Adobe Q2 preview: Is the software maker set for a subdued quarter?

Adobe Headquarters

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Adobe (NASDAQ:ADBE) is scheduled to announce FQ2 earnings results on Thursday, June 16th, after market close.

In FQ1, the software maker earned $3.37 per share on $4.26B in sales. A consensus of Wall Street estimates expected Adobe to earn $3.34 per share on $4.24B in revenues.

Adobe (ADBE) forecast weaker-than-expected results for Q2, prompting a -9.34% decline a day later over worries about the company’s exposure to the Russia-Ukraine conflict. It posted expectations of $3.30 in EPS on $4.34B in revenue.

The consensus EPS Estimate is $3.31 (+9.2% Y/Y) and the consensus Revenue Estimate is $4.35B (+13.3% Y/Y).

Morgan Stanley analyst Keith Weiss said at the time: “Impacts of the Russia-Ukraine conflict, a potentially weakening spending environment in Europe and a remarkably unclear conversation on the full year outlook likely leave investors with further questions on the underlying trends in the Digital Media business.”

Tempered expectations might help the company come in above analyst estimates this time around, but a report below the already-lowered bar could provoke an outsized share reaction and ripple across software stocks broadly.

Shares are down -33.82% YTD but the stock remains “highly buyable over the long term” according to SA contributor Julian Lin, with management expecting growth to accelerate in H2.

ADBE peer Salesforce (CRM) shares rallied recently after the cloud computing company posted first-quarter results that topped expectations and issued guidance that was seen as “a major relief” by some Wall Street analysts.

A look at ADBE’s YTD performance against peers:

Over the last 2 years, Adobe (ADBE) has beaten EPS estimates 100% of the time and has beaten revenue estimates 88% of the time.

Over the last 3 months, EPS estimates have seen 3 upward revisions and 20 downward. Revenue estimates have seen 3 upward revisions and 17 downward.

Roy Walsh

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