Adobe Systems Incorporated (NASDAQ:ADBE) is expected to announce lower earnings once again when it reports its quarterly results onDec.12. Adobe will host a conference call at 2:00 p.m. Pacific Time (5 p.m. Eastern Time) on the same day to discuss the fourth quarter results.
San Jose, California-based Adobe operates as a diversified software company. It offers a line of software and services used by creative professionals, marketers, knowledge workers, application developers, enterprises, and consumers. The company's key products include Photoshop, Illustrator, InDesign, Dreamweaver, Flash Pro, Fireworks, Acrobat, Bridge and Media Encoder.
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Wall Street expects Adobe to earn 32 cents a share, according to analysts polled by Thomson Reuters. The consensus estimate implies a 47.5 percent drop from last year when it earned 61 cents a share.
Adobe's quarterly earnings have managed to top analysts' consensus estimate thrice in the past four quarters. However, the consensus estimate has dropped by 9 cents in the past three months.
Quarterly revenue is expected to be down 10.8 percent to $1.03 billion from $1.15 billion a year-ago. The subscriber metrics would be the key as the company has shifted to the subscription-based model, and deferred revenue would be monitored. For the third quarter, deferred revenue grew by $42.7 million to a record $734.0 million.
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For the full year, Wall Street expects earnings of $1.35 a share on revenue of $4.05 billion. In the same period last year, Adobe earned $2.35 a share and generated revenue of $4.40 billion.
Adobe reports under Digital Marketing and Digital Media segments. Adobe provides Marketing Cloud under its marketing unit. Recently, it unveiled Adobe Campaign, which is a cross-channel campaign management tool that it got with the acquisition of Neolan! e during its third quarter of fiscal 2013.
Revenue from Adobe Marketing Cloud has increased 28 percent, driven by strong adoption of Adobe Experience Manager (AEM) offering, and, the addition of Neolane mid-third quarter of fiscal 2013.
Investors are likely to focus on the pace of adoption of Neolane solutions and new features to the marketing line. Adobe unveiled a new dynamic tag management capability in September for Adobe Marketing Cloud that dramatically speeds up the process for tagging content to be measured and optimized across Web properties.
In October, Adobe upgraded its Adobe Analytics, a key element of Adobe Marketing Cloud. Innovations include predictive analytics capabilities, advanced real-time reporting and data visualizations, video analytics advancements and powerful mobile app analytics. It also launched Adobe Mobile services for Adobe Marketing Cloud to help marketers better understand and improve user engagement with mobile apps.
Meanwhile, Adobe is accelerating its shift to cloud and hopes the move would generate more revenue while offering Adobe Creative Cloud under its Digital Media offering. It recently updated its Creative Cloud with features, reimagining the creative process through a new set of "CC" desktop applications and enhanced cross-device collaboration and publishing capabilities.
Adobe exited the third quarter with 1.31 million paid Creative Cloud subscriptions, an increase of 331 thousand when compared to the second quarter, and enterprise adoption of Creative Cloud was stronger than expected.
Total Creative Annualized Recurring Revenue exiting the third quarter of fiscal 2013 was $655.0 million, up from $440.0 million exiting the second quarter of fiscal 2013.
The street will keep an eye on costs as during this transition as expenses are not expected to decline in correlation to the decrease in revenue, which would adversely affect its net income and operating margin. They may want some color on expense control going into f! iscal 201! 4.
Investors will be looking for how the first quarter and full year outlook fare with Wall Street's view and it may decide the movement of shares post results. Street expects first quarter earnings of 34 cents a share on revenue of $1.02 billion, and $1.60 a share on revenue of $4.36 billion for the full year.
For the third quarter, the company reported net income of $83 million or 16 cents a share, compared to $201.36 million or 40 cents a share for the year-ago quarter. Excluding items, it earned 32 cents a share. Adobe's total revenue for the first quarter fell $995.1 million from $1.08 billion a year-ago.
The stock has gained 15 percent since reporting its third quarter results, and traded between $35.19 and $57.99 during the past 52-weeks. The stock trades 34.75 times its forward earnings.
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