Why Adobe Inc (NASDAQ: ADBE) stock is under pressure

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Adobe Inc (NASDAQ: ADBE) stock fell over 5.7% on December 14th, 2018 (as of 12:33 pm GMT-5; Source: Google finance). ADBE in the fourth quarter of FY 18 has reported the adjusted earnings per share of $1.83, missing the analysts’ estimates for the adjusted earnings per share of $1.88. The company had reported the adjusted revenue growth of 23 percent to $2.46 billion in the fourth quarter of FY 18, beating the analysts’ estimates for revenue of $2.42 billion. Operating income grew 18 percent and net income grew 44 percent year-over-year on a non-GAAP basis.

Why Adobe Inc (NASDAQ: ADBE) stock is under pressure

The company posted rise in quarterly revenue, helped by higher subscriptions for its flagship Creative Cloud suite of software that includes Photoshop. In Q4, the Creative business was fueled by strong performance across all segments, particularly among consumers. Black Friday and Cyber Monday were two of the largest single selling days in company history.

During the fourth quarter, Creative revenue is of $5.34 billion, which represents 28% year-over-year growth; Adobe Document Cloud revenue is of $982 million, which represents 17% year-over-year growth; adding a record $1.45 billion of net new Digital Media ARR during the year, and exiting FY ’18 with $6.83 billion of Digital Media ARR; Adobe Experience Cloud revenue of $2.44 billion, which represents 20% year-over-year growth; generating more than $4 billion in operating cash flow during the year; returning $2 billion in cash to stockholders through our stock repurchase program; and growing deferred revenue to approximately $3 billion, and increasing our unbilled backlog to approximately $5 billion exiting the year. Together, this represents approximately $8 billion of contracted revenue.

Total annual revenue growth, excluding Magento and Marketo, was approximately 22%, well ahead of the revenue target we provided entering the year. In the fourth quarter of FY ’18, Adobe achieved record revenue of $2.46 billion, which represents 23% year-over-year growth. Excluding the impact of the Marketo acquisition in Q4, ADBE estimate GAAP EPS would have been $1.48 and non-GAAP diluted EPS would have been $1.90, both of which would have exceeded the earnings targets the company provided in September

During fiscal year 2019, after the first quarter Adobe expects revenue in each quarter to grow by approximately the same year-over-year growth percentage implied in its targeted revenue for the year. In addition, the Company expects net new Digital Media ARR in each quarter to be sequentially similar as that achieved in past fiscal years from quarter to quarter

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