Posted on Wednesday, Jul 14th 2021
Adobe (NASDAQ: ADBE) recently reported its quarterly results that continued to outpace market expectations. The company entered into several partnerships during the year to drive end customer satisfaction across both private and government sectors.
Adobe’s Financials Adobe’s second quarter revenues grew 23% over the year to $3.84 billion, ahead of the market’s estimates of $3.73 billion. Adjusted EPS of $3.03 also beat analyst estimates of $2.82.
By segment, revenues from the Digital Media segment grew 25% to $2.79 billion with Creative revenue growing to $2.32 billion and Document Cloud growing to $469 million. Revenues from the Digital Experience segment were $938 million.
Digital Media Annualized Recurring Revenue (ARR) grew to $11.21 billion, a q-o-q increase of $518 million. Creative ARR grew to $9.53 billion, and Document Cloud ARR grew to $1.68 billion.
Adobe expects to end the third quarter with revenues of $3.88 billion with non GAAP EPS of $3. The market was looking for revenues of $3.85 billion with an EPS of $2.90.
For the year, Adobe expects revenues of $15.15 billion and non GAAP EPS of $11.20. Revenue from Digital Media is expected to grow 19% and Digital Experience is expected to grow 19%, and Digital Experience subscription is expected to grow 22%.
Adobe’s Product and Partner Growth
Adobe announced its new, multi-year partnership with FedEx. The partnership starts with an integration with FedEx’s subsidiary ShopRunner and Adobe Commerce. The integration will provide Adobe merchants access to FedEx’s post-purchase logistics intelligence, allowing them to drive demand, reduce cost, and gain customer insights. The current pandemic has accelerated the growth of digital commerce. Adobe’s collaboration with FedEx and ShopRunner will help brands and merchants manage their shipping and logistics in a more efficient way, allowing them to provide an improved last-mile delivery experience to end customers. The integration will enable brands to offer faster shipping speeds, accelerated returns process, and an improved checkout process.
Earlier in the year, Adobe had also announced a partnership with government agencies in all 50 states to power digital transformation of these organizations through Adobe Experience Cloud and Adobe Document Cloud. The partnerships exist across individual agencies at the state, county and city levels and will help the government bodies revamping their online presence, make their websites and apps easier to navigate, deliver personalized content that is updated real time and create intuitive forms that work on any device. Besides catering to the citizens, these government agencies have also adopted Adobe Document Cloud to optimize internal document workflows and Adobe Sign to power the entire e-signature process.
Overall, this was a strong quarter for Adobe. It beat Digital Media ARR adds in Q2, with growth accelerating to 17% over the year ahead of the market’s estimates by 15%. Digital Experience subscription revenues grew 25%, exceeding consensus expectations by 2%. Besides revenues, operating margins improved 325 bps over the year, driving a stellar EPS result.
The results clearly show that Adobe’s investments within Digital Media and Digital Experience are paying off. As the overall climate for marketing improves, and Adobe adds more partners and capabilities within the space, its growth is sure to continue.
The market is pleased with Adobe. Its stock is currently trading at $605.01 with a market capitalization of $288.27 billion. It touched a 52-week high of $607.67 last week. It was trading at a 52-week low of $416.29 in July last year.
Disclosure: All investors should make their own assessments based on their own research, informed interpretations and risk appetite. This article expresses my own opinions based on my own research of product-market fit, channel execution, and other factors. My primary interest is in product strategy. While this may have bearing on stock movements, my writings tend to focus on long-term implications. The information presented is illustrative and educational, but should not be regarded as a complete analysis nor recommendation to buy or sell the securities mentioned herein. I am not a registered investment adviser and I am not receiving compensation for this article. Photo Credit: midiman/Flickr.com This segment is a part in the series : Cloud Stocks . Smartsheet Acquiring Bootstrapped Startups to Drive Growth . Bootstrapped Unicorn Atlassian is Acquiring Capital Efficient Startups . Netflix Price Hike Ruffles Competition . How Will Carbon Black Differentiate? . 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