Adobe Q2 a mixed bag as revenue falls short of estimates
Adobe on Thursday reported mixed second quarter financial results, beating EPS targets but falling a tad short on revenue.
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Nonetheless, the cloud software giant reported record fiscal second quarter profit of $1.1 billion, or $2.27 a share. Non-GAAP earnings in the quarter were $2.45 a share on revenue of $3.13 billion, up 14% from a year ago. Wall Street was looking for earnings of $2.33 a share on revenue of $3.16 billion.
The Photoshop maker said subscription revenue increased to $2.87 billion. However, the company's product revenue fell from $152.8 million in Q2 2019 to $128 million in the current quarter, and services and support revenue dropped slightly $126 million.
Revenue from Adobe's Digital Media unit overall was $2.23 billion and Digital Experience segment revenue was $826 million. Broken out, Creative Cloud revenue reached $1.87 billion in Q2, while Document Cloud was $360 million.
Meanwhile, Adobe said annualized recurring revenue in its Digital Media unit grew to $9.17 billion, a quarter-over-quarter increase of $443 million. Creative ARR grew to $7.93 billion, and Document Cloud ARR grew to $1.24 billion.
For the current quarter, analysts are looking for earnings of $2.46 a share on revenue of $3.28 billion. Adobe responded with a revenue estimate of $3.15 billion with non-GAAP earnings of $2.40.
In March Adobe lowered its guidance for the second quarter, saying that it expected enterprise customers to defer bookings, delay consulting services and cut spending amid the worsening global pandemic. The company also prepared for reduced consumer spending and lower software license revenue from channel partners.
Adobe has also withdrawn the annual fiscal 2020 targets that were issued in December 2019. Shares of Adobe were up over 4% after hours.