Tech stock under pressure: Adobe Inc (NASDAQ: ADBE)

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Adobe Inc (NASDAQ: ADBE) stock lost over 3.6% in the pre-market session of March 15th, 2019 (as of 8:15 am GMT-4; Source: Google finance) gave weaker outlook for the second quarter 2019. The company’s net income rose 15.6 percent to $674.2 million.

ADBE in the first quarter of FY 19 has reported the adjusted earnings per share of $1.71, beating the analysts’ estimates for the adjusted earnings per share of $1.62. The company had reported the adjusted revenue growth of 25.1 percent to $2.6 billion in the fourth quarter of FY 18, beating the analysts’ estimates for revenue of $2.55 billion. In the Digital Media business, the company achieved strong revenue in both Creative Cloud and Document Cloud in Q1. Net new Digital Media annualized recurring revenue, or ARR, was $357 million, and total Digital Media ARR exiting Q1 grew to $7.07 billion. Q1 Creative revenue was $1.49 billion, which represents 22% year-over-year growth.

Moreover, ADBE achieved record Document Cloud revenue of $282 million in Q1, which represents 22% year-over-year growth, and the company added $65 million of net new Document Cloud ARR during the quarter. In addition to delivering another strong quarter with Acrobat and Document Cloud, some of the revenue strength in Q1 is attributed to a benefit from the move to ASC 606 revenue recognition. Notable drivers of Document Cloud growth include continued strength with Acrobat subscription adoption helped by a steady on-ramp and conversion of free mobile app usage to paid subscriptions, strength with enterprise adoption of Acrobat and Document Cloud services, and strong performance with Adobe Sign. In addition to new revenue from the recent Magento and Marketo acquisitions, Experience Cloud performance in Q1 was driven by success across many offerings, with strength in Adobe Campaign and Adobe Experience Manager. Cross-sell of Magento within existing Experience Cloud accounts was notable, and Marketo delivered solid results in their first full quarter as part of Adobe.

The company expects to report revenue of about $2.70 billion (2 billion pounds) for the second quarter, below estimates of $2.72 billion.  The company also guided adjusted earnings per share of $1.77, compared with analysts’ estimates of $1.88 a share.

For fiscal 2019, the company raised its guidance for adjusted earnings per share to $7.80, compared with its prior forecast of $7.75 a share. The company maintained its guidance for total revenue of $11.15 billion for the fiscal year, compared with analysts’ estimates of $11.16 billion.

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