Categories Analysis, Technology

Adobe’s (ADBE) Q2 report is due on June 15. What to look for?

It is estimated that in the second quarter, both earnings and revenues increased from last year

After entering the new fiscal year on an upbeat note, design software maker Adobe Inc. (NASDAQ: ADBE) is all set to report second-quarter results on June 15, after the closing bell.

The company’s stock was hit hard by the recent market selloff – it slipped to a two-year low in the second half of 2022 after retreating from the peak a year ago. ADBE has regained a part of the lost value since then, but it might take some time for the stock to recover fully. It has gained an impressive 25% this year alone.

The unique applications being offered by the company, such as the popular Photoshop and Illustrator which comes included in Creative Cloud now, continue to be the preferred tools for media professionals. Other products like the e-signature app and Acrobat, as well as analytics and e-commerce services, are also widely used by enterprise customers.  

Road Ahead

However, the pullback in enterprise spending due to interest rate hikes and economic uncertainties could weigh on the company’s sales this year. Though the management has raised its guidance for full-year sales growth, it is still below last year’s levels. However, the bottom line is likely to benefit from effective cost management.

From Adobe’s Q1 2023 earnings conference call:

“Our performance demonstrates the critical role that Adobe products are playing in fueling the global digital economy, empowering everyone everywhere to imagine, create and bring any digital experience to life. We are executing against our strategy to unleash creativity for all, accelerate document productivity, and power digital businesses, delivering on our innovative product roadmap and engaging a growing universe of customers from individuals to small businesses to the largest enterprises.”

Adobe Q1 2023 earnings infographic

Q2 Report on Tap

Adobe is preparing to release second-quarter results on June 15, at 4:05 pm ET. It is widely expected that the impressive performance seen in the early months of the year will continue in the latest quarter also. Market watchers estimate that the company earned $3.53 per share in the April quarter, on an adjusted basis, compared to $3.35 per share in the same period of 2022. They are looking for revenues of $4.46 billion, up 1.6% year-over-year.

A few months ago, the leadership had issued a guidance forecasting second-quarter revenues in the range of $4.75-$4.78 billion, and earnings per share between $3.75 and $3.80. Encouraged by the unfolding opportunities and strong execution, the company also raised its full-year guidance.

Key Numbers

Adobe enjoys the rare distinction of reporting strong quarterly earnings that either beat or matched estimates consistently for around six years. In the February quarter, continued strong demand in the core Digital Media and Digital Experience segments translated into a 9% increase in total revenues to $4.66 billion. The top line also came in above the forecast. Consequently, earnings climbed 13% annually to $3.80 per share.

After making steady gains in recent weeks, the stock is experiencing weakness lately. It traded sharply lower on Wednesday.

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