bennymarty Investment Thesis Adobe (NASDAQ:ADBE) delivered a mediocre outlook with its fiscal Q3 2024 results, which led to a 9% sell-off. Even though its outlook wasn't too far off analysts' own expectations, this has been a battleground stock for a long time. Bulls call Adobe a value stock, while bears question whether this business is flying high on narrative and low on growth rates. For my part, I'm very much on the fence with Adobe, and believe that there are amply better opportunities elsewhere. Rapid ...

Core View - Adobe shares dropped sharply in extended trading due to a disappointing current-quarter outlook, despite better-than-expected fiscal Q3 results [1][3] - The stock is at risk of breaking below the lower trendline of an ascending triangle pattern, potentially starting a new downtrend [1][3] Technical Analysis - Adobe shares have been trading within an ascending triangle since late February, with a recent golden cross formation indicating a potential uptrend [3] - The stock fell 9 1% to $533 in after-hours trading, signaling a possible breakdown below the triangle's lower trendline [3] Key Support Levels - $500: Psychological support level and horizontal line connecting peaks and troughs from June 2023 to August 2024 [4] - $439: Potential buying opportunity near pre-gap consolidation period from May to June 2023, aligning with the May 2024 swing low [4] - $386: Support area near peaks from February to April 2023 [4] - $333: Long-term correction target, aligning with the May 2023 swing low and measured move price target [5] Key Resistance Level - $550: Potential selling pressure during countertrend moves, near the ascending channel's lower trendline [6] Market Context - Adobe shares have gained 28% over the past three months but remain underwater for the year due to cautious enterprise spending amid economic uncertainty and high interest rates [2]

Financial Data and Key Metrics Changes - Adobe achieved record revenue of $5.41 billion in Q3 2024, representing 11% year-over-year growth [6][27] - GAAP earnings per share for the quarter was $3.76, and non-GAAP earnings per share was $4.65, reflecting 23% and 14% year-over-year growth, respectively [6][28] - Cash flows from operations were $2.02 billion, and the remaining performance obligation (RPO) was $18.14 billion, growing 15% year-over-year [28][32] Business Line Data and Key Metrics Changes - Digital Media revenue reached $4 billion, growing 12% year-over-year, with net new Digital Media ARR of $504 million [11][28] - Document Cloud revenue was $807 million, representing 18% year-over-year growth, with $163 million of net new Document Cloud ARR [28][29] - Creative revenue was $3.19 billion, growing 11% year-over-year, with net new Creative ARR of $341 million [18][29] Market Data and Key Metrics Changes - Experience Cloud revenue was $1.35 billion, with subscription revenue of $1.23 billion, reflecting 12% year-over-year growth [21][28] - Strong adoption of AI-powered features across various products, with over 12 billion Firefly-powered generations across Adobe tools [9][19] Company Strategy and Development Direction - Adobe's strategy focuses on integrating AI across its product portfolio to enhance creativity and productivity, with new offerings like Adobe GenStudio and Firefly Services [8][16] - The company aims to expand its reach through Adobe Express, targeting various customer segments including individuals, education, and enterprises [17][20] - Continued investment in technology platforms and global campaigns to attract top-tier talent while maintaining strong cash flows and profitability [27][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong performance of Digital Media and Document Cloud, attributing it to AI innovations and customer engagement [38][39] - The company anticipates a seasonally strong Q4, with expectations for continued growth driven by innovation and customer-centric approaches [33][51] Other Important Information - Adobe's Content Authenticity Initiative has gained traction, with over 3,300 members committed to enhancing trust and transparency [34] - The company is collaborating with educational institutions to boost digital and media literacy skills, preparing the workforce for an AI-driven future [35] Q&A Session All Questions and Answers Question: What drove the unseasonable strength in Digital Media ARR and why is the Q4 guide lower? - Management noted strong performance in Digital Media and Document Cloud, with AI Assistant contributing significantly. They expect a strong Q4 despite the lower sequential guidance, which is the highest ever for Q4 [38][39] Question: Can you compare AI monetization opportunities between image and video models? - Management highlighted the integration of AI into tools and the potential for monetization through generative credits, emphasizing the importance of commercial safety and user engagement [41][42] Question: How should we think about consumption contributing to ARR growth in FY'25? - Management expressed confidence in the unique differentiation of their offerings and the potential for consumption models to drive growth, despite competitive pressures [46][47] Question: Can you provide insights into Document Cloud's pricing dynamics and subscription transition? - Management indicated that Document Cloud is already a strong subscription business, with ongoing enhancements through AI Assistant and increased sharing capabilities driving engagement and adoption [53][55]

Thursday, September 12th, 2024Stock markets this Thursday finished higher — off session highs (except for the Dow, which was right there) but steadily higher for the most part throughout the day. The Dow rose +235 points, +0.58%; the S&P 500 was +41, +0.75%; the Nasdaq +174 points, +1.00%; and the small-cap Russell 2000 +25, +1.22%.This week’s inflation reports from the Consumer Price Index (CPI) and Producer Price Index (PPI) came and went without causing any drama toward what to expect from the Fed with r ...

