Adobe (ADBE) is set to report Q3 (Aug) results today.

The current S&P CapitalIQ consensus is for earnings growth of 17.5% to $3.02 per share and revenue growth of 20.7% yr/yr to $3.90 bln.

In Q2 (May), ADBE guided to Q3 earnings of $3.00/share and total revenue growth of 20.1% yr/yr to $3.88 bln.

• ADBE has also guided revenue growth for its Digital Media (DM) and Digital Experience (DE) segments for Q3.

  • ADBE sees DM growth of about 22% yr/yr and

  • ADBE seesDE growth of about 21% yr/yr.

ADBE is one of the major benefactors of the WFH post-pandemic environment. The company has posted double-digit revenue growth in every quarter over the past five years and that did not slow down during the pandemic.

• ADBE also only missed on earnings once during that time and is currently on a nice earnings streak, beating by double digits for six straight quarters.

ADBE also tends to sand bag their guidance so it would not be surprising if ADBE outperformed consensus in Q3.

Digital Media makes up most of ADBE's revenue growth(~73% of revenue). Digital Media revenue growth has been strong over the past year, with four straight quarters of over 20% growth.

• ADBE's Creative Cloud offering, that makes up over 80% of Digital Media revenue, should also continue double-digit revenue growth given the work from home environment.

• The other component of Digital Media is ADBE's Document Cloud offering. After growth of around 20% during FY20, Document Cloud growth saw notable strength in FY21, seeing two straight quarters of over 30% growth yr/yr.

TECHS:

ADBE's last earnings report in mid-June created the catalyst for the latest breakout in the name. That report helped move the stock approximately 15%. The stock may look fairly expensive at around 52x forward earnings but with such consistent revenue growth, ADBE has been great at capitalizing on digital transformation trends. The stock should continue to perform so long as growth does not slow down.

Going into the print the stock is finding support at the 50D and prior all time high resistance.

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