Analyst Conference Summary

Adobe
(ADBE)

conference date: March 23, 2010 @ 2:00 PM Pacific Time
for quarter ending: March 5, 2010 (first quarter fiscal 2010)

But I use Adobe products
Forward-looking statements

Overview: Good revenue increase as Adobe gears up for CS5 release.

Basic data (GAAP) :

Revenue was $858.7 million, up 13% sequentially from $757.3 million and up 9% from $786.4 million in the year-earlier quarter.

Net income was $127.2 million, up sequentially from negative $32.0 million, but down 19% from $156.4 million year-earlier.

Earnings per share (EPS) were $0.24, up sequentially from negative $0.06, and down 20% from $0.30 year-earlier.

Guidance:

One less week in Q2 than Q1. Target is $875 to $925 million for fiscal Q2. At midpoint Creative up; Knowledge Worker and Omniture slight decline. Enterprise up. Flat Print. Operating margin 21.0 to 24.5% GAAP; 33.5 to 35.5% non-GAAP. EPS $0.3 to $0.30 GAAP, $0.39 to $0.44 non-GAAP.

If achieve Q2 targets, believes will grow sequentially for rest of year.

Conference Highlights:

Q1 revenue benefited from 1 extra week in the quarter; about a $35 million benefit. Flash continued to show momentum. Bullish about the remainder of the year.

Operating margin was 20.6% GAAP, 33.7% non-GAAP.

Non-GAAP net income was $211.7 million; operating income $289.3 million. Non-GAAP EPS $0.40.

Segments reported changed; for comparisons, used restatements.

Creative solutions revenue was $432.0 million. CS5 to launch on April 12.

Business productivity revenue was $245.8 million, up sequentially from $211.8, and up from $227.0 million year-earlier. Knowledge worker sub-segment revenue was $165.9 million; Enterprise revenue $79.9 million (now contains Connect revenue). Connect, LiveCycle, Acrobat showed strong growth.

Omniture revenue was $87.7 million. 150 new customers in quarter.

Platform $46.6 million, down slighly sequentially, down from $52.3 million year-earlier.

Printing and Publishing also $46.6 million, flat sequentially, up from $42.9 million year-earlier.

Americas 48%, Asia 20%, EMEA 32%.

Employee count reduced sequentially.

$260 million cash flow from operations. $2.7 billion cash and short terms investment balance. Senior unsecured notes sold for $1.5 billion; will have $16 million per quarter interest. Repurchased 1.7 million shares for $60 million.

Cost of revenue was $89.4 million, leaving gross profit of $769.3 million. Operating expenses of $592.5 million consisted of: research and development $174.3 million; sales and marketing $297.3 million; general and administrative $91.1 million; restructuring $11.6 million; $18.2 million amortization of purchased intangibles. Other income negative $10.6 million. Income taxes $39.1 million.

Q&A

Confidence in CS5? Business in first months of 2010 strong. Trends favor author once, deliver in multiple media. Creative professionals are facing many challenges; we provide a comprehensive solution. Economy is strengthening and CS5 has major improvements. Design without boundaries. 3D in Photoshop. Faster work flow. HD video support. Native 64 bit support. Some Omniture support.

Headcount? There are a couple hundred more people being reduced, but hiring in other areas.

Launch on 12th is revealing CS5, including pricing. English version ships 4 weeks later, other major languages soon after that.

HTML5 v. Flash? We already support HTML in all current flavors. We will support any format that takes part in the marketplace. But customers would like to leverage their assets without having to do separate web sites for phones, tablets. We will support HTML5, but Flash will remain a more comprehensive format.

Cash flow? Nothing unusual. Cap ex $25 million. Paid back credit line. DSOs got much better in quarter. Cash flow was better a year ago, but it was a different environment.

Acrobat business boosted by return of IT spend, economy. But also move to digital workflow, with more companies moving to PDF for everything.

CS4 did not see as many upgrades as in previous cycles. We want to make it easy for CS4 users to move to CS5.

Core Adobe growth was in the mid-teens y/y once you back out Omniture acquisition.

Service revenue within CS5? Main reason for services is to help customers, but it could increase revenue and combat piracy. Won't be material in first year.

Flash iPhone issue? We have been transparent. We are committed to bringing Flash to any platform that has a screen. It can run on any smartphone. It has nothing to do with technology, it is an Apple issue, you will have to check with them on that.

Shippable backlog increase? Just because business environment has improved.

CS3 v. CS4 installed base? Transition to 1,2,3 to 4 was not as high as in the past.

OpenIcon Analyst Conference Summaries Main Page
Adobe Investor Relations Page
OpenIcon Adobe main page

 

Search

More Analyst Conference Pages:

 
 ADBE
 AKAM
 ALTR
 AMAT
 AMD
 AMGN
 ANSV
 BIIB
 CELG
 CSCO
 DNA
 DNDN
 GILD
 GOOG
 HILL
 HPQ
 INTC
 HNSN
 MCHP
 MRVL
 MSFT
 MXIM
 NOVL
 NVDA
 ORCL
 ONXX
 RACK
 RHT
 TTMI
 XLNX
 YHOO

Disclaimer: Our analyst summaries may include both our condensations of statements made by company representatives and our own analysis. They are not covered by any warranty. We cannot guarantee anything said by company representatives is true. We try not to make errors, but it is possible. Before making or terminating an investment you should always verify any factual basis of your decision.

Copyright 2010 William P. Meyers