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A Sudden Profitable Quarter Boosts Adobe Stock

Profitable Quarter Boosts Adobe Stock –

After the maker of design software revealed fiscal fourth-quarter earnings and guidance that surpassed analysts’ expectations, Adobe shares increased 6% in extended trading on Thursday.

Here is how the business fared:

Adjusted earnings per share were $3.60 compared to analysts’ expectations of $3.50, according to Refinitiv.

Refinitiv reports that revenue was $4.53 billion as opposed to the $4.53 billion analysts had predicted.

According to a statement, overall revenue increased 10% year over year in the three months that ended on December 2. The revenue increased by 13% from the prior quarter. At $1.18 billion, net income decreased slightly from the same quarter last year’s $1.23 billion.

CEO Shantanu Narayen told analysts during a conference call that “we delivered record operating cash flows with a focus on profitability.” He claimed that although the business is being cautious, it won’t be safe from a weakening economy.

Adobe’s fiscal first quarter guidance called for adjusted earnings per share of $3.65 to $3.70 on revenues between $4.60 billion and $4.64 billion. Refinitiv’s poll of analysts had predicted $4.64 billion in revenue and adjusted earnings per share of $3.64. The effects of Figma are not included in the figures. The business kept its forecast in place for the entire fiscal year 2023.

Revenue from Adobe’s Digital Media division, which includes subscriptions to Creative Cloud design software, totaled $3.30 billion, just shy of the StreetAccount consensus estimate of $3.31 billion. In the quarter, creative revenue increased by 8%. Just over the $1.14 billion StreetAccount consensus, the Digital Experience unit, which includes Adobe’s marketing software, generated $1.15 billion in revenue.

Anil Chakravarthy, president of the division, stated on the call that the digital experience business was successful in closing “numerous transformational deals that span our portfolio of solutions.”

In the quarter, Adobe announced that it would make its biggest-ever acquisition when it acquired design software startup Figma for about $20 billion.

According to David Wadhwani, president of the Digital Media business, “Overall, the regulatory process is going as planned.” Adobe still anticipates the transaction to close in 2023, according to Wadhwani, even though the US Justice Department and the UK’s Competition and Markets Authority are currently reviewing it.

How is Figma responding to the current economic climate? Asked one analyst. Narayen noted that because Figma is still a private company, for the time being, Adobe is unable to comment on its most recent performance.

When the after-hours action is taken into account, Adobe shares have fallen 42% this year, while the S&P 500 index has dropped 18% during the same time frame.