Adobe (ADBE) is set to report Q1 (Feb) earnings results today after the close with a call to follow at 5pm ET.

The CapitalIQ consensus is for EPS to grow 23% yr/yr to $2.79 and revenue to grow 22% yr/yr to $3.76 bln.

ADBE usually guides for EPS and revs for the next quarter and full year.

Entire industries from media and entertainment to pharma, retail, automotive, and financial services have had to pivot nearly overnight to digital operations. Electronic workflows and signatures are the only way to efficiently complete business transactions. This reality has created new tailwinds for Adobe.

Digital Media, Adobe's largest segment and includes Adobe Document Cloud, saw revenue jump 20% yr/yr to $2.50 bln. Not only that, but the Q1 guidance for this segment points to an acceleration in Q1 (+26% yr/yr). Adobe also guided to Q1 Digital Media ARR of $410 mln of net new ARR.

Adobe Document Cloud helps people create, edit, share and sign digital documents with Acrobat and PDF. Documents have become central to businesses operating remotely. The shift to at-home work and learning has created a heightened sense of urgency among all companies to accelerate their digital transformation. Adobe is seeing greater demand on the Creative Cloud side, which includes Photoshop, Illustrator, Premiere Pro, Lightroom, and InDesign.

TECHS:

Adobe has posted three consecutive double-digit EPS beats since the pandemic began. Adobe is benefitting from the pandemic which has caused more companies and consumers to shift to digital document creation.

The stock has been mostly trading sideways since July 2020 in the $420-510 range, which tells us a lot of good news is priced in already. It also has been a bit weak over the past month as investors rotate out of stay at home plays. We would be a bit cautious going in. Adobe will probably post good numbers, but expectations are high.

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