Adobe share price: 5 things to watch for in Q1 results

There are five important factors that can affect Adobe's Q1 earnings report.

Trader looking at data after Adobe Q1 earnings Source: Bloomberg

Adobe share price will closely watched by investors when the software company reports its Q1 results. Here are five questions that could impact Adobe’s latest earnings report.

Will Adobe's earnings per share and revenue rise?

Financial experts expect Adobe’s earnings per share to grow to $1.62 a share. Wall Street also predicts the company’s sales to top $2.55 billion.

Adobe had a strong 2018 and predicts having a high Q1 earnings per share and revenue. Adobe’s earnings per share is projected to be between $1.14-1.60 per share. Adobe’s revenue is expected to be $2.45 billion. The software giant is also expecting 25% growth in its successful digital media division that includes data products.

Will digital media continue to help lift Adobe's profits?

Adobe was just known as the maker of Photoshop and portable document formats(PDF) until the focus moved to its digital media division that includes the Creative and Document Cloud sections. While expanding the range of digital services helped its Q4 2018 profits, it remains to be seen if it will positively affect Adobe’s Q1 earnings.

Will the acquisition of Magento and Marketo help Adobe's earnings?

Adobe’s earnings also grew to a record high in 2018 with a 35% increase in the company’s stock over the past year with key acquisitions. The corporation grew after its blockbuster $6.3 billion deal to buy Magento, and e-commerce platform for businesses, and Marketo, a digital marketing automation company.

Adobe’s chief executive officer, Shantanu Narayen, spoke about the importance of adding Magento to Adobe’s Digital Experience division.

‘When you think about what Magento does, it really completely closes the loop with respect to everything we‘ve been doing for [business-to-consumer] B2C companies in terms of having the leading commerce solution, and that‘s off to a great start,’ said Narayen.

He also touted the addition of Marketo to build Adobe’s marketing presence and better manage customer experiences.

‘When you think about Marketo and what it does with respect to [business-to-business], we‘re now the only comprehensive platform that can help every single enterprise with high-volume email campaigns, personalization across all channels, and driving, basically, from leads to revenue across [business-to business] B2B and B2C,’ said Narayen.

The corporation’s purchase of Magento and Marketo helped expand Adobe’s reach into the e-commerce and marketing industries. Investors will be eager to see how Adobe’s Q1 revenue will be further impacted by the acquisition.

Will Adobe’s profits be affected by organisational change?

Adobe’s earnings could be impacted by the departure of executive vice president, Brad Renchern, who headed the Digital Experience division that included its marketing sector. As a result, that section of the corporation is expected to realign under Narayan's stewardship until a new leader is chosen. The new business will combine the company’s sales, marketing, and product sections under one umbrella group.

‘Coming off of a record 2018 and the acquisitions of Magento and Market, Narayen will create a broad new organization that includes product, sales, marketing, services and support’, said Adobe in a statement.

While the corporation is confident that the changes will be seamless, JMP Securities analyst, Patrick Walravens, and, Matthew Spencer, expressed scepticism about the changes helping Adobe's revenue.

‘Adobe executed very well in FY18 against its strategy of offering a digital experience management platform for both B2B and B2C, but, in our view, the challenge for FY19 will be effectively integrating the operations, technology, products, services and thousands of employees of Marketo and Magento,” wrote Walravens and Spencer.

Can Adobe’s earnings compete with Salesforce?

Salesforce has emerged as strong competition for Adobe with its own growth as a software company. After a positive Q4 earnings report, investors will compare Adobe’s profits to the other dominant cloud software company.

Investors will see if Adobe’s earnings will continue to improve in Q1 after a significant gain in Q4 profits.


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