Key Metrics
- Total Revenue: $5.41 billion (11% yoy)
- Digital Media Revenue: $4.00 billion (11% yoy)
- Digital Experience Revenue: $1.35 billion (10% yoy)
- Document Cloud Revenue: $807 million (18% yoy)
- Creative Revenue: $3.19 billion (10% yoy)
- Incremental Digital Media ARR: $1.42 billion
- Total Digital Media ARR: $16.76 billion (13% yoy)
- Creative ARR: $13.45 billion (up from $12.49 billion)
- Document Cloud ARR: $3.31 billion (up from $2.84 billion)
- Cash from Operations: $5.135 billion
- Ending Deferred Revenue: $5.91 billion
- RPO: $18.14 billion (15% yoy)
Forward guidance
- Q4 Revenue Guidance: Total Adobe revenue expected to be between $5.50 billion and $5.55 billion.
- Digital Media ARR: Projected net new Digital Media ARR of approximately $550 million for Q4.
- Digital Media Segment Revenue: Expected revenue for Digital Media segment between $4.09 billion and $4.12 billion.
- Digital Experience Segment Revenue: Anticipated revenue for Digital Experience segment between $1.36 billion and $1.38 billion.
- Digital Experience Subscription Revenue: Expected subscription revenue for Digital Experience between $1.23 billion and $1.25 billion.
- Tax Rate Guidance: Projected effective tax rate of approximately 16% on a GAAP basis and 18.5% on a non-GAAP basis for Q4.
- EPS Guidance: GAAP earnings per share expected to be between $3.58 and $3.63 and non-GAAP EPS between $4.63 and $4.68 for Q4.
Key takeaways
- Positives:
- Shantanu Narayen noted, "Our success reflects our strong execution against an ambitious innovation agenda," indicating robust product development and customer satisfaction across Creative, Document, and Experience Clouds, contributing to 11% revenue growth.
- David Wadhwani highlighted a "12% year-over-year growth" in Digital Media revenue, driven by AI innovations in Document Cloud, which saw "over 70% quarter-over-quarter growth in AI interactions," showcasing strong customer engagement and adoption.
- The introduction of Adobe GenStudio and Firefly Services is empowering companies to create personalized content at scale, addressing "content supply chain challenges," which positions Adobe favorably in a competitive landscape.
- Anil Chakravarthy emphasized the importance of "Customer Experience Management" for enterprises, with Adobe's integrated platform uniquely positioned to deliver personalized experiences, enhancing customer retention and acquisition.
- Negatives:
- Despite strong Q3 results, Narayen acknowledged concerns regarding Q4 guidance, stating, "We expect a seasonally strong Q4," but the sequential net new ARR guidance is the "lowest it's ever been," raising investor apprehensions about future growth.
- Wadhwani explained that some deals traditionally closing in Q4 were completed earlier, impacting expected sequential growth, which may indicate potential volatility in revenue patterns.
- Competitive pressures were hinted at when Shantanu Narayen stated, "I'm not sure who specifically you're referring to as it relates to competition," suggesting a need for vigilance in maintaining market leadership amidst evolving industry dynamics.
Peer Summary
- Salesforce Inc: The Americas region's growth has slowed to 8%, with Amy Weaver noting, "the measured buying environment is really what's impacted the largest business," indicating potential market saturation. Additionally, concerns about AI's impact on workforce needs were raised, suggesting uncertainty among customers regarding AI integration.
- Intuit Inc: Sandeep Aujla stated, "We are not assuming any tailwinds coming from the macro environment," highlighting potential vulnerability to economic headwinds. The Consumer Group's long-term revenue growth expectations were adjusted to 6%-10%, reflecting caution in the face of market dynamics.
- Synopsys Inc: Ghazi acknowledged challenges in the semiconductor industry, particularly regarding "thermal, mechanical, stress interactions," which could impact customer demand. The China market showed an 8% decline, raising questions about future growth in a region affected by regulatory and macroeconomic pressures.
- Zoom Video Communications Inc: The EMEA region showed flat growth, with Steckelberg noting, "We have seen the economy in EMEA... continue to be impacted by the ongoing wars," indicating macroeconomic challenges. The SMB segment is experiencing headwinds, suggesting potential future growth concerns.
- Roper Technologies Inc: Organic revenue growth was only 4%, with Hunn acknowledging, "back-to-back quarters of strong enterprise bookings growth... not unexpected without question unsatisfying," reflecting concerns about growth momentum.
