Adobe
Adobe is considered one of the largest and leading SaaS stocks as its software products are used by many companies. This made it one of the best outperformers during the previous bull market when investors rewarded the company's high margin, high retention business model with a lavish multiple. So far this year, the stock is down 42%, although it's up about 15% from its early October lows.
Inside the Numbers
In its fiscal Q4, Adobe reported $3.60 per share in adjusted earnings which topped estimates of $3.50 per share. Revenue edged out estimates at $4.53 billion vs $4.5 billion. In total, revenue was up 10%, while earnings were flat on a year-over-year basis.
The company did achieve a record in terms of operating cash flow which is a leading indicator of future earnings growth. However, it did note that it's uncertain whether a worsening economy would impact its results going forward.
Next quarter, the company is forecasting adjusted earnings per share between $3.65 and $3.70 and $4.62 billion in revenue. The bottom line figure was slightly higher than analysts' estimates, while the top line was short by $0.04 billion. However, these figures don't include revenue from Figma. This deal is going through the regulatory process and was the largest in Adobe's history at $20 billion. The company expects the deal to close sometime next year.
The company's Digital Media segment which includes Creative Cloud contributed the bulk of revenue $3.3 billion and was up 8% from last year. Digital Experiences, which includes its marketing products, added $1.15 billion in revenue.
Long-term investors have to like that the company continues to deliver solid growth amid a tough environment. This combined with a weaker stock price has resulted in the company sporting an attractive forward P/E of 18.7. The Figma acquisition also shows that it's determined to hold onto its dominant position in its segments.
