Adobe Third-Quarter Results Beat Expectations as Subscription Revenue Surges

5:15AM ET 9/18/2019 MT Newswires
Cloud computing major Adobe (ADBE) unveiled adjusted earnings guidance that missed analysts estimates after markets closed on Tuesday but posted third-quarter results which comfortably surpassed expectations, buoyed by a jump in subscriptions.

The San Jose, Calif.-based company, whose products include the video and photo editing software Premier Pro and PhotoShop, reported revenue of $2.83 billion in the three months ended Aug. 30, up 24% from the corresponding quarter of the prior year. This was also ahead of the consensus estimate of analysts polled by Capital IQ for $2.82 billion.

Subscription revenue advanced to $2.55 billion from $2.02 billion while production revenue advanced to $157.3 million from $149.1 million.

Revenue from Adobe's digital media segment advanced to $1.96 billion, a 22% year-on-year increase. Creative revenue rose to $1.65 billion and document cloud achieved revenue of $307 million.

Digital media annualized recurring revenue rose to $7.86 billion exiting the quarter, a quarter-on-quarter increase of $386 million. Creative annualized recurring revenue rose to $6.87 billion while document cloud annualized recurring revenue rose to $993 million.

Adjusted earnings per share, meanwhile, advanced to $2.05 from $1.73, also comfortably beating the Street's forecast for $1.97.

"Adobe delivered another quarter of record revenue in Q3," John Murphy, chief financial officer of Adobe, said. "Highlights include 24% year-on-year total revenue growth, strong subscription revenue performance and operating margin expansion."

For the fourth quarter, the company said that it is targeting revenue of $2.970 billion, which was broadly in line with the Street's forecast for $2.973 billion, while adjusted earnings per share are expected to be $2.25, just a cent below analysts' consensus estimates for $2.26.

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