On Wall Street, Adobe Systems Inc.(ADBE, Financial) has become the gift that keeps on giving.
In its first-quarter earnings, the California-based computer software developer reported $1.55 in earnings per share on a non-GAAP basis on revenues of $2.08 billion.
The earnings estimate exceeded the expectations of nearly 30 Wall Street analysts, who had projected a maximum of $1.51 per share.
The Photoshop maker’s $2.08 billion in revenue shattered its previous record set in the prior-year quarter of $1.68 billion. That’s a 24% year-over-year growth.
In net income, the company reported $583 million for the quarter, up from the prior-year quarter of $398 million. That translates into a diluted net income per share of $1.17, up from the prior-year quarter of 80 cents per share.
A greater significance
Investors have been keen on whether the company, with a market cap over $100 billion, could maintain its growth momentum. After today’s earnings results, they have little to complain about.
The company was able to post impressive results while setting aside $2.7 billion in cash and cash equivalents for the quarter. That compares to $1.06 billion in the prior-year quarter.
It also announced today it had repurchased about 1.6 million shares during the quarter and was returning $301 million of cash to stockholders.
The period under scrutiny involves the three months ended March 2.
Adobe subscription
The company saw revenue for subscriptions jump significantly to $1.8 billion from $1.4 billion over the prior-year quarter.
It saw total revenues, which includes product sales and services and support, climb to over $2 billion from $1.68 billion in the prior-year quarter.
Investors have been keeping a close eye on the subscriptions sector of the business since the company migrated to subscription-based services.
Adobe provided a breakdown that showed its digital media segment revenue was $1.46 billion with creative revenue growing to $1.23 billion and document cloud achieving revenue of $231 million.
The company’s Digital Experience segment revenue was $554 million, which is 16% year-over-year growth.
GuruFocus indicators
GuruFocus shows the company’s revenues per share have been climbing since 2003. Earnings per share were reported as $14.57 a share in 2007, expanding from $2.68 per share in 2003.
The company’s operating margin dropped to 9.95% in 2014 but rose to over 29% in 2017. The company saw margins of 37% in 2005.
GuruFocus assigns Adobe a financial strength rating of 7 out of a total of 10. Concerning its ability to generate and grow profit, GuruFocus rates it with a value of 9 out of 10.
Analysts also have forecasted earnings to grow based on an annual average 23.75% rate over the next five fiscal years.
In late Thursday trading, Adobe sold for almost $219 a share, up 0.2%. It has a market cap of $108 billion, according to GuruFocus.
According to GuruFocus, Adobe Systems has 493.33 million shares outstanding. The portion held by institutions is 56.4% and the remaining 0.36% is held by insiders.
As of Dec. 30, FMR LLC holds 7.24% of Adobe’s total shares outstanding, the Vanguard Group Inc. holds 7.16% and BlackRock Inc. owns 6.65%.
