Adobe Inc. (NASDAQ:ADBE) exceeded expectations with its first-quarter fiscal 2024 results, reporting non-GAAP earnings of $4.48 per share, surpassing the Consensus Estimate by 2.3%. This marked a 17.9% improvement year-over-year.
Total revenues for the quarter were $5.18 billion, beating the Consensus Estimate of $5.13 billion. This represented an 11% increase on a reported basis and a 12% increase on a constant-currency basis compared to the same period last year.
The growth was primarily driven by strong performances from Adobe’s Creative Cloud, Document Cloud, and Experience Cloud. Additionally, accelerating subscription revenues contributed to the positive results.
Adobe’s stock has surged by 61.5% year-to-date, outperforming the industry’s growth of 51%.
Breaking down the revenue, subscription revenues accounted for $4.92 billion (94.9% of total revenues), up 12.4% year-over-year. Product revenues totaled $119 million (2.3% of total revenues), down 0.8% year-over-year. Services and other revenues were $147 million (2.8% of total revenues), a decrease of 9.3% from the prior-year quarter.
In terms of segment performance, the Digital Media segment reported revenues of $3.82 billion, up 12% year-over-year, driven by strong performances from Creative Cloud and Document Cloud. Digital Experience segment revenues were $1.29 billion, up 10% year-over-year, fueled by strong demand for Experience Cloud subscription revenues.
Adobe’s gross margin expanded by 80 basis points year-over-year to 88.6%. Operating expenses increased by 47.3% year-over-year, with the adjusted operating margin expanding to 47.6%, a 180 basis points increase from the previous year.
As of March 1, 2024, Adobe had a cash and short-term investment balance of $6.8 billion, down from $7.8 billion as of December 1, 2023. Long-term debt was $2.14 billion compared to $3.63 billion at the end of the previous quarter.
For the second quarter of fiscal 2024, Adobe expects total revenues between $5.25 billion and $5.30 billion, with Digital Media revenues projected between $3.87 billion and $3.90 billion, and Digital Experience segment revenues expected between $1.31 billion and $1.33 billion. Management anticipates non-GAAP earnings per share between $4.35 and $4.40.
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Author Stephanie Bédard-Châteauneuf 
