Hot Tech stock to watch: Adobe Systems Incorporated (NASDAQ: ADBE)

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Adobe Systems Incorporated (NASDAQ: ADBE) stock rose over 2.6% on 14 Sep, (as of 10:58 AM GMT-4; Source: Google finance) after the company posted better than expected results for the third quarter 2018. The company’s third-quarter profit rose to $666.3 million from $419.6 million last year. In the third quarter, there is deferred revenue growth of 23% year-over-year, cash flow from operations of $955 million, returned $714 million of cash to the stockholders through stock buyback and approximately 90% of the revenue in Q3 was from recurring sources.

ADBE in the third quarter of FY 18 has reported the adjusted earnings per share of $1.73, beating the analysts’ estimates for the adjusted earnings per share of $1.69. The company had reported the adjusted revenue growth of 24 percent to $2.29 billion in the third quarter of FY 18, beating the analysts’ estimates for revenue of $2.25 billion. In the Digital Media business, ADBE has achieved strong growth in both Creative Cloud and Document Cloud revenue in Q3. Net new Digital Media annualized recurring revenue or ARR was $339 million, and total Digital Media ARR exiting Q3 grew to $6.4 billion. Key Digital Media customer engagements in the third quarter included the U.S. Department of Education, Facebook, Marks & Spencer and Walmart. Creative Cloud has become the creativity platform for all with millions of highly engaged subscribers and a strong base of trialists whom we actively convert each month into paying customers.

Further, In Q3, ADBE has achieved Experience Cloud revenue of $614 million with strong bookings across Adobe Marketing Cloud, Analytics Cloud and Advertising Cloud. Key customer deals in the quarter included NBA Properties, Commonwealth Bank of Australia, The Federal Aviation Administration, CBS Interactive and Navy Federal Credit Union. In June, the company has completed the acquisition of Magento, bringing its industry-leading commerce capabilities to Adobe Experience Cloud for B2B and B2C customers.

With Document Cloud, ADBE has achieved record revenue of $249 million, which represents 21% year-over-year growth, and the company has delivered another solid quarter of Document Cloud ARR growth. Acrobat unit growth across Creative Cloud and Document Cloud was again greater than 20%. Adobe Sign achieved greater than 25% year-over-year revenue growth. In addition, from a quarter-over-quarter currency perspective, FX decreased revenue by $13.8 million. ADBE had $16.8 million in hedge gains in Q3 FY ’18 versus $0.3 million in hedge gains in Q2 FY ’18. Thus, the net sequential currency increase to revenue considering hedging gains was $2.7 million.

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