Adobe Inc. said revenue from its digital experience segment, which contains its Magento Commerce e-commerce software, grew 5% year-over-year to $826 million for the fiscal second quarter. closed May 29.
Sales jumped 18% in its digital media segment to $2.27 billion, signaling strong demand for its Photoshop and productivity tools while customers work from home, the company said Thursday.
The software maker told investors in March that the coronavirus outbreak had created business uncertainty and slashed companies’ marketing budgets, driving down demand for its products. Thursday’s results showed the damage to the business was not as severe as feared, with quarterly sales rising 14% to $3.13 billion. Analysts expected $3.16 billion.
Grow with cloud strategy
Shantanu Narayen, Chairman, President and CEO, has driven Adobe’s revenue and market value to record highs since transitioning the company to cloud-based software in 2012. the coronavirus pandemic and recession, Adobe’s frenetic pace of growth was expected to slow, even as the company unveils a steady stream of new products to modernize customers’ technology systems and refresh mobile applications for consumers, designers and social media influencers. While Adobe has sought to branch out from creative products that have become household names with expensive bets on enterprise software, Photoshop and its brethren remain the company’s cash cow.
“We have weathered several crises successfully and have always used them as a catalyst for strategic and structural changes to emerge stronger,” Narayen said on a conference call after the results. “Our people, a broad and diverse product portfolio, a strong balance sheet, and a disciplined operating cadence put us in a rarefied atmosphere among companies of our size and scale.”
The shares rose about 3% in extended trading after closing at $387.67 in New York. The stock is up about 18% this year.
Earnings, after some expenses, were $2.45 per share in the period ended May 29, beating analysts’ expectations of $2.34. Adobe said it will generate earnings of $2.40 per share in the current period, missing estimates by 5 cents.
Invest in next-gen web content tools and apps
Digital media revenue is expected to grow 16% year-over-year in the current period. Adobe said the unit’s annual recurring revenue will show a net increase of $340 million in the current period, indicating continued growth for the company.
The digital media division’s annualized recurring revenue was $9.17 billion at the end of the second fiscal quarter, the San Jose, Calif.-based company said in a statement Thursday. Analysts estimated an average of $9.03 billion, according to data compiled by Bloomberg.
Adobe was forecasting revenue of $3.15 billion for the current period ending August, missing the average analyst estimate of $3.27 billion, due to weak demand for its Advertising Cloud product. the society. The company withdrew its annual guidance announced in December.
Adobe executives said that by discontinuing the product, which has helped customers complete ad transactions, the company can instead invest in future growth areas, such as making web browsers a better platform. form to create content, artificial intelligence and next-generation applications. Adobe has seen record web traffic for its documents and creative products, but demand from small and medium-sized businesses has declined during the pandemic.