Adobe Inc. posted fiscal fourth-quarter earnings results today that slightly exceeded analyst expectations, helping send its stock up more than 2.5% in early after-hours trading.

The maker of software for creative media professionals and marketers reported a 21% jump in quarterly revenue, to $2.99 billion, slightly beating consensus estimates of $2.97 billion. Earnings of $2.29 per share beat the company’s own guidance of $2.25 and analysts’ expectations of $2.26.

Full-year revenue jumped 24%, to $11.7 billion and earnings per share rose 15%, to $7.87. The company said it expects 2020 revenue to come in at $13.15 billion with a profit of $9.75 per share, both of which are slightly below Wall Street estimates. The company also guided expectations slightly lower for the first fiscal quarter of 2020.

Investors appeared to shake off the somewhat tempered forecasts in light of the overall strength of Adobe’s business. The company’s remaining performance obligation, which is an aggregate of deferred revenue and backlog, reached $9.8 billion, with a quarter-over-quarter increase of $1.05 billion. Adobe also logged a record $4.42 billion in operating cash flow during the year even as it bought back nearly 10 million shares.

“Global interest and subscription adoption were strong throughout the quarter and accelerated after Adobe MAX,” which is the company’s annual customer conference, said Chief Executive Officer Shantanu Narayen (pictured). “We are attracting new customers, with over 50% of our cumulative subscribers being new to our Creative Cloud franchise.”

He added that 23 million students now have access to Adobe Spark, a set of easy-to-use online and mobile design applications that the company hopes will be an onramp for the next generation of digital artists.

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“The numbers were impressively strong, beating on the top and bottom line,” said Rob Enderle, principal analyst at the Enderle Group. However, he noted that Adobe’s gross profit margin of 84% may indicate that the company is focusing a little too strongly on profitability at the expense of growth. “The numbers indicate they likely should be spending more on research and development for long-term growth but, in the short term, they knocked it out of the park this quarter,” he said.

Constellation Research Inc. Principal Analyst Ray Wang agreed that the gross profit figures are a warning bell. “They need to invest more in R&D, especially for post-merger integration,” he said, referring to the company’s 2018 purchases of marketing automation specialist Marketo Inc. and e-commerce provider Magento Inc.

Still, said fellow Constellation analyst Liz Miller, “this quarter certainly shows that the investments into acquisitions like Marketo and Magento were smart ones — and ones they quickly integrated into their pipeline. They have started to really take advantage of the key partnerships they forged with folks like Microsoft, which has given Adobe a new credibility with IT leaders who once only thought of Adobe as the PDF and Photoshop company.”

Performance was strong across the company’s product portfolio. The Digital Media business segment, which is by far the company’s largest, recorded revenue of $7.71 billion, up 22% year-over-year, although that growth rate was down from 26% the previous year. The business finished the year with $8.40 billion of annualized recurring or subscription revenue, up 25%.

Adobe Document Cloud grew 25%, to $1.22 billion. And revenue at the Digital Experience segment, which encompasses the company’s highly touted line of customer experience management applications, jumped 31%, to $3.21 billion.

On the whole, Wang said, “Adobe’s strategy is working. The strength is still coming from Digital Media, but Digital Experience is finally getting some synergies after a blockbuster set of acquisitions.”

Those acquisitions are considered critical to Adobe’s efforts to diversify its business and expand beyond the lucrative but relatively narrow realm of creative professionals. The marketing and e-commerce initiatives that Marketo and Magento are expected to accelerate saw 31% growth, thanks in part to “cross-selling and up-selling Magento” and “momentum in our Marketo business, including in the midmarket segment,” said Chief Financial Officer John Murphy. Adobe said Experience Cloud has been adopted by the top 10 U.S. financial institutions and automobile makers as well as nine of the top 10 hotel companies, media chains and internet retailers.

Adobe has also been trying to expand its consumer business with low-priced photo and video applications as well as mobile-only offerings. Those have collectively attracted more than 200 million registrations. The company has also been stoking Creative Cloud growth with the addition of stock content, collaboration and offers to convert customers of its packaged applications to subscriptions.

Photo: Adobe/Twitter