Adobe (ADBE) Q3 Earnings Report Preview: What To Look For

Adam Hejl /
2022/09/14 6:34 am EDT
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Creative software maker Adobe (NASDAQ:ADBE) will be announcing earnings results tomorrow afternoon. Here's what to expect.

Last quarter Adobe reported revenues of $4.38 billion, up 14.3% year on year, in line with analyst expectations. It was a weak quarter for the company, with revenue guidance for both the next quarter and the full year below analysts' estimates.

Is Adobe buy or sell heading into the earnings? Read our full analysis here, it's free.

This quarter analysts are expecting Adobe's revenue to grow 12.8% year on year to $4.43 billion, slowing down from the 22% year-over-year increase in revenue the company had recorded in the same quarter last year. Adjusted earnings are expected to come in at $3.34 per share.

Adobe Total Revenue

The analysts covering the company have been growing increasingly bearish about the business heading into the earnings, with revenue estimates seeing three downward revisions over the last thirty days. The company has a history of exceeding Wall St's expectations, beating revenue estimates every single time over the past two years on average by 1.67%.

Looking at Adobe's peers in the vertical software segment, some of them have already reported earnings results, giving us a hint of what we can expect. Unity delivered top-line growth of 8.58% year on year, missing analyst estimates by 0.67%, and Toast reported revenues up 58.9% year on year, exceeding estimates by 4.22%. Unity traded down 2.67% on the results, and Toast was up 10.6%. Read our full analysis of Unity's results here and Toast's results here.

The segment has been facing declining investor sentiment following the fears around raising interest rates, with the stocks down on average 12.4% over the last month. Adobe is down 16.2% during the same time, and is heading into the earnings with analyst price target of $467.3, compared to share price of $372.89.

One way to find opportunities in the market is to watch for generational shifts in the economy. Almost every company is slowly finding itself becoming a technology company and facing cybersecurity risks and as a result, the demand for cloud-native cybersecurity is skyrocketing. This company is leading a massive technological shift in the industry and with revenue growth of 70% year on year and best-in-class SaaS metrics it should definitely be on your radar.

The author has no position in any of the stocks mentioned.