Adobe Up 5.2% Premarket as Firm’s Q4 Earnings Beat Expectations

Adobe’s shares are up significantly in premarket trading after the maker of Photoshop and After Effects reported Q4 2022 earnings that beat analysts’ estimates. The company also provided a promising outlook for the following quarter, sending its stock up over 5.2% in premarket.

Adobe’s Q4 Earnings Top Estimates; Revenue and Operating Income Rose at a Record Level in FY22

Shares of Adobe are up more than 5.2% in premarket trading Friday after the software company reported better-than-expected earnings for Q4 2022. The company also issued an upbeat outlook for the first quarter of 2023.

Adobe reported Q4 adjusted earnings per share (EPS) of $3.60, topping the consensus estimates of $3.50 per share, according to Refinitiv. Revenue came in at $4.54 billion, up 10% from a year ago and in line with analysts’ expectations.

On a quarterly basis, revenue increased by 13%. On the other hand, the company’s net income stood at $1.18 billion in the latest quarter, down from $1.23 billion in the same period last year.

“Adobe drove record revenue and operating income in fiscal 2022. Our market opportunity, unparalleled innovation, operational rigor, and exceptional talent position us well to drive our next decade of growth.”

– Shantanu Narayen, chairman, and CEO of Adobe.

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Adobe Provides an Upbeat Q1 2023 Forecast

Going forward, Adobe expects adjusted EPS in Q1 2023 to be in the range of $3.65 to 3.70, beating the consensus projection of $3.64 per share. The software maker expects revenue to range between $4.60 and $4.64 billion in the upcoming quarter, compared to analysts’ estimates of $4.64 billion. Adobe reiterated its outlook for the full-fiscal 2023.

The company’s Digital Media unit, which manages the widely used Creative Cloud application set, generated $3.30 billion in revenue, up 8% in the quarter but slightly below the analysts’ expectations of $3.31 billion. The Digital Experience business contributed $1.15 billion in revenue, while analysts were looking for $1.14 billion.

Adobe’s earnings report comes two months after the company announced a deal to buy the design software startup Figma for around $20 billion, marking Adobe’s largest-ever acquisition. The company said the latest financial results do not include the impact of the Figma takeover.

Meanwhile, the broader US stock market is in the red after central banks reiterated their desire to continue combating inflation with aggressive interest rates. The declines offset the previous stock market rally earlier this week, driven by a softer interest rate increase of 50 basis points (bps) on Wednesday.

However, the Fed then said it plans to continue raising rates through spring 2023, and to a higher level than initially expected. This is despite the latest consumer price index (CPI) print released earlier in the week, showing inflation cooled down to 7.1% in the US.

Do you think Adobe will continue performing at this level despite a looming recession in 2023? Let us know in the comments below.