Financial Performance - Adobe reported $5.41 billion in revenue for the quarter ended August 2024, a 10.6% year-over-year increase [1] - EPS for the quarter was $4.65, compared to $4.09 a year ago [1] - Revenue surpassed the Zacks Consensus Estimate of $5.37 billion by 0.79% [1] - EPS exceeded the consensus estimate of $4.53 by 2.65% [1] Business Unit Metrics - Digital Media - Creative ARR (Annualized Recurring) was $13.45 billion, slightly below the five-analyst average estimate of $13.46 billion [2] - Digital Media - Total Digital Media ARR (Annual) was $16.76 billion, compared to the $16.71 billion average estimate [2] - Digital Media - Document Services ARR (Annual) was $3.31 billion, exceeding the four-analyst average estimate of $3.25 billion [2] Revenue Breakdown - Digital Media revenue was $4 billion, a 11.2% year-over-year increase, slightly above the $3.97 billion average estimate [2] - Publishing and Advertising revenue was $59 million, a 11.9% year-over-year decrease, below the $60.35 million average estimate [2] - Digital Experience revenue was $1.35 billion, a 10.2% year-over-year increase, slightly above the $1.34 billion average estimate [2] - Digital Media - Creative Cloud revenue was $3.19 billion, a 9.6% year-over-year increase, slightly above the $3.18 billion estimate [2] - Digital Media - Document Cloud revenue was $807 million, a 17.8% year-over-year increase, exceeding the $790.70 million estimate [2] - Services and other revenue was $146 million, a 10.4% year-over-year decrease, below the $163.69 million estimate [2] - Products revenue was $82 million, a 14.6% year-over-year decrease, below the $111.98 million estimate [2] - Digital Experience Subscription Revenue was $1.23 billion, a 12.3% year-over-year increase, slightly above the $1.21 billion estimate [2] - Net Revenue - Subscription was $5.18 billion, a 11.9% year-over-year increase, exceeding the $5.09 billion estimate [2] Stock Performance - Adobe shares returned +7.5% over the past month, outperforming the Zacks S&P 500 composite's +4% change [3] - The stock currently has a Zacks Rank 2 (Buy), indicating potential for outperformance in the near term [3]

Key TakeawaysAdobe reported fiscal third-quarter earnings and revenue that topped expectations.However, its outlook for the fourth quarter missed analysts' estimates.Adobe shares tumbled in extended trading Thursday following the company's earnings release. Adobe (ADBE) shares tumbled in extended trading Thursday after the company’s fiscal fourth-quarter outlook fell short of analysts' expectations. The software company said it anticipates revenue of between $5.50 billion and $5.55 billion for the fourth qu ...

Adobe Systems (ADBE) came out with quarterly earnings of $4.65 per share, beating the Zacks Consensus Estimate of $4.53 per share. This compares to earnings of $4.09 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 2.65%. A quarter ago, it was expected that this software maker would post earnings of $4.39 per share when it actually produced earnings of $4.48, delivering a surprise of 2.05%.Over the last four quarters, the compa ...

Adobe reported third-quarter results on Thursday that beat Wall Street expectations for sales and earnings, but the stock slid 10% in extended trading on fourth-quarter guidance that came up short.Here's how Adobe did for the quarter ending in August versus LSEG consensus estimates:Revenue: $5.41 billion, vs. $5.37 billion expectedEarnings per share: $4.65, adjusted, vs. $4.53 estimatedAdobe said it expected earnings per share between $4.63 and $4.68 on revenue in the fourth quarter of between $5.5 billion ...

Exhibit 99.1 Investor Relations Contact Jonathan Vaas Adobe ir@adobe.com Public Relations Contact Ashley Levine Adobe adobepr@adobe.com FOR IMMEDIATE RELEASE Record Q3 net new Digital Media ARR of $504 million, with exiting RPO surpassing $18 billion and growing 15 percent year over year SAN JOSE, Calif. – Sept. 12, 2024 – Adobe (Nasdaq:ADBE) today reported financial results for its third quarter fiscal year 2024 ended Aug. 30, 2024. "Adobe's record Q3 performance is a testament to our relentless innovation ...

The much-awaited consumer price index (CPI) reading came out on Wednesday, showing monthly inflation increasing by 0.2% in August, in line with the consensus estimate after rising by a similar margin in July. This somewhat dented investors’ sentiment as many had been expecting a 50-basis point rate cut by the Fed in its September policy meeting.However, the annual inflation rate fell to its lowest level since early 2021, which is being seen as positive news ahead of the rate cuts. Growth assets like tech st ...