Adobe Inc (NASDAQ: ADBE) stock rose over 3.9% on 12th June, 2020 (as of 11:47 am GMT-4; Source: Google finance) after the company posted decent results for the second quarter of FY 20. The company has reported second-quarter net income of $1.1 billion compared to $632.6 million, in the year-ago period the drive for mobile workplaces because of COVID-19 increased demand for its digital products. Adobe’s customer interest in its creative tools such as Photoshop is projected to remain steady. The company withdrew its annual forecast announced in December. Annual recurring revenue for digital media was $9.17 billion while the analysts had forecast $9.11 billion. ARR for Adobe’s creative segment was $7.93 billion, while the Street had forecast $7.92 billion, and ARR for its document cloud segment was $1.24 billion, compared with the Street forecast of $1.19 billion. Remaining Performance Obligation rose by 19 percent year-over-year to $9.92 billion ending Q2 and was relatively flat quarter-over-quarter. The ending cash and short-term investment position at the end of Q2 stood at $4.35 billion.
ADBE in the second quarter of FY 20 has reported the adjusted earnings per share of $2.45, beating the analysts’ estimates for the adjusted earnings per share of $2.32, according to analysts surveyed by FactSet. The company had reported the adjusted revenue growth of 14 percent to $3.13 billion in the second quarter of FY 20, missing the analysts’ estimates for revenue of $3.16 billion. This is because of weak demand for the company’s Advertising Cloud product.
Moreover, in the Digital Media segment, the company posted 18% year-over-year revenue growth in Q2. Within Digital Media, the company has achieved another strong quarter with the Creative business. Creative revenue rose 17% year-over-year and has increased Creative ARR by $352 million.
Additionally, in Q2 the company had repurchased approximately 2.6 million shares at a cost of $850 million. The company currently has $3.4 billion remaining of the $8 billion repurchase authority granted in May 2018 which goes through 2021.
Adobe projects third-quarter adjusted earnings to be of about $2.40 a share on revenue expected to be of about $3.15 billion, while analysts had forecast earnings to be of $2.46 a share on revenue to be of $3.26 billion. The company now projects approximately $200 million total Advertising Cloud revenue for the full fiscal year, with $70 million for the second half, decelerating from the first half of the year.