Adobe's revenue in the second fiscal quarter of 2024 hit a new high of US$5.309 billion, with net profit increasing 21% year-on-year

In the morning news on June 14th, Beijing time, Adobe today announced the company’s second quarter financial report for fiscal year 2024.

Adobe’s quarterly revenue was US$5.309 billion, a record, an increase of 10% compared with US$4.816 billion in the same period last year. Excluding the impact of exchange rate changes, it was a year-on-year increase of 11%; net profit was US$1.573 billion, an increase of 21% compared with US$1.295 billion in the same period last year; adjusted net profit not in accordance with U.S. GAAP was US$2.203 billion, an increase compared with the adjusted net profit of US$1.794 billion in the same period last year.

According to Wall Street analysts’ predictions, Adobe’s second fiscal quarter revenue and adjusted earnings per share will exceed Wall Street analysts’ expectations, and the company’s third fiscal quarter and full-year revenue and adjustments for fiscal 2024 Post-earnings per share outlook also exceeded expectations. These forecasts also pushed the company's stock price up by more than 16%.

Performance Summary:

In the fiscal quarter ended May 31, 2024, Adobe's net profit was US$1.573 billion, an increase of 21% compared with the net profit of US$1.295 billion in the same period last year; diluted net profit per share was US$3.49, an increase compared with the diluted net profit per share of US$2.82 in the same period last year.

According to data provided by Yahoo Finance, 27 analysts previously predicted that Adobe’s adjusted net profit in the second fiscal quarter, which does not follow U.S. GAAP, will be US$2.203 billion, which is 2.203 billion U.S. dollars, compared with the adjusted net profit in the same period last year. Adjusted earnings per share were $4.48, an increase from $3.91 in the same period last year. The results were expected to beat analysts' expectations. Adobe's second-quarter earnings per share will reach $4.09.

Adobe’s second quarter revenue was US$5.309 billion, a record, an increase of 10% compared with US$4.816 billion in the same period last year. Excluding the impact of exchange rate changes, it was a year-on-year increase of 11%. This The results also exceeded analysts' expectations. According to data provided by Yahoo Finance Channel, 26 analysts had previously expected Adobe's second-quarter revenue to reach $4.93 billion on average.

According to business units, Adobe’s subscription business revenue in the second fiscal quarter was US$5.06 billion, an increase from US$4.517 billion in the same period last year; product business revenue was US$104 million, compared with US$130 million in the same period last year. The U.S. dollar declined; services and other business revenue was $145 million, a decrease from $169 million in the same period last year.

According to the report, Adobe’s digital media division revenue in the second fiscal quarter was US$3.91 billion, an increase of 11% compared with the same period last year. The division's creative division generated revenue of $3.13 billion, up 10% compared with the same period last year. Document cloud business revenue was US$782 million, an increase of 19% compared with the same period last year. In addition, Adobe's digital font verification department revenue in the second fiscal quarter was US$1.33 billion, an increase of 9% compared with the same period last year. Digital font subscription business revenue was US$1.20 billion, an increase of 13% compared with the same period last year. Overall, revenue from the digital media and digital font verification divisions increased by 11% and 9% year-on-year, and revenue from the digital font subscription business and document cloud business increased by 13% and 19% year-on-year.

Adobe’s fiscal second-quarter annualized recurring revenue from its digital media business rose $487 million sequentially to $16.25 billion. Among them, the annualized recurring revenue of the creative business unit increased to $13.11 billion, and the annualized recurring revenue of the file cloud business unit increased to $3.15 billion.

Adobe’s total cost of revenue in the fiscal second quarter was $598 million, up from $572 million in the same period last year. Among them, the cost of revenue of the subscription business was US$456 million, an increase from US$436 million in the same period last year; the cost of revenue of the product business was US$8 million, which was the same as US$8 million in the same period last year; services and other businesses Cost of revenue was $134 million, up from $128 million in the same period last year.

