Shares of Adobe Inc. (ADBE, Financial) rose more than 4% in after-hours trading on Tuesday following the release of strong second-quarter results.
The San Jose, California-based software company, which is known for its suite of photo editing products as well as creating the portable document format, or PDF, posted adjusted earnings of $1.83 per share, topping Refinitiv’s estimates of $1.78. Revenue grew 25% from the prior-year quarter to a record $2.74 billion, surpassing expectations of $2.71 billion.
The company’s largest segment, Digital Media, which encompasses the Creative Cloud and Document Cloud products, saw sales grow 22% to $1.89 billion. The Digital Experience business, which includes Magento and Marketo, generated $783.5 million in revenue, a 34% increase year over year. The Publishing division raked in $70.6 million in sales.
In a statement, President and CEO Shantanu Narayen praised Adobe’s performance, saying its “continued momentum is being fueled by the explosion of creativity across the globe and the widespread business transformation agenda to deliver engaging customer experiences."
During the earnings call, he added that the world is in “the golden age of creativity.”
“The power of our brand, the continuous innovation in our products and services, the deep investment we're making in our technology platforms and a robust ecosystem of partners are enabling us to serve millions of customers around the globe,” Narayen said. “We are creating large, addressable markets in the creativity, document and customer experience management categories. Our opportunity has never been greater.”
Looking ahead to the third quarter, the company is guiding for adjusted earnings of $1.95 per share on $2.80 billion in revenue. This is slightly below analysts’ projections of $2.05 in earnings per share on $2.83 billion in revenue.
"With an innovative technology platform, exciting product roadmap and strong ecosystem of partners, we are well positioned for the second half of FY19 and beyond," Narayen said.
Adobe’s rally carried over into Wednesday morning. With a market cap of $140.95 billion, shares of the software giant were up 4.28% at $288.63. GuruFocus estimates the stock has climbed 27% year to date.
According to GuruFocus’ Industry Overview page, Adobe is the third-largest company in the application software sector. Other top players in the space are Microsoft Corp. (MSFT, Financial), Oracle Corp. (ORCL, Financial), International Business Machines Corp. (IBM, Financial) and Accenture PLC (ACN, Financial).
Disclosure: No positions.
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