Wide-moat Adobe (ADBE) reported strong first quarter results, including upside to guidance for both revenue and non-GAAP EPS, and provided quarterly guidance that was ahead of Street expectations. Importantly, management also raised its full year outlook. The company announced CFO John Murphy will be retiring this year for personal reasons and a search is underway for a successor. We see strength on all fronts of quarterly performance. New customer engagement levels remained strong and activity on adobe.com remains elevated as a result of the extended remote work environment. We think results continue to support our investment case that Adobe will continue to dominate the creative segment, and its well-rounded portfolio, including Magento and Marketo, position the firm as a digital marketing leader. Given results and guidance, we are raising our fair value estimate to $520 per share, from $500. As software has lagged early in 2021, we see shares as increasingly attractive.
First quarter revenue grew 26% year over year to $3.905 billion, compared with guidance of $3.750 billion and FactSet consensus of $3.751 billion. Digital Media revenue grew 32% year over year while Digital Experience revenue grew 24% year over year, with both being nicely ahead of our own expectations. Publishing and Advertising revenue declined 34% year over year, as expected based on the discontinuation of transactional advertising services. Workfront added $38 million in revenue, while FX drove $62 million in year-over-year revenue growth. Net new digital ARR was $435 million, versus guidance of $410 million. Document Cloud (within Digital Media) was strong in the quarter with good momentum for Adobe Sign, leading to 50% year-over-year revenue growth. Not surprisingly, Magento also did well, with management commenting that online spending has permanently increased. Non-GAAP operating margin was 46.8%, compared with 40.3% a year ago and nicely ahead of our own expectations.
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