Adobe Q1 Earnings Beat Estimates, Revenue Rise Y/Y, Shares Fall

Adobe ADBE reported first-quarter fiscal 2025 non-GAAP earnings of $5.08 per share, beating the Zacks Consensus Estimate by 2.21% and increasing 13.4% year over year.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.Total revenues were $5.71 billion, which beat the consensus mark by 1.06% and increased 10% year over year on a reported basis and 11% on a constant-currency (cc) basis.However, Adobe's stock declined more than 4% in the after-hours trading. This drop is attributed to investor concerns regarding the company's pace in monetizing its artificial intelligence (AI) initiatives.Adobe Inc. Price, Consensus and EPS Surprise  Adobe Inc. price-consensus-eps-surprise-chart | Adobe Inc. QuoteADBE’s Top Line in DetailSubscription revenues were $5.48 billion (accounting for 96% of the total revenues), up 11.5% on a year-over-year basis. Product revenues were $95 million (1.7% of the total revenues), down 20.2% year over year. Services and other revenues were $136 million (2.4% of the total revenues), down 7.5% year over year.The Digital Media segment generated revenues of $4.23 billion (accounting for 74% of the total revenues), up 11% year over year on a reported basis and 12% on a cc basis. The figure surpassed the Zacks Consensus Estimate by 1.12%.Digital Experience revenues of $1.41 billion (accounting for 25% of the total revenues) were up 10% year over year both on a reported and cc basis. The figure beat the consensus mark of 0.75%.Publishing and Advertising revenues of $70 million (accounting for 1% of the total revenues) fell 9% on a year-over-year basis. The figure beat the consensus mark by 1.61%.Digital Media Top-Line DetailsAdobe adjusted its revenue reporting structure and disclosed subscription revenues by “Business Professionals and Consumers” and “Creative and Marketing Professionals.”Business Professionals and Consumers group consists of Document Cloud, Acrobat subscription revenues in Creative Cloud, and Adobe Express subscription revenues in Creative Cloud, all of which are part of Digital Media.Business Professionals and Consumers group’s subscription revenues were $1.53 billion, marking 15% year-over-year growth.The Creative and Marketing Professionals group consists of all subscription revenues from Digital Experience and the remaining subscription revenues from Creative Cloud in Digital Media.Creative and Marketing Professionals group’s subscription revenues were $3.92 billion, representing 10% year-over-year growth.Digital Media’s annualized recurring revenues (“ARR”) were $17.63 billion exiting first-quarter fiscal 2025, representing 12.6% year-over-year growth.Digital Experience’s Top-Line DetailsExperience Cloud subscription revenues were $1.30 billion, up 11% year over year, both on a reported and a cc basis.Digital Experience growth is driven by strong momentum across content, data and journey-based product offerings. The GenStudio solution has exceeded $1 billion in ending ARR, while improved enterprise retention further strengthens long-term performance.Operating Details of ADBEAdobe reported a first-quarter fiscal 2025 non-GAAP gross margin of 90%, which expanded 40 basis points (bps) on a year-over-year basis.Operating expenses were $2.45 billion, up 11.5% year over year. As a percentage of total revenues, the figure increased 50 bps year over year to 42.9%.The adjusted operating margin was 47.5%, which contracted 10 bps year over year.ADBE’s Balance Sheet & Cash FlowAs of Feb. 28, 2025, the cash and short-term investment balance was $7.44 billion, down from $7.89 billion as of Nov. 29, 2024.Long-term debt, as of Feb. 28, 2025, was $6.16 billion compared with $4.13 billion as of Nov. 29, 2024.Cash generated from operations was $2.48 billion in the reported quarter compared with $2.92 billion in the previous quarter.The company repurchased 7 million shares in the first quarter of fiscal 2025.Adobe Reaffirms FY25 GuidanceFor the second quarter of fiscal 2025, ADBE expects total revenues between $5.77 billion and $5.82 billion.The Zacks Consensus Estimate for second-quarter fiscal 2025 revenues is pegged at $5.79 billion, higher than management’s guidance range, indicating 8.98% growth from the figure reported in the year-ago quarter.The company expects Digital Media revenues between $4.27 billion and $4.30 billion. The Digital Experience segment’s revenues are expected between $1.43 billion and $1.45 billion. Experience Subscription revenues are expected to be $1.32-$1.33 billion.Adobe expects fiscal second-quarter non-GAAP earnings between $4.95 and $5 per share. The consensus mark for earnings is pegged at $4.97, indicating 10.94% growth from the figure reported in the year-ago quarter.For fiscal 2025, ADBE expects total revenues between $23.30 billion and $23.55 billion. The Zacks Consensus Estimate for fiscal 2025 revenues is pegged at $23.45 billion, indicating 9.04% growth from the figure reported in the year-ago quarter.Adobe expects Digital Media revenues between $17.25 billion and $17.40 billion. Digital Media ending ARR book of business growth is pegged at 11% year over year.The Digital Experience segment’s revenues are anticipated between $5.8 billion and $5.9 billion. Experience Subscription revenues are expected to be $5.38-$5.43 billion.ADBE expects fiscal 2025 non-GAAP earnings per share between $20.20 and $20.50. The consensus mark for fiscal 2025 earnings is pegged at $20.39, indicating 10.69% growth from the figure reported in the year-ago quarter.Zacks Rank & Other Stocks to ConsiderCurrently, ADBE carries a Zacks Rank #2 (Buy).ATN International ATNI, InterDigital IDCC and Garmin GRMN are some other top-ranked stocks in the broader technology sector, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.ATN International’s shares have jumped 21% year to date. The long-term earnings growth rate for ATNI is pegged at 10%.InterDigital shares have gained 9.8% year to date. The long-term earnings growth rate for IDCC is pegged at 15%.Garmin shares have returned 4.5% year to date. The long-term earnings growth rate for GRMN is pegged at 21.60%.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +24.3% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Garmin Ltd. (GRMN): Free Stock Analysis Report Adobe Inc. (ADBE): Free Stock Analysis Report InterDigital, Inc. (IDCC): Free Stock Analysis Report ATN International, Inc. (ATNI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks