Adobe Builds on Creative Cloud to Scale Life-High Levels

Adobe (Nasdaq: ADBE) is one company that has successfully reinvented itself as a cloud-based service provider from a license-based software company. Each quarter, it keeps surprising the market with its stellar performance. Earlier this week, it reported its second quarter results, that helped send its stock to a lifetime high.

Adobe’s Financials

Adobe’s second quarter revenues grew 27% over the year to $1.77 billion, ahead of the market’s projections of $1.73 billion. EPS of $1.02 was also ahead of the Street’s estimated $0.95 per share for the quarter.

During the quarter, Adobe’s Subscription revenues grew 36% over the year to $1.48 billion. Product revenues declined 13% to $171 million and services and support revenues fell 2% to $117 million.

Among other metrics, digital media segment revenues grew 20% to $1.21 billion compared with just over $1 billion a year ago. Creative Cloud and Document Cloud adoption and retention helped drive Digital Media Annualized Recurring Revenue to $4.56 billion for the quarter, recording a growth of $312 million over the previous quarter. It also delivered a record revenue within the Adobe Experience Cloud segment, which ended the quarter with $495 million, growing 29% over the year.

For the current quarter, Adobe expects revenue of $1.815 billion with an EPS of $1. The market was looking for revenues of $1.8 billion and an EPS of $0.95.

Adobe’s Creative Expansion

Adobe continued to improve its content offerings for its customers. Its Adobe Stock offering, which offers stock photography to users, now has a library of more than 90 million graphics. It continues to add to the service and recently introduced Aesthetic Filters, a next-gen search capability that will leverage Adobe Sensei to streamline search for images or video content for creative projects. Recently, it also expanded its library with the availability of new collections from Reuters and Stocksy. Adobe is working on the addition of content from USA TODAY Sports to its stock collection as well.

Within the video business, Premiere Pro recorded a 49% growth in single-app subscriptions. It recently unveiled a major update to the service that allows filmmakers and video producers to create, deliver, and monetize their video assets faster than earlier. The latest update offers new features for graphics and titling, animation, polishing audio and sharing assets, support for the latest video formats such as HDR, VR, and 4K, and new integrations with Adobe Stock. Other updates within video include the launch of Character Animator that allows users to create instant walking animations by tagging a character’s legs, arms, and body and Audition that lets users edit and mix sound types to clips.

Besides video, Adobe is also innovating across other categories like Experience Design, 3D, and mobile apps, through offerings like the Adobe Spark that simplifies the process of designing social graphics, web stories, and animated videos. Adobe is counting on these new offerings to help drive more users to the Creative Cloud.

Its stock is currently trading at $143.69 with a market capitalization of $72.7 billion. It touched a 52-week high of $147.45 earlier this week. It has grown significantly since it touched the 52-week low of $90.35 in June last year.

Photo Credit: midiman /Flickr.com