Adobe Inc. saw its shares jump Thursday in after-hours trading despite reporting mixed second-quarter financial results, plus guidance for the next period that came in light.

The maker of creative cloud software reported a profit before certain costs such as stock compensation of $2.45 per share on record revenue of $3.13 billion, up 14% from a year ago. Wall Street was expecting a profit of $2.33 per share on slightly more revenue of $3.16 billion.

Adobe’s subscription revenue rose to $2.87 billion, but product revenue fell to just $128 million, down from $152.8 million one year ago. Services and support revenue stayed more or less flat at $126 million.

“Adobe’s strategy to empower customers to create the world’s content, automate critical document processes and enable enterprises to engage with their customers digitally, drove record revenue in Q2,” Adobe Chief Executive Officer Shantanu Narayen (pictured) said in prepared remarks. “The tectonic shift towards ‘all things digital’ across all customer segments globally will serve as a tailwind to our growth initiatives as we emerge from this crisis.”

The company’s largest business, its Digital Media group, raked in the lion’s share of its revenues with $2.23 billion. Digital Experience revenue came to $826 million, and Creative Cloud revenue came to $1.87 billion.

Meanwhile, annualized recurring revenue in Adobe’s Digital Media group rose to $9.17 billion, up $443 million from the previous quarter. No doubt that was seen as a big positive by investors looking for the reassurance of a sustained income.

Indeed, it may have helped to soften the blow of Adobe’s poor guidance. For the third quarter, the company said it’s looking for a profit of $2.40 per share on revenue of $3.15 billion. Wall Street had earlier forecast a profit of $2.46 a share on $3.28 billion in revenue. Adobe’s stock rose 3.7% in after-hours trading.

Adobe had lowered its guidance for the second quarter prior to today’s results, saying it expected some enterprise customers to defer bookings, delay consulting services and cut spending amid the coronavirus pandemic. But the company did better than expected in spite of those conditions.

“Adobe delivered another quarter of record revenue and expanding profitability despite the challenging environment, demonstrating the resiliency of our business model,” said John Murphy, the company’s executive vice president and chief financial officer. “We drove record Digital Media net new ARR for Q2, highlighting how mission-critical creative and document solutions are in engaging remotely.”

Dan Neiweem, co-founder and principal at Adobe partner Avionos LLC, said Adobe had benefited from the fact that the coronavirus has forced companies to do more work online.

“We expect to see an increase in Adobe’s online collaborative and productivity tools such as Adobe Sign and Creative Cloud as COVID-19 has forced companies to do more online,” Neiweem said. “The majority of Adobe’s business is within their Document Cloud and Creative Cloud, which will help maintain, if not grow, their overall revenue and earnings in the short term.”

Ray Wang of Constellation Research Inc. said Adobe’s strong quarter shows that the company has been a well run machine for some time, pointing out that any dips in its performance tend to be cyclical, reflecting the exposure of its Experience Cloud to the travel, retail and financial services industries.

“Adobe is in the middle of a transition with new leadership in its Experience Cloud,” Wang said. “It will succeed if it can integrate the Marketo and Magento acquisitions and gain scale. It’ll require some innovative leadership and more R&D investment, but it’s possible in this battle vs Salesforce, Oracle, and Microsoft.”

Wang’s colleague Holger Mueller added that it was encouraging to see Adobe offer guidance for its full year too, as many companies have shied away from this due to the coronavirus pandemic.

“As economies world wide start to reopen, the key question for Adobe is if it can take advantage of that, or if it is already baked into its current revenue stream,” Mueller said.

Adobe has also withdrawn its fiscal 2020 earnings targets because of the uncertain impacts of the coronavirus pandemic.

Photo: Adobe MAX/Flickr