Adobe Systems Inc. (ADBE, Financial) delivered figures for the third quarter of fiscal 2017 on Sept. 19.
The U.S. multinational computer software company headquartered in San Jose, California, closed the quarter with a non-GAAP measure of EPS – on a diluted basis – of $1.10 or a non-GAAP net profit of $549.071 million. This was a 195.6% increase from the comparable of fiscal 2016.
Adobe Systems beat expectations by 9 cents on third-quarter earnings.
Source: Yahoo Finance
On a GAAP basis, the net profit increased year over year by 55% to $419.6 million or 85 cents per diluted share.
A substantial growth in third-quarter earnings and operating cash flow – the latter was up 36% to $704.4 million compared to 2016 – was possible thanks to robust growth in quarterly revenue that came in at $1.84 billion.
Adobe Systems beat expectations on revenue by $20 million with a figure representing a 26% increase from the third quarter of fiscal 2016.
The revenue record that Adobe Systems achieved in the third quarter of fiscal 2017 was “driven by the company’s Cloud-based subscription offerings,” said Mark Garret, Adobe Systems’ executive vice president and CEO in commenting on the quarterly results.
Revenue from the Digital Media segment came in at $1.27B leading to an annual recurring revenue – ARR – of $4.87 billion while in the Adobe Experience Cloud segment the company recorded a 26% year-over-year increase to $508 million on Sept. 1.
Total Digital Media ARR increased by 6.8% from $4.56 billion in the second quarter of fiscal 2017 to $4.87 billion in the third quarter of fiscal 2017.
With its guidance for the fourth quarter of fiscal 2017, the company expects year-over-year increases of 25% in revenues from the Digital Media segment – with a figure of $330 million in net new ARR – and of 17% in revenues from the Adobe Experience Cloud segment.
Let’s have a look at the company’s third-quarter revenue per division compared to the same quarter of one year ago: Revenue from the sale of subscriptions came in at $1.57 billion (up 34% from the comparable of 2016); revenue from the sale of products was down 12% to $158.96 million, and revenue from services’ supply and support came in at $111.78 million, down 2% from the third quarter of fiscal 2016.
Concerning revenue for which the company has not delivered products and services yet to the customers and that are booked among the current liabilities of the company’s balance sheet – this was $2.2 billion at the end of the quarter. Led by a growth in sales of subscriptions, the deferred revenue increased by almost 10% from the previous quarter, which ended last calendar year Dec. 2.
In the third quarter of fiscal 2017, Adobe Systems charged the income statement with operating expenses of $1 billion. This was nearly a 15.7% increase year over year, mainly due to increases in R&D and in expenses for sales and marketing activities.
Adobe Systems closed the third quarter of fiscal 2017 with $5.4 billion in cash on hand and securities, $6.58 billion in current assets and $3.22 billion in current liabilities. The last two figures led to a current ratio of 2.04, a 3% improvement from the previous quarter. The amount in long-term debt is approximately $1.89 billion as of the third quarter of fiscal 2017, for a long-term debt-equity ratio of 23.1% versus an industry average of 77.77%.
Adobe Systems is currently trading at $156.6 per share with a market capitalization of $77.27 billion, a price-book (P/B) ratio of 9.90, a price-earnings (P/E) ratio of 54.19, a price-sales (P/S) ratio of 12.04 and a forward P/E ratio of 31.25.
For the fourth quarter of fiscal 2017, analysts expect Adobe Systems will report an EPS of $1.10 on quarterly revenue forecasted to come in at $1.95 billion. Both figures on earnings and revenue, as forecasted by analysts for the last quarter of 2017, led to a full fiscal 2017 EPS of $4.06 and a revenue of $7.22 billion.
With a rating of 1.9, analysts suggest buying shares of Adobe Systems which price is expected to reach $161.80 within the next 12 months’ trading period.
Disclosure: I have no positions in Adobe Systems Incorporated.
