Adobe Shares Tick Lower Post Q1 Results

Adobe Inc ADBE reported first-quarter FY22 revenue growth of 9% year-over-year or +17% adjusted year-over-year growth to $4.26 billion, beating the consensus of $4.24 billion.

Adjusted EPS improved to $3.37 from $3.14 in 1Q21, beating the consensus of $3.34.

Digital Media revenue was $3.11 billion (+9% Y/Y), Creative revenue was $2.55 billion (+7% Y/Y), and Document Cloud revenue was $562 million (+17% Y/Y).

Digital Media Annualized Recurring Revenue increased $418 million sequentially to $12.57 billion, Creative ARR grew to $10.54 billion, and Document Cloud ARR grew to $2.03 billion.

Digital Experience revenue was $1.06 billion (+13% Y/Y). Digital Experience subscription revenue was $932 million (+15% Y/Y).

The gross margin declined by 60 bps to 88%. The operating income increased by 8.7% Y/Y to $1.58 billion, and the margin contracted 15 bps to 37%.

Adobe generated cash from operating activities year-to-date of $1.77 billion. The company repurchased ~3.8 million shares during the quarter.

Impact of War in Ukraine, ARR reduction of $87 million, and an expected revenue impact of $75 million for FY22.

2Q22 Outlook: ADBE expects Total revenue of ~$4.34 billion vs. the consensus of $4.40B, Digital Media annualized recurring revenue (ARR) of ~$440 million of net new ARR, and Digital Media segment revenue of ~13%.

It expects EPS of GAAP ~$2.44 and Non-GAAP ~$3.30 vs. $3.35 consensus.

Price action: ADBE shares are trading lower by 2.90% at $466.45 during the post-market session on Tuesday.