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American multinational software giant, Adobe Inc., beat analysts’ estimates for quarterly profit and revenue last Tuesday, driven by growth in its digital media business that houses its flagship product Creative Cloud, sending its shares up 4.6% on Nasdaq stock exchange
Adobe, known for its image-editing software Photoshop, partnered with Microsoft in March to bolster its sales and marketing software capabilities.
Salesforce and Microsoft also posted better-than-expected quarterly results on the back of growth in their cloud businesses.
Adobe’s shift to a cloud-based subscription has brought a more predictable revenue stream for the company, by selling its software through web-based subscriptions and not through the sale of packaged-licensed software.
Adobe’s executives expressed confidence in the company’s ability to raise prices annually for its subscription-based services, while driving volume growth by attracting new users.
According to Chief Financial Officer John Murphy “We’re able to do that through the various new products that are attracting folks to our platform. And then as they get comfortable with those, they end up to upsell them into full suite products for multiple applications.”
Adobe Subscription revenue during the second quarter jumped 27.7% to $2.46 billion (N 720 billion) and product revenue rose 1.2% to $152.8 million (N 55 billion).
Revenue from Adobe’s digital media segment jumped 22% to $1.89billion (N648billion), above estimates of $1.86 billion (N648billion), according to IBES data from Refinitiv.
According Chief Executive Officer Shantanu Narayen Revenue from its Experience Cloud business, which provides services including analytics, advertising and marketing rose 34% to $784 million (N282 billion), above analysts’ estimate of $774.9 million (N278 billion). The growth was helped by the acquisitions of Magento and Marketo.
However, the company expects to report revenue of about $2.80 billion (N1 trillion) in the third quarter, below analysts’ estimates of $2.83 billion (N 1 trillion). It estimates a 20% revenue rise in its digital media unit in the current quarter.
The San Jose, California-based company’s revenue jumped 25% to $2.74 billion (N 1 trillion) in the quarter ended May 31, beating estimates of $2.70 billion (N 1 trillion).
Excluding items, Adobe earned $1.83(N720) per share, above the average analyst estimate of $1.78(N720).