Earnings To Watch: Adobe (ADBE) Reports Q1 Results Tomorrow

Kayode Omotosho /
2022/03/21 3:42 pm EDT

Creative software maker Adobe (NASDAQ:ADBE) will be reporting earnings tomorrow after the bell. Here's what investors should know.

Last quarter Adobe reported revenues of $4.11 billion, up 20% year on year, in line with analyst expectations. It was a weak quarter for the company, with guidance for the next quarter missing analysts' expectations and an underwhelming guidance for the full year.

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 8.53% year on year to $4.23 billion, slowing down from the 26.3% 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

Majority of analysts covering the company have reconfirmed their estimates over the last thirty days, suggesting they are expecting the business to stay the course heading into the earnings. The company only missed Wall St's revenue estimates once over the last two years, and has on average exceeded top line expectations by 1.54%.

Looking at Adobe's peers in the vertical software segment, some of them have already reported Q4 earnings results, giving us a hint of what we can expect. Unity (NYSE:U) delivered top-line growth of 43.3% year on year, beating analyst estimates by 6.81% and Autodesk (NASDAQ:ASDK) reported revenues up 16.5% year on year, exceeding estimates by 1.3%. Unity traded up 13% on the results, Autodesk was up 1.77%. Read our full analysis of Unity's results here and Autodesk's results here.

Tech stocks have had a rocky start in 2022 and software stocks have not been spared. Though shares are up on average 1.86% over the last month indicating concerns about rising interest rates and macro volatility are cooling off. Adobe is up 2.95% during the same time, and is heading into the earnings with analyst price target of $624, compared to share price of $451.5.

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.