Adobe Systems Inc., the company behind the popular Photoshop software, posted a decline in fiscal first-quarter profit and sales Tuesday, squeezed by the economic downturn.
However, adjusted earnings slightly exceeded Wall Street’s expectations, and the company’s forecast for the current quarter was in line with analysts’ estimates.
San Jose, Calif.-based Adobe had already warned this month of revenue falling below its previous targets. The recession has slowed sales of Creative Suite 4, the latest version of the software package that brings in the majority of Adobe’s revenue. The product launched last fall, coinciding with the worsening economic turmoil.
For the December-February period, Adobe earned $156.4 million, or 30 cents per share, down 29 percent from $219.4 million, or 38 cents per share, a year earlier.
Excluding one-time items such as stock-options expenses, restructuring charges and investment losses, adjusted earnings totaled 45 cents a share in the latest quarter, beating average analysts’ estimates by a penny.
Revenue declined 12 percent to $786.4 million, roughly in line with analysts’ estimates of $784.2 million, according to a survey by Thomson Reuters.
“While the economy had a clear impact on overall product demand, we were able to proactively align our expenses with our revenue,” said Mark Garrett, chief financial officer, on a conference call with analysts.
Adobe, which said in December it is cutting 600 jobs or 8 percent of its work force, trimmed its operating expenses by 6 percent during the first quarter, to $501.1 million.
Edward Jones analyst Andy Miedler said that while the economy has “clearly taken a toll” on Adobe’s revenue, the company is doing a good job managing its expenses and its overall business, which is helping profits.
“They are investing where they need to but also making the cuts where they need to,” said Miedler, who rates Adobe shares at “Buy.”
Shantanu Narayen, Adobe’s president and chief executive, said the Flash platform is among the areas the company continues to invest in, as use of the product grows beyond PCs to mobile devices, set-top boxes and gaming consoles.
The company’s Creative business, along with Acrobat, continues to represent growth opportunities for Adobe even in the current economy, he added.
Adobe forecast second-quarter earnings of 20 cents to 27 cents per share, or, excluding one-time items, a profit of 31 cents to 38 cents per share. Wall Street’s expectations for a profit of 35 cents per share, excluding items, is within that range.
The company expects revenue between $675 million and $725 million for the quarter, also bracketing analysts’ average forecast of $694.4 million.
“We believe the major market trends driving our business remain intact, and we will continue to focus on innovation and investing in new growth businesses,” Narayen said in a statement.
Trump Asks Supreme Court To Delay TikTok Ban
President-elect Donald Trump asked the Supreme Court on Friday to pause the potential TikTok ban from going into effect until his administration can pursue a "political resolution" to the issue.
The request came as TikTok and the Biden administration filed opposing briefs to the court, in which the company argued the court should strike down a law that could ban the platform by Jan. 19 while the government emphasized its position that the statute is needed to eliminate a national security risk.
"President Trump takes no position on the underlying merits of this dispute. Instead, he respectfully requests that the Court consider staying the Act's deadline for divestment of January 19, 2025, while it considers the merits of this case," said Trump's amicus brief, which supported neither party in the case and was written by D. John Sauer, Trump's choice for solicitor general.
The argument submitted to the court is the latest example of Trump inserting himself in national issues before he takes office. The Republican president-elect has already begun negotiating with other countries over his plans to impose tariffs, and he intervened earlier this month in a plan to fund the federal government, calling for a bipartisan plan to be rejected and sending Republicans back to the negotiating table.
He has been holding meetings with foreign leaders and business officials at his Mar-a-Lago club in Florida while he assembles his administration, including a meeting last week with TikTok CEO Shou Chew.
Trump has reversed his position on the popular app, having tried to ban it during his first term in office over national security concerns. He joined the TikTok during his 2024 presidential campaign and his team used it to connect with younger... Read More