Shulou(Shulou.com)11/24 Report--

On the morning of June 16, Beijing time, Adobe today released the company's financial results for the second quarter of fiscal year 2023. According to the report, Adobe's second-quarter revenue was $4.816 billion (currently about 34.483 billion yuan), a record, up 10% from $4.386 billion in the same period last year, and 13% year-on-year growth excluding exchange rate changes.

Second-quarter net profit was $1.295 billion (currently about 9.272 billion yuan), up 10% from $1.178 billion in the same period last year. Adjusted net profit, not in accordance with GAAP, was $1.794 billion, compared with $1.585 billion in the same period last year.

Adobe's second-quarter revenue and adjusted earnings per share beat Wall Street analysts' expectations, and the company's outlook for earnings per share for the third quarter and full year of fiscal 2023 also exceeded expectations, pushing its shares up more than 3% in after-hours trading to break their 52-week high.

Summary of results: for the quarter ended June 2, 2023, Adobe's net profit was $1.295 billion, up 10% from $1.178 billion in the same period last year; diluted earnings per share were $2.87, compared with $2.49 per diluted share in the same period last year.

Excluding certain one-time items (not in accordance with GAAP), Adobe's adjusted net income for the second quarter was $1.794 billion, compared with adjusted net income of $1.585 billion in the same period last year, and adjusted earnings per share of $3.91, compared with adjusted earnings of $3.35 per share in the same period last year, which beat analysts' expectations. On average, 26 analysts had expected Adobe to earn $3.79 a share in the second quarter, according to data provided by Yahoo Finance.

Adobe's second-quarter revenue was a record $4.816 billion, up 10 per cent from $4.386 billion in the same period last year, and 13 per cent year-on-year, excluding currency changes, which also beat analysts' expectations. On average, 25 analysts had expected Adobe's second-quarter revenue to reach $4.77 billion, according to Yahoo Finance.

Adobe's second-quarter subscription revenue by business unit was $4.517 billion (currently about 32.342 billion yuan), compared with $4.07 billion in the same period last year; revenue from products was $130 million, compared with $146 million in the same period last year; and revenue from services and other businesses was $169 million, compared with $170m in the same period last year.

Divided in another way: (1) the revenue of Adobe's digital media division in the second quarter was $3.51 billion, an increase of 10% over the same period last year, and 14% year-on-year growth excluding exchange rate changes. Of this total, the revenue of the creative sector was US $2.85 billion, an increase of 9% compared with the same period last year, and 14% year-on-year growth excluding exchange rate changes, while document cloud revenue was US $659 million, an increase of 11% compared with the same period last year. Excluding the impact of exchange rate changes, the year-on-year growth is 14%. (2) the revenue of Adobe's digital experience division in the second quarter was US $1.22 billion, an increase of 12% over the same period last year, and 14% year-on-year growth excluding exchange rate changes. Of this total, revenue from the digital experience subscription business was $1.07 billion, an increase of 11% over the same period last year, and 14% year-on-year growth excluding exchange rate changes.

Annualized recurring revenue from Adobe's digital media business rose $470 million to $14.14 billion in the second quarter from the previous quarter. Of this total, the annual recurrent income of the creative business unit increased to $11.64 billion, and that of the document cloud business unit increased to $2.5 billion.

Adobe's total revenue cost in the second quarter was $572 million, compared with $539 million in the same period last year. Of this total, the revenue cost of the subscription business was $436 million, compared with $410 million for the same period last year; the revenue cost of the product business was $8 million, compared with $9 million for the same period last year; and the revenue cost of services and other businesses was $128 million, compared with $120 million for the same period last year.

Adobe's second-quarter gross profit was $4.244 billion, compared with $3.847 billion in the same period last year.

Adobe's second-quarter operating profit was $1.624 billion, compared with $1.529 billion in the same period last year. Excluding certain one-time items (not in accordance with GAAP), Adobe's adjusted operating profit for the second quarter was $2.18 billion, compared with $1.974 billion in the same period last year.

Adobe's total operating expenses were $2.62 billion in the second quarter, compared with $2.318 billion in the same period last year. Of this total, R & D expenditure was $876 million, compared with $738 million in the same period last year; sales and marketing expenses were $1.345 billion, compared to $1.247 billion in the same period last year; general and administrative expenses were $357 million, compared with $291 million in the same period last year; amortization of acquired intangible assets was $4200, compared with $4200 in the same period last year.

In the second quarter, Adobe bought back about 2.7 million shares of the company. Adobe's cash flow from business operations in the second quarter was $2.14 billion.

At the end of the second quarter, Adobe's remaining performance obligations were $15.22 billion.

Performance outlook: performance outlook for the third quarter of fiscal year 2023

Adobe expects revenue of between $4.83 billion and $4.87 billion for the third quarter of fiscal 2023, with an average of $4.85 billion, roughly in line with analysts' expectations. Of this total, revenue from the digital media division is expected to reach between $3.55 billion and $3.57 billion; revenue from the digital experience division is expected to reach between $1.21 billion and $1.23 billion; and revenue from the digital experience subscription business is expected to reach between $1.08 billion and $1.1 billion. On average, 25 analysts expect Adobe's third-quarter revenue to reach $4.86 billion, according to Yahoo Finance.

Adobe also predicts that the net annual recurrent income of the digital media business in the third quarter of fiscal 2023 will reach about $410 million; the tax rate according to the US general accounting standards will be about 21.5 per cent, and the tax rate that is not in accordance with the US general accounting standards will be about 18.5 per cent Earnings per share will be between $2.82 and $2.88, while earnings per share that are not in accordance with GAAP will be between $3.95 and $4.00, exceeding analysts' expectations. On average, 26 analysts expect Adobe's third-quarter earnings per share to reach $3.89, according to Yahoo Finance.

Performance outlook for fiscal year 2023

For the entire 2023 fiscal year, Adobe expects total revenue of between $19.25 billion and $19.35 billion, with an average of $19.3 billion, in line with analysts' expectations. Of this total, revenue from the digital media division is expected to reach between $14.1 billion and $14.15 billion; revenue from the digital experience division is expected to reach between $4.85 billion and $4.9 billion; and revenue from the digital experience subscription business is expected to reach between $4.3 billion and $4.35 billion. On average, 32 analysts expect Adobe's full-year revenue to reach $19.3 billion, according to data provided by Yahoo Finance.

Adobe also predicts that the net annual recurrent income of the digital media business for the whole of fiscal year 2023 will reach about $1.75 billion; the tax rate according to the US general accounting standards will be about 21.5 per cent, and the tax rate not in accordance with the US general accounting standards will be about 18.5 per cent. Earnings per share will be between $11.15 and $11.25 per share, while earnings per share that are not in accordance with GAAP will be between $15.65 and $15.75, exceeding analysts' expectations. On average, 31 analysts expect Adobe to earn $15.50 a share for the full year, according to Yahoo Finance.

Share price movements: Adobe shares rose $11.38, or 2.37%, to close at $490.91 in regular Nasdaq trading. Adobe shares rose another $15.58, or 3.17 per cent, to $506.49 in after-hours trading as of 06:11 est on Thursday (06:11 Beijing time on Friday), breaking a 52-week high. In the 52 weeks ending Thursday's close of trading in the U.S. Stock market, Adobe traded as high as $495.20 and as low as $274.73.

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