Adobe’s stock (NASDAQ
NDAQ
DBE
Interestingly, Adobe
ADBE
The company surpassed the consensus estimates in the third quarter of FY2023 (FY Dec 4 – Dec 3), with revenues increasing 10% y-o-y to $4.89 billion. It was driven by an 11% growth in digital media and a 10% rise in digital experience revenues. Notably, the subscription-based revenues contributed close to 94% of the top line. On the cost front, the operating margin increased from 33.5% to 34.7% in the quarter, leading to a net income of $1.4 billion – up 24% y-o-y.
The top line grew 10% y-o-y to $14.4 billion in the nine months of FY 2023. It was primarily driven by an 11% rise in subscription-based revenues. However, total expenses as a % of revenues witnessed an unfavorable increase over the same period. Markedly, the operating margin reduced from 37.8% to 34.2%. Overall, the net income increased 10% y-o-y to $3.9 billion.
Moving forward, the firm expects the fourth quarter revenues and earnings to remain between $4.96-$5.03 billion and $3.10-$3.15 respectively. Altogether, Adobe’s revenues are forecast to touch $19.38 billion in FY2023. Further, ADBE’s net income margin is likely to see a slight increase in the year. It will likely result in a net income of $5.4 billion and an annual GAAP EPS of $11.63. This coupled with a P/E multiple of just above 51x will lead to a valuation of $594.
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