Adobe released its Q3 FY2022 earnings in September 2022. Here are the key points that you don't want to miss for Adobe from this earnings!
In mid September 2022, Adobe released its earnings report for its third quarter fiscal year 2022 ended 2 September 2022 (Q3 FY2022).
It was a good quarter for Adobe, with its revenue growing 13% year-on-year, although its profitability has come down (but still at a good 34% operating profit margin).
On top of continuously buying back its shares, the company also announced its largest acquisition (US$20 billion) in its history, of Figma, a web-first collaborative design platform.
Let’s dive into the latest announcements by Adobe and find out more.
Life Goes On As Usual At Adobe
Here are some quick highlights from Adobe’s latest quarter.
The company posted a record revenue of US$4.43 billion, which grew 13% year-on-year from US$3.94 billion in Q3 FY2021.
By segment, both the Digital Media business and Digital Experience business grew their revenues well year-on-year, by 12.8% (to US$3.23 billion) and by 13.7% (to US$1.12 billion) respectively. Meanwhile, the minor Publishing and Advertising business revenue fell by 4.7% year-on-year to US$81 million.
By percentage contribution, it was similar to the previous year – the Digital Media business contributed to 73% of total revenue, followed by Digital Experience (25%) and Publishing and Advertising (2%).
For Q3 FY2022, Adobe posted a gross profit margin of 87.7% (down from 88.1% last year), while its operating profit margin came in at 33.5% (down from 36.6% last year). Even though the margins came down slightly this quarter, they are still respectable.
Despite a lower operating profit margin, Adobe’s operating income for the quarter still grew slightly at 3% year-on-year (to US$1.48 billion) due to a higher revenue. However, net income dipped 6.3% year-on-year (to US$1.14 billion), mainly due to higher provision for income taxes.
Adobe continues to maintain a strong balance sheet. As of 2 September 2022, it had US$5.76 billion in total cash & equivalents, with total debt (excluding operating lease liabilities) of US$4.13 billion. Total operating lease liabilities as of 2 September 2022 was US$0.51 billion. Therefore, Adobe ended the quarter with a net cash balance of US$1.63 billion or US$1.12 billion, excluding or including operating lease liabilities respectively.
Adobe also continues to generate strong cash flows. For the quarter, its operating cash flow grew 20.4% year-on-year (to US$1.70 billion), different from the negative growth for net income due mainly to a high 35% growth in share based compensation (SBC) expenses, which are non-cash, and more cash inflow from changes in working capital. Meanwhile, its free cash flow (FCF) (after deducting SBC expenses) rose 15.5% year-on-year to US$1.20 billion.
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