Adobe Systems Revises Earnings Guidance for Fiscal Year 2018 and First Quarter of 2018; Provides Effective Tax Rate Guidance for Fiscal Year of 2019
January 22, 2018 at 09:13 pm
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Adobe Systems updated its guidance to account for U.S. tax reform. The company said the Tax Act reduces the U.S. corporate income tax rate to 21% from 35% and imposes a 15.5% tax on accumulated foreign earnings effective Jan. 1. As a result, it expects its fiscal year 2018 GAAP and non-GAAP effective tax rates will decline substantially from rates in fiscal year 2017 and fiscal year 2019 GAAP and non-GAAP effective tax rates to stabilize at a rate of approximately 18%, below its fiscal year 2017 rate of approximately 21%.
In fiscal year 2018, the company expects to EPS of approximately $4.72 on a GAAP-basis, and $6.20 on a non-GAAP basis, compared with its prior targets of approximately $4.40 on a GAAP-basis, and $5.50 on a non-GAAP basis. Total sales are seen about $8.725 billion, below estimates for $8.76 billion.
In first quarter of 2018, the company expects to EPS of approximately $1.05 on a GAAP-basis, and $1.43 on a non-GAAP basis, versus prior targets of approximately $1.15 on a GAAP-basis, and $1.27 on a non-GAAP basis. Forecasts are for $1.14 GAAP and $1.27 normalized. Adobe said it expects a tax charge of approximately $85 million.
Adobe Inc. specializes in the development of software for content design, publication and visual distribution. Net sales break down by product family as follows:
- digital media software (73.3%): primarily creation, illustration, viewing, conversion and digital contents broadcasting;
- online marketing and business process management software (25.2%): web publishing, information security, business resources planning, document production management, application automation software, etc.;
- other (1.5%): software for high-definition printing, online training, etc.
Net sales break down by source of income between sales of subscriptions (94.2%), sales of services 3.4%; consulting, training, maintenance and technical support services) and sales of products (2.4%).
Net sales are distributed geographically as follows: the United States (53.9%), Americas (6.2%), Europe/Middle East/Africa (25.1%) and Asia/Pacific (14.8%).