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Adobe Reports Record Revenue in Q2 Fiscal 2024: Raises Annual Targets
On June 13, 2024, Adobe (Nasdaq) announced its financial results for the second quarter of fiscal year 2024, ending May 31, 2024. The company achieved record revenue of $5.31 billion, driven by robust growth across its Creative Cloud, Document Cloud, and Experience Cloud segments. Adobe has also raised its annual targets for Digital Media net new ARR, Digital Experience subscription revenue, and EPS.
Financial Performance Highlights
Revenue and Earnings
Adobe reported second quarter revenue of $5.31 billion, marking a 10% year-over-year growth, or 11% in constant currency. The company’s GAAP diluted earnings per share (EPS) was $3.49, while non-GAAP EPS was $4.48. GAAP operating income for the quarter stood at $1.89 billion, with non-GAAP operating income at $2.44 billion. Additionally, Adobe's GAAP net income was $1.57 billion and non-GAAP net income was $2.02 billion.
Cash Flow and Share Repurchases
Adobe generated $1.94 billion in cash flows from operations during the quarter. The company also repurchased approximately 4.6 million shares.
Remaining Performance Obligations
Exiting the quarter, Adobe's Remaining Performance Obligations (RPO) were valued at $17.86 billion.
Business Segment Performance
Digital Media Segment
The Digital Media segment reported revenue of $3.91 billion, reflecting an 11% year-over-year growth, or 12% in constant currency. Creative revenue grew to $3.13 billion, a 10% increase year-over-year, or 11% in constant currency. Document Cloud revenue was $782 million, showing a significant 19% year-over-year growth.
Net new Digital Media Annualized Recurring Revenue (ARR) was $487 million, with total Digital Media ARR reaching $16.25 billion. Creative ARR grew to $13.11 billion, and Document Cloud ARR grew to $3.15 billion.
Digital Experience Segment
The Digital Experience segment reported revenue of $1.33 billion, a 9% year-over-year increase. Digital Experience subscription revenue grew to $1.20 billion, representing a 13% year-over-year growth.
Updated Financial Targets
Third Quarter Fiscal Year 2024
Adobe provided the following targets for the third quarter of fiscal year 2024:
- Total revenue: $5.33 billion to $5.38 billion
- Digital Media net new ARR: ~$460 million
- Digital Media segment revenue: $3.95 billion to $3.98 billion
- Digital Experience segment revenue: $1.325 billion to $1.345 billion
- Digital Experience subscription revenue: $1.20 billion to $1.22 billion
- Tax rate: GAAP: ~18.0%, Non-GAAP: ~18.5%
- Earnings per share: GAAP: $3.45 to $3.50, Non-GAAP: $4.50 to $4.55
Fiscal Year 2024
For the fiscal year 2024, Adobe updated its targets as follows:
- Total revenue: $21.40 billion to $21.50 billion
- Digital Media net new ARR: ~$1.95 billion
- Digital Media segment revenue: $15.80 billion to $15.85 billion
- Digital Experience segment revenue: $5.325 billion to $5.375 billion
- Digital Experience subscription revenue: $4.775 billion to $4.825 billion
- Tax rate: GAAP: ~20.5%, Non-GAAP: ~18.5%
- Earnings per share: GAAP: $11.80 to $12.00, Non-GAAP: $18.00 to $18.20
Market Reaction
In response to these outstanding results, Adobe's stock price has surged by 14.67% in after-market trading.
(Source: Adobe)
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