Hot Tech Stock to Watch: Adobe Inc (NASDAQ: ADBE)

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Adobe Inc (NASDAQ: ADBE) stock rose over 2.5% in the pre-market session of September 16th, 2020 (Source: Google finance) after delivering a decent third quarter of FY2020.

The firm’s revenue rose 14% yoy to $3.23 billion while GAAP EPS rose 22% yoy to $1.97. Non-GAAP EPS rose 25% yoy to $2.57. Rise in new Digital Media ARR and Digital Experience subscriptions given the ongoing remote work and learning-from-home environment drove the growth of the business. Digital Media business rose 19% yoy to $2.34 billion driven by Creative Cloud as well as Document Cloud during the third quarter of 2020. Net new Digital Media Annualized Recurring Revenue or ARR was $458 million, and total Digital Media ARR reached $9.63 billion. Net new Creative Cloud ARR reached $360 million while reported a revenue of $1.96 billion driven by solid traffic to Net new Document Cloud ARR reached $98 million and a record revenue of $375 million. Acrobat Mobile installs rose 33% year-to-date. Subscription revenue excluding Advertising Cloud rose 14% on a yoy basis. Digital Experience segment, rose 2% yoy to $838 million, while Digital Experience subscription revenue rose 7% yoy to $729 million. Excluding Advertising Cloud, Digital Experience subscription revenue rose 14% yoy with the number of transactions greater than $1 million in new annual subscription value as of the quarter. Adobe sees digital transformation to offer solid target opportunity, which showed in Bookings which rose 15%. The firm launched brand new products, and see these growth drivers for Adobe Experience Platform.

The firm’s GAAP operating income during the third quarter reached $1.07 billion, while the non-GAAP operating income was $1.40 billion. GAAP net income was $955 million, and non-GAAP net income was $1.25 billion. Cash flows from operations reached a record $1.44 billion. Remaining Performance Obligation rose 18% yoy to $10.34 billion, while the firm repurchased over 1.5 million shares during the quarter.

For fourth quarter, Adobe issued better forecasts given the strategic shift to Advertising Cloud business, leading to an overall Adobe revenue of over $3.35 billion. Digital Media segment revenue is forecasted to rise over 18% yoy while net new Digital Media ARR is expected to be over $540 million. Digital Experience segment revenue is forecasted to be flat while Digital Experience subscription revenue are rising over 1% year-over-year, or 12% when excluding Advertising Cloud revenue.

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