Adobe: Strong first quarter, but outlook cut over Japan

Japan represents Adobe's second largest country based on revenue and the company is cutting its second quarter outlook due to the earthquake, tsunami and its aftermath.

For the fiscal second quarter, Adobe projected revenue of $970 million to $1.02 billion. Non-GAAP earnings will be 47 cents a share to 54 cents a share. GAAP earnings will be about 33 cents a share to 40 cents a share. Wall Street was looking for non-GAAP earnings of 56 cents a share on revenue of $1.03 billion.

In a statement, Adobe CFO Mark Garrett said that it was prudent to cut its revenue projections for Japan. Garrett said:

Japan is our second largest country from a revenue perspective and March is typically our biggest revenue month of the year there due to fiscal year-end spending. Given the uncertain business environment in Japan, we are being prudent and have reduced our revenue expectation for our second quarter by $50 million — or roughly one-third of our original Q2 revenue expectation for Japan.

The outlook, which is likely to be echoed by other tech companies with sizeable operations in Japan, overshadowed a strong quarter for Adobe.

Adobe reported first quarter earnings of $234.6 million, or 46 cents a share, on revenue of $1.028 billion, up 20 percent from a year ago. Non-GAAP earnings were 58 cents a share. Wall Street was expecting earnings of 57 cents a share on revenue of $1.026 billion.

By the numbers:

• Product revenue was $842.7 million in the first quarter and subscription revenue was $106.2 million. Services and support was $78.85 million.
• Adobe's creative and interactive revenue was 41 percent of first quarter revenue followed by digital media (15 percent), digital enterprise (26 percent), Omniture (11 percent) and print and publishing (5 percent).
• Americas revenue in the first quarter was $506.3 million followed by Europe, Middle East and Africa at $315 million and Asia at $206 million.