Adobe’s fiscal second-quarter gross profit was $4.711 billion, an increase from $4.244 billion in the same period last year.

Adobe’s second-quarter operating profit was $1.885 billion, up from $1.624 billion in the same period last year. Excluding certain one-time items (non-GAAP), Adobe's adjusted operating profit in the fiscal second quarter was $2.441 billion, an increase from $2.180 billion in the same period last year.

Adobe’s total operating expenses for the fiscal second quarter were $2.826 billion, up from $2.620 billion in the same period last year. Among them, R&D expenses were US$984 million, an increase from US$876 million in the same period last year; sales and marketing expenses were US$1.445 billion, an increase from US$1.345 billion in the same period last year; general and administrative expenses were US$355 million. The amortization expense of acquired intangible assets was US$42 million, which was the same as US$42 million in the same period last year.

During its fiscal second quarter, Adobe repurchased approximately 4.6 million shares of the company's stock. Adobe's second-quarter cash flow from operating activities was $1.94 billion.

As of the end of the fiscal second quarter, Adobe's remaining performance obligations were $17.86 billion.

Performance Outlook:

Performance Outlook for the Third Fiscal Quarter of Fiscal Year 2024

Adobe expects revenue in the company's fiscal third quarter of fiscal 2024 to be between $5.33 billion and $5.38 billion, with an average of $5.355 billion, beating analysts' expectations. Among them, the revenue of the digital media department is expected to reach between US$3.95 billion and US$3.98 billion; the revenue of the digital experience department is expected to reach between US$1.325 billion and US$1.345 billion; the revenue of the digital experience subscription business is expected to reach US$1.20 billion. to US$1.22 billion. According to data provided by Yahoo Finance, 26 analysts on average expected Adobe's third-quarter revenue to reach $5.03 billion.

Adobe also predicts that the net new annualized recurring revenue of the digital media business in the third quarter of fiscal year 2024 will reach approximately US$460 million; the tax rate in accordance with U.S. GAAP will be approximately 18.0%, which is not The tax rate in accordance with US GAAP will be around 18.5%; earnings per share will be between US$3.45 and US$3.50, and earnings per share not in accordance with US GAAP will be between US$4.50 and US$4.55, exceeding analyst expectations . According to data provided by Yahoo Finance, 27 analysts on average expected Adobe to earn $4.17 per share in the third quarter.

Fiscal Year 2024 Performance Outlook

For the entire fiscal year 2024, Adobe expects total revenue to reach a range of US$21.40 billion to US$21.50 billion, with an average of US$21.45 billion, exceeding the analysis Teacher expectations. Among them, the revenue of the digital media department is expected to reach US$15.80 billion to US$15.85 billion; the revenue of the digital experience department is expected to reach US$5.325 billion to US$5.375 billion; the revenue of the digital experience subscription business is expected to reach US$4.775 billion. to US$4.825 billion. According to data provided by Yahoo Finance, 35 analysts on average expected Adobe's full-year revenue to reach $19.98 billion.

Adobe also predicts that the net new annualized recurring revenue of the digital media business in fiscal year 2024 will reach approximately US$1.95 billion; the tax rate in accordance with U.S. GAAP will be approximately 20.5%. The GAAP tax rate will be around 18.5%; earnings per share will be between US$11.80 and US$12.00, and non-GAAP earnings per share will be between US$18.00 and US$18.20, exceeding analyst expectations. According to data provided by Yahoo Finance, 33 analysts on average expected Adobe to earn $16.78 per share for the full year.

Stock price changes:

On the same day, Adobe's stock price fell $1.13 in regular trading on Nasdaq, closing at $458.74, a decrease of 0.25%. In subsequent after-hours trading as of 6:21 pm ET on Thursday (6:21 am on Friday, Beijing time), Adobe's stock price rose sharply by $75.01 to $533.75, an increase of 16.35%. In the past 52 weeks as of Thursday's close, Adobe's highest price was $638.25 and its lowest price was $433.97.

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