Adobe delivered better-than-expected third quarter financial results on Tuesday. The company said success in the quarter was driven by a stronger-than-usual summer period stemming from ongoing remote work and online learning during the coronanvirus pandemic.
"Despite challenging macroeconomic conditions, the ongoing remote work and learning-from-home environment provided an opportunity to offset normal Q3 summer seasonality," Adobe CFO John Murphy said in prepared remarks. "Our success was driven by Adobe's unique ability to draw insights across our business in real-time utilizing our data-driven operating model."
"Throughout the quarter we generated sustained levels of traffic and demand across our Adobe.com offerings, including during the summer holidays where purchasing patterns have historically softened," Murphy continued. "Utilizing our proprietary attribution technologies, we made variable marketing investments that enabled us to attract and engage new customers, delivering the strongest Q3 on record for Adobe."
As for the numbers, the cloud software giant reported fiscal third quarter profit of $955 million, or $1.97 a share. Non-GAAP earnings in the quarter were $2.57 a share on revenue of $3.23 billion, up 14% from a year ago. Wall Street was looking for earnings of $2.41 a share on revenue of $3.16 billion.
Elsewhere on the balance sheet, Adobe said subscription revenue increased to $3 billion. The company's product revenue fell from $157 million in Q3 2019 to $109 million in the current quarter, and services and support revenue dropped to $116 million.
Revenue from Adobe's Digital Media unit overall was $2.34 billion and Digital Experience segment revenue was $838 million. Broken out, Creative Cloud revenue reached $1.96 billion in Q3, while Document Cloud was $375 million.
Meanwhile, Adobe said annualized recurring revenue in its Digital Media unit grew to $9.63 billion, a quarter-over-quarter increase of $458 million. Creative ARR grew to $8.29 billion, and Document Cloud ARR grew to $1.34 billion. Adobe said cash flows from operations were a record $1.44 billion in Q3.
For the current quarter, analysts are looking for earnings of $2.64 a share on revenue of $3.36 billion. Adobe responded with a revenue estimate of $3.35 billion with non-GAAP earnings of $2.64.
"Adobe drove outstanding performance in Q3, highlighted by growth in Creative Cloud and Document Cloud ARR, Digital Experience subscription revenue and record operating cash flows," said Adobe CFO John Murphy. "The resilience of our recurring business model and a strong book of business is driving sustained long-term growth."