What’s Going on in Adobe’s Record Quarter

By Chris Lange Published Sep 15, 4:29PM EDT

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What’s Going on in Adobe’s Record Quarter — © Coolcaesar / Wikimedia Commons

Adobe Inc. (NASDAQ: ADBE | ADBE Price Prediction) released its fiscal third-quarter earnings report after markets closed Tuesday. The firm posted $2.57 in earnings per share (EPS) and a record $3.23 billion in revenue, compared with consensus estimates that called for $2.41 in EPS and $3.16 billion in revenue. In the same period last year, the company reported $2.05 in EPS and $2.83 billion in revenue.

During the quarter, the Digital Media segment revenue increased 19% year over year to $2.34 billion. At the same time, Creative revenue grew 19% to $1.96 billion. Document Cloud revenue was $375 million, representing 22% year over year growth.

Separately, Digital Media Annualized Recurring Revenue (ARR) increased $458 million quarter-over-quarter to $9.63 billion exiting the quarter, representing 24% year over year growth on a constant-currency basis. Creative ARR grew to $8.29 billion, and Document Cloud ARR grew to $1.34 billion.

Digital Experience segment revenue was $838 million. Digital Experience subscription revenue increased 7% year over year to $729 million. Digital Experience subscription revenue, excluding Advertising Cloud revenue, grew 14% year over year.

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Cash flows from operations were a record $1.44 billion. On the books, cash, cash equivalents, and short-term investments totaled $5.3 billion at the end of the quarter, versus $4.2 billion at the end of the previous fiscal year.

Looking ahead to the fiscal fourth quarter, the company expects to see EPS of roughly $2.64 and revenue near $3.35 billion. Consensus estimates call for $2.64 in EPS and $3.36 billion in revenue for the quarter.

Shares of Adobe closed at $497.67, in a 52-week range of $255.13 to $536.88. The consensus price target is $478.73. Following the announcement, the stock was up 2% at $507.50 in the after-hours session.

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About the Author Chris Lange →

Chris Lange is a writer for 24/7 Wall St., based in Houston. He has covered financial markets over the past decade with an emphasis on healthcare, tech, and IPOs. During this time, he has published thousands of articles with insightful analysis across these complex fields. Currently, Lange's focus is on military and geopolitical topics.

Lange's work has been quoted or mentioned in Forbes, The New York Times, Business Insider, USA Today, MSN, Yahoo, The Verge, Vice, The Intelligencer, Quartz, Nasdaq, The Motley Fool, Fox Business, International Business Times, The Street, Seeking Alpha, Barron’s, Benzinga, and many other major publications.

A graduate of Southwestern University in Georgetown, Texas, Lange majored in business with a particular focus on investments. He has previous experience in the banking industry and startups.