Adobe Raises Revenue Guidance After TubeMogul Acquisition

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Adobe Systems Incorporated ADBE closed its acquisition of TubeMogul on Dec 19 and hosted a conference call on Jan 9 to provide updates on financial targets following the same.

At the call, management raised first quarter fiscal 2017 total revenue guidance to $1.644 billion from the prior guidance of $1.625 billion provided at the fourth quarter earnings call. For fiscal 2017, management expects revenues of $7.09 billion, up from the prior expectation of $6.95 billion.

Management expects that the TubeMogul acquisition will increase Adobe Cloud Marketing revenue growth in the first quarter from the prior expectation of 20% to 24%. Annual Adobe Cloud Marketing revenue is expected to grow at a rate of 25%, up from the prior expectation of 20%.

Adobe expects the acquisition to be neutral to its non-GAAP earnings in fiscal 2017 and thus reiterated its earnings expectations.

Adobe Systems Incorporated EPS Diluted (TTM)

For the last one year, the stock has outperformed the Zacks industry. It has returned 21.12% compared with the industry’s return of 18.05%.

What Prompted the Increase?

Management believes that by acquiring TubeMogul, Adobe will be able to create an unmatched end-to-end independent advertising and data management solution compatible with digital formats. Customers will get access to first-party data and measurement capacities, leveraging on the combination of Adobe Marketing Cloud and TubeMogul’s video advertising platform.

We believe that the TubeMogul acquisition will help Adobe to further strengthen its foothold in the digital marketing space. The deal will enable advertisers to capitalize on online video campaigns, thereby expanding Adobe’s offerings. Moreover, with this acquisition, Adobe can further distinguish its Marketing Cloud offering from the likes of Salesforce CRM, International Business Machines IBM, Oracle ORCL, and Pardot.

Emeryville, CA based TubeMogul is a leading provider of video demand-side platform (DSP) that enables advertisers to plan, buy and measure video ads across mobile, desktops, television and streaming devices. The company will merge with Adobe’s Digital Marketing business with Brett Wilson continuing as its CEO.

At present Adobe carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

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