UPDATED 19:18 EDT / JUNE 17 2021


Adobe’s clouds post double-digit growth as it sails past earnings and revenue targets

Photoshop creator Adobe Inc. celebrated another strong financial performance today, posting second quarter earnings and revenue that topped expectations and showing strong growth in its three core cloud businesses.

The company reported a profit before certain costs such as stock compensation of $3.03 per share on revenue of $3.84 billion, up 23% from the year ago period. Wall Street analysts were expecting the company to report a profit of $2.81 per share on revenue of $3.73 billion.

Adobe Chief Executive Shantanu Narayen (pictured) wasn’t wrong when he said the company had an “outstanding second quarter.” From an investors perspective, the biggest positive was that Adobe saw strong growth across all three of its main cloud offerings: Creative, Document and Experience.

Adobe’s Digital Media business, which includes the Creative and Document clouds, saw total sales rise 25% from a year ago, to $2.79 billion. Within that segment, Creative Cloud revenue rose 25%, to $2.32 billion, while Document Cloud added $469 million, up 30% from a year ago.

The Digital Media segment’s annualized recurring revenue rose by $518 million, to $11.21 billion at the end of the quarter. Creative ARR was $9.53 billion, while Document ARR rose to $1.68 billion. ARR is an important metric for investors because it shows how much recurring revenue a company is likely to collect over the next year based on yearly subscriptions.

As for Adobe’s Digital Experience business, which includes the Experience Cloud, revenue rose 21%, to $938 million. Subscription revenue within the segment rose 25%, to $817 million.

The company also reported a record $1.99 billion in cash flow from operations.

Constellation Research Inc. analyst Liz Miller told SiliconANGLE that the COVID-19 pandemic has been good to Adobe because business processes, especially those related to commerce and collaboration, needed to modernize fast with a laser focus on engagement. As a result, brands quickly re-imagined how and where they could and should engage and transact, she said.

“It’s notable that Creative Cloud and Document Cloud led the growth charge as content creators and creative originators had to quickly stand up tools for the work-from-home pandemic reality,” Miller said. “Collaboration shifted and tools needed to shift with those new styles of work. The need for individual creators and teams to continue to create came through loud and clear in Adobe’s earnings.”

Charles King of Pund-IT Inc. said Adobe is a great example of a company that’s in the right place with the right solutions at the right time.

“The Document Cloud offerings have been valuable in both working from home and distance learning scenarios, and its marketing and business analytics tools are also enjoying strong demand,” King said. “Add that to growth in sales of the company’s traditional Photoshop, Illustrator and other graphics offerings and you have the makings of another solid quarter for Adobe.”

This was the third successive quarter in which Adobe has beaten analysts’ expectations, and the company’s hot streak looks set to extend into a calendar year, as officials offered some very encouraging guidance for the next three-month period.

Adobe said it’s expecting third-quarter earnings of $3 per share on revenue of $3.88 billion, ahead of Wall Street’s forecast of $2.89 per share in earnings and $3.83 billion in revenue.

Miller’s colleague at Constellation Research, Holger Mueller, told SiliconANGLE that Adobe is firing on all cylinders and that it’s unlikely to slow down anytime soon. “With solid execution in the second half of the year, it will pass the $15 billion revenue mark,” he said.

Adobe’s stock was up almost 3% in the after-hours trading session.

Photo: Adobe MAX/Flickr

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