Adobe has seen a rise in revenue amid the ‘tectonic shift to all things digital’ during the ongoing pandemic.
On Thursday (11 June), Adobe announced that it achieved record quarterly revenue of $3.13bn in its second fiscal quarter of 2020. The represents 14pc year-on-year growth.
Although the company had previously reported uncertainty about the impact of Covid-19 on its business, revenue continued to rise in the quarter ending 29 May. While product and services revenue fell, subscription revenue from the company’s software products, which is the largest part of its business, rose to $2.8bn.
“The tectonic shift toward ‘all things digital’ across customer segments globally will serve as a tailwind to our growth initiatives as we emerge from this crisis,” Shantanu Narayen, president and CEO of Adobe, said.
This builds on Adobe’s record $3.09bn revenue in the first fiscal quarter. Last year, Adobe surpassed $11bn in annual revenue for the first time since the company was founded in 1982 and said that it aims to exceed $13bn in revenue in 2020.
Adobe’s digital media segment saw revenue grow by 18pc year on year to $2.23bn in the latest quarter. The company said that creative revenue grew to $1.87bn and document cloud revenue was $360m.
Digital media annualised recurring revenue (ARR) grew to $9.17bn exiting the quarter, which represented a quarter-on-quarter increase of $443m. Creative ARR grew to $7.93bn and document cloud ARR grew to $1.24bn.
Adobe said that revenue from its digital experience segment grew to $826m, representing a 5pc year-on-year growth. Digital experience subscription revenue was $707m, representing 8pc growth.
The company reported that GAAP operating income in the second quarter was $1.02bn and non-GAAP operating income was $1.34bn. Cash flow from operations was $1.19bn in Q2.
Adobe added that it has “significantly accelerated” a planned strategy to eliminate low-margin Advertising Cloud transaction-driven offerings. It said it will continue to offer its Advertising Cloud software solutions, but that the macroeconomic environment and strategy have impacted Advertising Cloud targeted revenue by approximately $50m.
Providing ‘mission-critical’ software
Commenting on the quarterly results, Narayen said: “Adobe’s strategy to empower customers to create the world’s content, automate critical document processes and enable enterprises to engage with their customers digitally, drove record revenue in Q2.”
The company’s CFO, John Murphy, added: “Adobe delivered another quarter of record revenue and expanding profitability despite the challenging environment, demonstrating the resiliency of our business model.
“We drove record digital media net new ARR for Q2, highlighting how mission-critical creative and document solutions are in engaging remotely.”