Adobe Reports Record Revenue of $2.74 Billion for Q2 FY2019

Earlier this week, Adobe (NASDAQ: ADBE) investors received an impressive financial report for Adobes second quarter of fiscal year 2019 for the period ended

Subscription News: Adobe Reports Record Revenue of $2.74 Billion for Q2 FY2019

Source: Adobe

Earlier this week, Adobe (NASDAQ: ADBE) investors received an impressive financial report for Adobes second quarter of fiscal year 2019 for the period ended May 31, 2019. Adobe reported record revenue of $2.74 billion, a 25% increase year-over-year, driven by strong revenue in its Creative, Document Cloud and Experience Cloud segments. Adobe also reported diluted earnings per share of $1.29 (GAAP) and $1.83 (non-GAAP), beating analysts estimates for both revenue and profitability.

Adobe’s continued momentum is being fueled by the explosion of creativity across the globe and the widespread business transformation agenda to deliver engaging customer experiences, said Shantanu Narayen, Adobe president and CEO, in a June 18 news release. With an innovative technology platform, exciting product roadmap and strong ecosystem of partners, we are well positioned for the second half of FY19 and beyond.

Adobes solutions have become the standard for creating and managing the worlds digital experiences. Millions of consumers depend on brands like Photoshop and PDF for their personal and professional pursuits, Narayen added. Thousands of enterprises the world over are turning to Adobe every day to help them transform their businesses.

Other highlights from the quarter include:

  • Digital Media segment revenue was $1.89 billion, a 22% increase year-over-year. Digital Media revenue included Creative revenue of $1.59 million and Document Cloud revenue of $296 million.
  • Digital Media annualized recurring revenue (ARR) was $7.47 billion at the end of the quarter, an increase of $406 million.
  • Creative ARR was $6.55 billion, and Document Cloud ARR was $921 million.
  • Digital Experience segment revenue was $784 million, a 34% increase year-over-year.
  • GAAP operating income was $750 million, and non-GAAP operating income was $1.95 billion.
  • GAAP net income was $633 million, and non-GAAP net income was $901 million.
  • Cash flow from operations was $1.11 billion.
  • Adobe repurchased about 2.5 million shares during the quarter.

KFGO.com reported that Adobes subscription revenue increased 27.7% to $2.46 billion while product revenue increased 1.2% to $152.8 million. Subscription revenue represents 89.8% of total revenue for Adobe.

Adobe offered the following guidance for its third quarter of fiscal year 2019:

  • Total revenue of approximately $2.8 billion
  • Digital Media segment revenue growth of approximately 20%
  • Digital Experience segment revenue of approximately 34%
  • Net new Digital Media annualized recurring revenue of approximately $360 million
  • Earnings per share – approximately $1.40 (GAAP) and $1.95 (non-GAAP)

Adobe offers a wide range of products for individuals, and businesses of all sizes, including Photoshop, Stock, Lightroom, Illustrator, InDesign, Creative Cloud for mobile, Media Server, Prelude and many more. Many, if not all, of Adobes products, are available via subscription after a free trial, starting at $9.99 a month. Adobe also offers a variety of special promotions.

Investors were apparently impressed. On June 18, Adobe stock was valued at $276.68 per share. As of 7:59 p.m. EDT yesterday, Adobe stock had risen to $291.21 per share, a 5.25% increase.

Subscription News: Adobe Reports Record Revenue of $2.74 Billion for Q2 FY2019

Source: Google

Insider Take:

Adobe started to make the shift toward a subscription model in 2013. Rather than charge customers a perpetual licensing fees costing customers thousands at launch, Adobe moved its products to the subscription model where they would keep the software maintained and updated in the cloud for customers for monthly subscription fees starting at $9.99 a month. The transition took time, but the subscription model has proven to be a successful one for Adobe. Now, nearly 90% of Adobes revenue comes from subscriptions and it continues to post record revenue. In a highly competitive, cloud-based industry, this is a very good place to be.

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