Hot stock to watch: Adobe Inc (NASDAQ: ADBE)

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Adobe Inc (NASDAQ: ADBE) stock rose over 4.4% on 19th June, 2019 (as of 1:30 pm GMT-4; Source: Google finance) after the company posted better than expected results for the second quarter of FY 19 driven by growth in its digital media business that houses its flagship product Creative Cloud. But, Net income fell to US$632.6 million in the second quarter 2019, from US$663.2 million, from a year earlier

Hot stock to watch: Adobe Inc (NASDAQ: ADBE)

For the second quarter, ADBE posted Digital Media revenue of $1.89 billion, including Creative revenue of $1.59 billion and Adobe Document Cloud revenue of $296 million; strong net new Digital Media ARR of $406 million; record Digital Experience revenue of $784 million; Remaining Performance Obligation, or RPO, grew to $8.37 billion and cash flow from operations of $1.11 billion. The company had repurchased 2.5 million shares of the stock through stock buyback; and approximately 91% of the revenue in Q2 was from recurring sources. In the Digital Media segment, ADBE has achieved record revenue of 22% year-over-year growth. The addition of $406 million net new Digital Media ARR during the quarter grew the total to $7.47 billion. Creative revenue grew 22% year-over-year in Q2 and we increased Creative ARR by $341 million. ADBE achieved record Document Cloud revenue of $296 million in Q2, which represents 22% year-over-year growth, and the company has added $65 million of net new Document Cloud ARR during the quarter. The growth in the Document Cloud business was driven by strong demand on adobe.com, the continued migration of Acrobat perpetual customers to subscriptions, enterprise services adoption, and monetization of mobile app use. In addition, Adobe Sign achieved another strong quarter of growth. In the Digital Experience segment, ADBE has achieved record quarterly Experience Cloud revenue of $784 million, which represents 34% year-over-year growth. Experience Cloud subscription revenue was a record $654 million.

ADBE in the second quarter of FY 19 has reported the adjusted earnings per share of $1.83, beating the analysts’ estimates for the adjusted earnings per share of  $1.78. The company had reported the adjusted revenue growth of 25 percent to $2.74 billion in the second quarter of FY 19, beating the analysts’ estimates for revenue of $2.71 billion.

The company expects to report revenue of about US$2.80 billion in the third quarter, below analysts’ estimates of US$2.83 billion, according to IBES data from Refinitiv. For Q3 2019, Digital Media segment year-over-year revenue growth is expected to be of approximately 20%; Net new Digital Media ARR is expected to be of approximately $360 million; Digital Experience segment year-over-year revenue growth is expected to be of approximately 34%

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