Adobe Systems (ADBE) 16Q3 Earnings Call Notes

posted in: Earnings, Earnings Call, Notes | 0

Adobe had record revenues this quarter

“Adobe delivered another record quarter, with revenue of $1.46 billion; GAAP earnings per share of $0.54; and non-GAAP earnings per share of $0.75. These strong results are a reflection of our market leadership and momentum we have with Creative Cloud, Adobe Document Cloud, and Adobe Marketing Cloud.” Shantanu Narayen – President and Chief Executive Officer

 

Adobe also had a record 23 trillion data transactions this quarter

“Adobe managed a record 23 trillion data transactions. Our customers in every major category of business are utilizing our machine learning algorithms to predict customer behavior and drive their business.” Shantanu Narayen – President and Chief Executive Officer

 

ADBE is at the center of the tailwind that is the digital disruption of marketing

“I mean, people are still talking about digital disruption and how do they help create more personalized experiences for customers, and we are right in the center of that particular tailwind. With respect to the second half of the year, again, it’s playing out as we expected. We told you at the end of Q2 that we had a strong pipeline, which gave us confidence to grow approximately 20% for the year.” Shantanu Narayen – President and Chief Executive Officer

 

The digital marketing space is shifting to multi-solution deals

“Given the breadth of existing customer base, certainly we are up selling all of them to multiple solutions. But whether it’s a new logo acquisition or whether it’s renewals, most of the deals are now multi-solution deals and much larger revenue to Adobe and value to the customer. So hopefully that gives you some color in terms of the number of solutions that they are all adopting and how that’s certainly migrating. To your point, it is a competitive advantage for us most definitely.” Shantanu Narayen – President and Chief Executive Officer

 

Mobile continues to be a key market trend

“Mobile remains a key market trend for this business. Mobile data transactions grew to 52% of total Adobe Analytics transactions in the quarter” Mark Garrett – Executive Vice President and Chief Financial Officer

 

83% of revenue is recurring, which has been a boon to margins

“in 83% recurring revenue model, particularly on the creative side, you are going to over time have less cost of acquisition and you can drive more margin.” Mark Garrett – Executive Vice President and Chief Financial Officer

 

AI and machine learning are becoming an industry buzz, which ABDE has been invested in for years

“there is a lot of conversation right now about machine learning and AI. It’s something that we have invested in for years… And the reality is when we think about Marketing Cloud, it’s not about data collection, it’s all about how we are driving insight and predictive, which is another form of machine learning and that’s what’s really fueled our Marketing Cloud business… It’s going to become something that becomes the industry buzz. We have partly been executed against that for quite a while now.” Shantanu Narayen – President and Chief Executive Officer