Adobe said it repurchased about 1.5 million shares in the quarter.
Ammu Kannampilly/AFP/Getty ImagesAdobe shares were higher in after-hours trading after the creative-software company posted better-than-expected results for its fiscal third quarter ended Aug. 28.
Adobe (ticker: ADBE) reported revenue of $3.23 billion, up 14% from a year earlier, and ahead of the company’s forecast at $3.15 billion. The Wall Street analyst consensus had been $3.16 billion. Non-GAAP profit was $2.57 a share, ahead of both guidance at $2.40 a share and Street consensus at $2.41 a share.
Revenue in its digital-media segment was $2.41 million, up 19% and ahead of the company’s projected growth rate of 16%. Creative-segment revenue was $1.96 billion, up 19%, while Document Cloud revenue was $375 million, up 22%.
Adobe said it repurchased about 1.5 million shares in the quarter.
For the fiscal fourth quarter, the company forecasts revenue of $3.35 billion and non-GAAP profit of $2.64 a share, in line with previous Street estimates at $3.36 billion and $2.64 a share.
“Adobe delivered the best [third quarter] in our history in a challenging macroeconomic environment, demonstrating the global demand for our innovative solutions,” CEO Shantanu Narayen said in a statement. “We are confident that our leadership in the creative, document and customer experience management categories will drive continued momentum in 2020 and beyond.”
CFO John Murphy said the quarter was driven by “growth in Creative Cloud and Document Cloud [annual recurring revenue], Digital Experience subscription revenue and record operating cash flows.”
In an interview with Barron’s, Murphy noted that the summer quarter is normally seasonally slower for Adobe, but added that with many people working and learning from home, the company had its best third quarter ever, and he said the “durability of demand” carried over into fourth quarter guidance.
“Digital is key for people to create content, distribute it, tell their stories and influence who they are trying to influence,” Murphy said. “And that’s not going to change.” He notes that there was some recovery in the quarter of the small- and medium-sized business customers from a softer second quarter.
While the company isn’t yet providing any guidance for fiscal 2021, Murphy notes that the company “expects to ride the tailwinds that we have now. The opportunities in digital media and experience are just huge.”
Adobe shares were up 2.8% to $511.80 around 4:30 p.m. Eastern time. In the regular session, Adobe shares gained 2.4%, while the Dow Jones Industrial Average was essentially flat. Year to date, the stock has rallied 54%, compared with a 5.3% gain for the S&P 500.
Write to Eric J. Savitz at eric.savitz@barrons.com
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September 16, 2020 at 03:44AM
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Adobe Shares Climb After Financial Results Beat Expectations - Barron's
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