Yahoo Finance Live’s Julie Hyman and Brian Sozzi discuss quarterly earnings for Adobe, General Mills, and Poshmark.
Video Transcript
JULIE HYMAN: Sozz, let’s talk about some individual movers, shall we? We start with Adobe, the software company out with its numbers and out with a forecast that seems to have perhaps disappointed investors. Revenue is going to be about $4.34 billion in its fiscal second quarter. That’s just short of what analysts have been projecting. And so you can see the shares are down by 7%. Profit– that is earnings per share– also projected to be below analysts’ estimates.
So the company, over the long-term, is an outperformer, I think it’s safe to say. But as of late, like many software companies, we’ve seen investors lose some confidence in the stock here, Sozz. And the company has been sort of overhauling the price structure for its Creative Suite, which is its main project– main product, I should say. And it’s the first big change to pricing structure that it’s had going back to 2017.
BRIAN SOZZI: Yeah, Julie, not that I’m keeping track on this, but I would say this is the second straight disappointing quarter from Adobe on a relative basis here. And the company is still growing sales and profits, but still not growing them at Adobe-like rates that really attracted a lot of the bulls over the past two to three years. In some parts of the business now, sales are only growing by single digit percentages. That is a pretty big slowdown.
There is concern out there about new upstarts in this space competing more effectively with Adobe. And to your point, you know, that increased competition is now really going to be put to the test because Adobe is raising prices on a good number of its products. And the company talking last night on the earnings call, those price increases will likely influence the results, I mean, two quarters from now.
So it will take time to show up, but you have to wonder, does Adobe go out there and lose some business to those upstart competitors as it jacks up prices? And then lastly, Julie, Adobe noting a $75 million hit in its fiscal year because of the Russia-Ukraine crisis. Adobe will not be accepting annual recurring revenue from Russia. And it’s going to hit their bottom line as a result.
JULIE HYMAN: Yeah, it’s been quite interesting on these various company earnings calls, finding out who has that exposure. That’s not something that we really thought about before this whole conflict happened. So that has been an interesting element to watch. Want to move on to the cereal maker, General Mills, makes more than cereal, but that’s mostly what it is known for. And the company coming out with an updated outlook.
So that seems to be mostly responsible for the movement that we’ve been seeing in the shares, up by 5%. You can see last quarter, revenue coming in largely in line, earnings per share beating estimates. But it’s really for the fiscal year that the company’s forecast is better than estimated. The company says organic net sales going to rise 5% for its fiscal year. Its fiscal year ends in May, by the way. And that’s a bit of an increase to its forecast.
And also, adjusted earnings per share, excluding the effects of currency swings, expected to be flat to up 2%. So that forecast seems to be responsible for the 6% gain we’re seeing in the share, Sozz.
BRIAN SOZZI: Well, here’s something I know you can appreciate, Julie. General Mills, of course, they still operate. Blue Buffalo, good old Blue, delivering the results for General Mills. Sales up 30% in the company’s pet business. And their operating profits for the segment up 8%. That was the fastest growth in operating profits out of all of General Mills’s businesses in the most recent quarter.
And really, this echoes what I heard from Petco CEO a couple– Ron Coughlin, a couple of weeks ago, that pet demand, pet food demand, pet product demand remains very strong, despite a lot of these companies like a General Mills, like a Petco, starting to push through inflation adjusted price increases on consumers. I guess at the bottom– end of the day, Sparky still has to eat, Julie, even if that kibble is 30% more.
JULIE HYMAN: Yes, he does. And one more thing I just wanted to mention about supply chain when it comes to General Mills. Just about, I guess, a month ago or eight weeks ago or so, the company said acute supply shortages for things like its pizza products, its hot snacks in North America, would hurt its third quarter profit numbers. But now the company gave an update today and said it had taken steps to address those shortages and saw, quote, “notable improvement in customer service levels in the final weeks of the quarter.” So that’s interesting as well.
Moving on and looking at Poshmark, this stock is trading lower. The company came out with a forecast of first quarter revenue that’s going to be up to $88 million. That’s the upper end of its forecast. Analysts are looking for $92 and 1/2 million. So saw that wider loss than estimated, revenue beating estimates. But as usual, the focus here seems to be on that forecast, Sozz.
BRIAN SOZZI: Yeah, real quick, though, on General Mills, Julie, they did note there could be a dough shortage on pizza. I just had to mention it. I had to get that off my chest. I made a note on my pad to go back and check it later.
Now, on Poshmark, I think this quarter could be summed up by the fact Poshmark spent a lot of their time on the call last night talking about a new category for them– electronics. Here’s a company that was founded on fashion, now selling used electronics on its website. I think that sums up very much why the stock has gone from, really, a high around– or high of about $97.50 on the first trade when it IPO’ed in January 2021 to almost $10. Sums it all up in my view.
JULIE HYMAN: Yeah, interesting. I– hmm, I don’t know.
BRIAN SOZZI: If you want a used Amazon speaker–
JULIE HYMAN: I was still processing that.
BRIAN SOZZI: If you want a used Amazon speaker, as I’m looking at right now on the Poshmark site, you, Julie, could pick one up for $25. Good news– it comes with the charger.
JULIE HYMAN: Uh, good, I guess? OK, well, we’re going to take a break. Before we do, we’re going to go to the Stat of the Day, which is telling us about global interest in virtual currencies, like Bitcoin and Ethereum, 70% below their 2021 highs. That was measured by Google search volumes.
Query volumes for NFT also weak, 65% lower than their January 2022 highs. DataTrek bringing us those Google search terms. I didn’t get a chance because I didn’t know that I was going to be doing Stat of the Day, but I would bet that if you looked at how much Bitcoin and Ethereum are pricewise below their 2021 highs–
BRIAN SOZZI: I’m glad you mentioned that, Julie.
JULIE HYMAN: I’m guessing it wouldn’t be similar.
BRIAN SOZZI: Because I have that story right now on the Yahoo Finance home page. I encourage you and everybody to check it out. Click, click, click.
JULIE HYMAN: But you’re not going to tell me how much it’s below the highs?
BRIAN SOZZI: I can’t. I need the views.