Robinhood shares gain on Q2 beat, as user and crypto growth accelerate
On Thursday, Citizens JMP analysts maintained a Market Outperform rating on Adobe (NASDAQ:ADBE), a $190.75 billion market cap software giant with a "GOOD" financial health rating according to InvestingPro, following the company’s release of its first-quarter fiscal year 2025 results, which surpassed expectations. Adobe announced non-GAAP earnings per share (EPS) of $5.08, exceeding the consensus estimate of $4.97. The company reported a gross margin of 89.1%, slightly below the anticipated 89.9%, and an operating margin of 47.5%, which was above the consensus of 47.0%. InvestingPro analysis shows Adobe maintains consistently impressive gross profit margins, with 12 additional exclusive insights available for subscribers.
Adobe’s revenue reached $5.71 billion, representing a 10% increase year-over-year and surpassing the consensus forecast of $5.66 billion. This growth rate represents a slight deceleration from the previous quarter’s 11% year-over-year increase. The Digital Media segment experienced an 11% revenue growth, which also marked a decrease from 12% growth in the last quarter. Similarly, the Digital Experience segment saw revenue growth of 9%, a decline from the 10% growth reported in the previous quarter.
The company’s net new Digital Media Annualized Recurring Revenue (ARR) came in at $414 million, which was above the consensus estimate of $408 million. Adobe’s Remaining Performance Obligation (RPO), a measure of future revenue, stood at $19.97 billion, up 12% year-over-year and exceeding the consensus estimate of $19.93 billion. This figure represents an acceleration from the 8% growth in the previous quarter.
Despite these strong results, Adobe shares fell 4% in after-market trading. The company’s stock had already experienced a 1% decline year to date, in contrast to the S&P 500’s and the Russell 3000’s 5% decrease over the same period. Adobe’s free cash flow for the quarter was reported at $2.46 billion, significantly higher than the consensus estimate of $2.07 billion.
In other recent news, Adobe reported its financial results for the first quarter of fiscal year 2025, surpassing analysts’ expectations. The company achieved a non-GAAP earnings per share (EPS) of $5.08, exceeding the forecast of $4.97, and reported a revenue of $5.71 billion, surpassing the projected $5.66 billion. Adobe’s Digital Media division generated $4.23 billion, marking a 12% increase, while Digital Experience revenue rose 10% to $1.41 billion. In addition to strong earnings, Adobe launched new AI-driven products, including a Firefly video model, and reaffirmed its FY2025 targets with expectations for AI-driven growth.
In related developments, BofA Securities adjusted its stance on Adobe, reducing the stock price target to $528 from $605, while maintaining a Buy rating. The revision reflects a recalibration of valuation multiples in the software sector, as noted by BofA Securities analyst Brad Sills. Sills emphasized Adobe’s steady course in its creative and digital experience segments, highlighting the increasing adoption metrics and the first-time disclosure of revenue from Adobe’s artificial intelligence platform, Firefly. The recent increase in monthly active users for Firefly also supports the continued Buy rating on Adobe shares.
These recent developments indicate Adobe’s strategic focus on AI innovations and expanding product offerings, contributing to its solid performance.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.