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Adobe (ADBE) meets estimates but stock falls on 2022 outlook

By Kevin Donovan

17:20, 16 December 2021

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Adobe (ADBE) reported $1.23bn net income in the fourth quarter on $4.11bn in revenue – Photo: Adobe Inc.

Adobe (ADBE) matched analyst estimates for both fourth quarter earnings and revenue Thursday, but the stock fell more than 10% on lower-than-expected forward-looking performance guidance.

Adobe reported $1.23bn (£916m) net income for the three months ended 3 December, or $3.20 per share, on $4.11bn in revenue, in line with analyst expectations.

On a year over year basis, net income fell 45%, while revenue increased 20%. Q4 2020 included a $1.1bn income tax benefit.

Full-year 2021 net income totalled $4.82bn, or $12.48 per share, on $15.79bn in annual revenue compared to net income of $5.26bn on $12.87bn of revenue.

Additionally, Adobe reported it had repurchased 1.6 million outstanding shares through its buyback program in the fourth quarter, and 7.2 million shares throughout fiscal 2021.

Stock falls after open

Adobe stock was down almost 12% to $556.15 per share before recovering to $575.71 as of 12:00 ET (UTC-5). Adobe trades over the Nasdaq exchange under the ticker “ADBE”.

“Adobe’s record performance in (the fourth quarter) resulted in fiscal 2021 revenue exceeding $15bn,” Adobe CEO Shantanu Narayen said in a prepared statement.


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“Adobe’s financial performance in fiscal 2021 was outstanding, with top-line acceleration resulting in more than $7bn in operating cash flows,” CFO Dan Durn added in the same release.

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2022 outlook

But investors took issue with Adobe’s 2022 financial guidance, which lagged analyst expectations for both Q1 2022 and full-year 2022.

Adobe estimates Q1 2022 earnings in the $3.35 per-share area on an estimated $4.23bn in quarterly revenue, while analysts surveyed by Refinitiv have a mean $3.38 per-share earnings estimate.

For full-year guidance, Adobe expects $13.70 per-share earnings on $17.9bn in revenue, versus Refinitiv mean estimates of $14.26 per-share earnings on $18.2bn in annual revenue.

Adobe’s 2022 performance outlook assumes a stronger US dollar next year and factors in a 13-week first quarter, compared to Q1 2021, which had an extra week in the reporting period, which accounted for $267m of revenue in the Q1 2021, $25m of which was new digital media annual recurring revenue.

Read more: Adobe (ADBE) stock rises 2% as earnings report looms

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Adobe Systems Inc (Extended Hours)
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The difference between trading assets and CFDs
The main difference between CFD trading and trading assets, such as commodities and stocks, is that you don’t own the underlying asset when you trade on a CFD.
You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again.
CFDs are leveraged products, which means that you only need to deposit a percentage of the full value of the CFD trade in order to open a position. But with traditional trading, you buy the assets for the full amount. In the UK, there is no stamp duty on CFD trading, but there is when you buy stocks, for example.
CFDs attract overnight costs to hold the trades (unless you use 1-1 leverage), which makes them more suited to short-term trading opportunities. Stocks and commodities are more normally bought and held for longer. You might also pay a broker commission or fees when buying and selling assets direct and you’d need somewhere to store them safely.
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