ADBE Q1 2020 Earnings

Call Details

• Call Title: Adobe Q1 2020 Earnings Call
• Date: March 12, 2020 at 9:00 PM UTC
• Management Team:
  • Mike Savage (Vice President of Investor Relations)
  • Shantanu Narayen (Chairman and CEO)
  • John Murphy (Executive Vice President and CFO)

Call Summary

Financial Performance

• Company reported revenue of $3.09 billion in Q1 FY20 representing 19% year-over-year growth.
• GAAP diluted EPS was $1.96 and non-GAAP diluted EPS was $2.27 for the quarter.
• Digital media revenue was $2.17 billion and creative revenue was $1.82 billion, representing 22% year-over-year growth in creative revenue.
• Document Cloud revenue was $351 million, representing 24% year-over-year growth, and digital experience revenue was $858 million, representing 15% year-over-year growth.
• Net new digital media ARR was $400 million in Q1 and total digital media ARR exiting Q1 was $8.73 billion.
• RPO grew 22% year-over-year to $9.91 billion exiting Q1 and deferred revenue exiting Q1 was $3.61 billion.
• Cash flow from operations was $1.32 billion and ending cash and short-term investments were $4.17 billion.
• Trade DSO was 41 days compared to 46 days in the year-ago quarter and the company repurchased 2.4 million shares at a cost of $795 million in Q1.

Guidance

• Adobe is targeting Q2 revenue of approximately $3.175 billion and GAAP EPS of approximately $2.10 and non-GAAP EPS of approximately $2.35.
• Targeted digital media segment year-over-year revenue growth for Q2 is approximately 19% and net new digital media ARR is targeted at approximately $385 million.
• Targeted digital experience segment year-over-year revenue growth for Q2 is approximately 12%.
• Company expects net non-operating expense of approximately $14 million for Q2 and share count of approximately 486 million shares.
• Adobe revised expected GAAP quarterly tax rates to minus 10%, 10%, and minus 85% in Q2, Q3, and Q4 respectively, and expects non-GAAP quarterly tax rate of 10% in Q2, Q3, and Q4.
• Guidance explicitly factors in expected COVID-19 impacts including deferred enterprise bookings, delayed services implementations, reduced marketing spend, consumer spending reductions in affected countries, and channel-driven software license softness.