Adobe Inc. (ADBE, Financial) released its fiscal second-quarter results after the closing bell on June 17. The software provider posted strong results, surpassing earnings and revenue expectations.
The company’s shares surged 2.7% in after-hours trading to $566 following the earnings announcement.
Earnings highlights
Adobe registered adjusted earnings of $3.03 per share for the second quarter, which grew roughly 24% on a year-over-year basis. Analysts had anticipated earnings of $2.81 per share.
Revenue of $3.84 billion was up 23% from the prior-year quarter and beat expectations of $3.73 billion. The robust growth was due to strong demand for the company's Document Cloud and Experience Cloud products.
Reflecting on the performance, President and CEO Shantanu Narayen said:
“Adobe had an outstanding second quarter as Creative Cloud, Document Cloud and Experience Cloud continue to transform work, learn and play in a digital-first world. Our innovative product roadmap and unparalleled leadership in creativity, digital documents and customer experience management position us for continued success in 2021 and beyond.”
Segment performance
The Digital Media segment's revenue grew 25% to $2.79 billion. Within the segment, the Creative Cloud division's sales increased to $2.32 billion, while Document Cloud sales came in at $469 million. The annualized recurring revenue, a metric that shows the value of a subscription-based company's membership base, for the digital media group climbed to $11.21 billion.
In the Digital Experience segment, revenue stood at $938 million. The segment also includes Advertising Cloud revenue.
Adobe's key creative platform, Photoshop, has been quite instrumental in taking photography to graphic design. The company's mobile applications, which include Photoshop on iPad, Lightroom and Photoshop Express, have been continuously witnessing growing demand. The application for handheld devices is turning out to be one of the company's strongest offerings with a solid pipeline.
In April, Adobe partnered with FedEx (FDX, Financial) by virtue of which the former will be able to help its merchants get access to FedEx’s post-purchase logistics intelligence, which would further increase demand and reduce costs. Adobe is currently in the process of integrating FedEx’s ShopRunner e-commerce services with Adobe commerce. FedEx’s president and chief operating officer, Raj Subramaniam, said:
“The opportunity to partner with Adobe is another step forward in the FedEx journey to create an open, collaborative e-commerce ecosystem that will help brands and merchants deliver seamless experiences for their customers. With Adobe’s leadership in customer experiences, the ShopRunner platform and our digital and logistics intelligence, we can increase the competitiveness of brands and merchants and create new possibilities in e-commerce.”
Looking forward
Adobe said that Creative Cloud and Adobe Sign will continue to play an active role in the near term, given that the Covid-19 pandemic and the resulting lockdowns has compelled businesses across the U.S. to do more work online.
For third quarter of fiscal 2021, the company anticipates total revenue of $3.88 billion and adjusted earnings per share of $3.00. Analysts are expecting Q3 revenue to be $3.83 billion and earnings to be $2.89 per share.
