Adobe tops third quarter financial targets
Adobe delivered better-than-expected third quarter financial results on Tuesday. The company said success in the quarter was driven by a stronger-than-usual summer period stemming from ongoing remote work and online learning during the coronanvirus pandemic.
« Despite challenging macroeconomic conditions, the ongoing remote work and learning-from-home environment provided an opportunity to offset normal Q3 summer seasonality, » Adobe CFO John Murphy said in prepared remarks. « Our success was driven by Adobe’s unique ability to draw insights across our business in real-time utilizing our data-driven operating model. »
« Throughout the quarter we generated sustained levels of traffic and demand across our Adobe.com offerings, including during the summer holidays where purchasing patterns have historically softened, » Murphy continued. « Utilizing our proprietary attribution technologies, we made variable marketing investments that enabled us to attract and engage new customers, delivering the strongest Q3 on record for Adobe. »
As for the numbers, the cloud software giant reported fiscal third quarter profit of $955 million, or $1.97 a share. Non-GAAP earnings in the quarter were $2.57 a share on revenue of $3.23 billion, up 14% from a year ago. Wall Street was looking for earnings of $2.41 a share on revenue of $3.16 billion.
Elsewhere on the balance sheet, Adobe said subscription revenue increased to $3 billion. The company’s product revenue fell from $157 million in Q3 2019 to $109 million in the current quarter, and services and support revenue dropped to $116 million.
Revenue from Adobe’s Digital Media unit overall was $2.34 billion and Digital Experience segment revenue was $838 million. Broken out, Creative Cloud revenue reached $1.96 billion in Q3, while Document Cloud was $375 million.
Meanwhile, Adobe said annualized recurring revenue in its Digital Media unit grew to $9.63 billion, a quarter-over-quarter increase of $458 million. Creative ARR grew to $8.29 billion, and Document Cloud ARR grew to $1.34 billion. Adobe said cash flows from operations were a record $1.44 billion in Q3.
For the current quarter, analysts are looking for earnings of $2.64 a share on revenue of $3.36 billion. Adobe responded with a revenue estimate of $3.35 billion with non-GAAP earnings of $2.64.
« Adobe drove outstanding performance in Q3, highlighted by growth in Creative Cloud and Document Cloud ARR, Digital Experience subscription revenue and record operating cash flows, » said Adobe CFO John Murphy. « The resilience of our recurring business model and a strong book of business is driving sustained long-term growth. »