Adobe delivers record quarter, but predicts COVID-19 impact

Adobe has released record first-quarter 2020 results, but does expect to be impacted by COVID-19 in its upcoming quarter.

It achieved a record quarterly revenue of US$3.09 billion in its first quarter of fiscal year 2020, representing 19 per cent year-over-year growth. Digital media segment revenue was US$2.17 billion, 22 per cent year-over-year growth, while creative revenue grew to US$1.82 billion and Document Cloud revenue was US$351 million.

Digital Media Annualized Recurring Revenue (ARR) grew to US$8.73 billion exiting the quarter, a quarter-over-quarter increase of US$400 million. Creative ARR grew to US$7.58 billion, and Document Cloud ARR grew to US$1.15 billion.

However, the current global health crisis is affecting some earnings. Diluted earnings per share was US$1.96 on a GAAP basis, and $2.27 on a non-GAAP basis. Adobe’s earnings per share results factor an expense charge related to the cancellation of corporate events including Adobe Summit due to COVID-19, which impacted both GAAP and non-GAAP earnings per share by $0.07 in the quarter.

"We delivered a record Q1 and our first $3 billion quarter," Adobe president and CEO, Shantanu Narayen, said. “Our strategy in light of the COVID-19 situation has been to ensure the well-being of our employees, serve our customers and focus on our long-term opportunity.”

Adobe expected its second quarter will be impacted, despite it being a subscription-based business, due to enterprises deferring bookings decisions, delaying consulting services implementations and reducing marketing spend; consumers reducing spending in countries more adversely impacted by the COVID-19 situation; and software license revenue driven by channel partners.

"Adobe delivered strong revenue, earnings and cash flow in our first quarter," Adobe executive vice-president and CFO, John Murphy, said. "Our recurring revenue model and the real-time visibility we have into our business uniquely positions Adobe to manage through an uncertain environment."

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