Adobe Inc (NASDAQ:ADBE) on buying spree

Adobe Inc (NASDAQ:ADBE) stock fell 3.96% (As on September 16, 11:14:16 AM UTC-4, Source: Google Finance) after the company announced that  it will acquire design software firm Figma in a deal worth about $20 billion in cash and stock. Adobe said it will integrate some of the features from its other products, such as illustration, photography and video technology, into Figma’s platform. Once the deal closes, Figma co-founder and CEO Dylan Field will continue to run the company. Figma is expected to add approximately $200 million in net new ARR this year, surpassing $400 million in total ARR exiting 2022 with greater than 150% net-dollar retention rate.

Meanwhile, Digital Media segment revenue was $3.23 billion, which represents 13 percent year-over-year growth or 16 percent in constant currency. Creative revenue grew to $2.63 billion, representing 11 percent year-over-year growth or 14 percent in constant currency. Document Cloud revenue was $607 million, representing 23 percent year-over-year growth or 25 percent in constant currency. Net New Digital Media Annualized Recurring Revenue (“ARR”) was $449 million, exiting the quarter with Digital Media ARR of $13.40 billion. Creative ARR grew to $11.15 billion and Document Cloud ARR grew to $2.25 billion. Digital Experience segment revenue was $1.12 billion, representing 14 percent year-over-year growth or 15 percent in constant currency. Digital Experience subscription revenue was $981 million, representing 14 percent year-over-year growth or 15 percent in constant currency.

ADBE in the third quarter of FY 22 has reported the adjusted earnings per share of $3.40, beating the analysts’ estimates for the adjusted earnings per share of $3.33, according to the Zacks Consensus Estimate. The company had reported the adjusted revenue growth of 13 percent to $4.43 billion in the third quarter of FY 22, beating the analysts’ estimates for revenue by 0.08%. Cash flows from operations were $1.70 billion. Remaining Performance Obligations (“RPO”) exiting the quarter were $14.11 billion.

Additionally, Adobe repurchased approximately 5.1 million shares during the quarter.

The company issued mixed guidance for the fiscal fourth quarter. Adobe said revenue in the quarter will be $4.52 billion, compared with consensus estimates of $4.6 billion, according to StreetAccount. It expects to report earnings of $3.50 per share, adjusted, above a StreetAccount forecast of $3.47 per share.

For Q4, the company is targeting total Adobe revenue of approximately $4.52 billion, net new Digital Media ARR of approximately $550 million, Digital Media segment revenue growth of approximately 10% year-over-year or 14% in constant currency, Digital Experience segment revenue growth of approximately 13% year-over-year or 15% in constant currency and Digital Experience subscription revenue growth of approximately 13% year-over-year or 15% in constant currency.

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