Adobe crushes Q1 earnings, boosts guidance for fiscal year

Adobe reported solid first quarter financial results Thursday that came in well above Wall Street estimates.

The creative software giant reported fiscal first quarter earnings of $254.3 million, or 50 cents a share.

Non-GAAP earnings in the quarter were 66 cents a share on revenue of $1.38 billion, up 25 percent year-over-year.

Wall Street was looking for earnings of 61 cents a share on revenue of $1.34 billion.

Adobe has become a poster child for successful migration to subscription-based services, as its creative apps continue to appeal to a range of professionals and hobbyists.

The Photoshop maker added 798,000 Creative Cloud subscribers across its individual, team and enterprise accounts during Q1. Revenue climbed 44 percent year-over-year to $733 million.

Meanwhile, Adobe Marketing Cloud brought in $377 million for the quarter, up 21 percent annually.

Adobe's Digital Media unit overall grew 33 percent year-over-year and ended the quarter with annual recurring revenue of $3.13 billion.

For the current quarter, Adobe now projects revenue range in the of $1.365 billion to $1.415 billion with earnings between 64 cents and 70 cents a share.

Analysts are looking for earnings of at least 65 cents a share on revenue of $1.39 billion.

"We are pleased to report another record quarter with 25 percent year-over-year revenue growth. Strong Cloud adoption drove record Creative and Marketing Cloud revenue in Q1, and better-than-expected Digital Media ARR," said Adobe CFO Mark Garrett, in prepared remarks. "Based on our strong Q1 results and business momentum, we are increasing our annual revenue and earnings targets for the year."

For the fiscal year Adobe now expects revenue of $5.8 billion, up from $5.7 billion, with earnings of $2.70 a share.