse than the prior-year quarter. Net margin was 7.6%, much worse than the prior-year quarter. (Margins calculated in GAAP terms.)

Looking ahead
 Next quarter's average estimate for revenue is $1.01 billion. On the bottom line, the average EPS estimate is $0.34.

Next year's average estimate for revenue is $4.10 billion. The average EPS estimate is $1.45.

Investor sentiment
 The stock has a three-star rating (out of five) at Motley Fool CAPS, with 1,768 members out of 1,889 rating the stock outperform, and 121 members rating it underperform. Among 515 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 487 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 $45.35.

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The article Adobe Systems Beats on EPS But GAAP Results Lag originally appeared on Fool.com.

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. The Motley Fool recommends 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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