For the Creative Cloud business, which includes tools like Photoshop and Illustrator, international momentum was especially strong, and in the enterprise-focused Experience Cloud business, the tone they picked up on was positive “for the first time in three or four quarters,” they wrote. There was a “softening competing environment” from the likes of Oracle and IBM, they wrote.
One factor that helped in the quarter was the company’s partnership with Microsoft, Adobe CEO Shantanu Narayen said on a conference call with analysts after the company released the earnings results.
With respect to guidance, Adobe said it’s expecting $1.68 in earnings per share, excluding certain items, on revenue of $2.24 billion in the fiscal third quarter. Analysts had expected Adobe to forecast $1.61 in earnings per share, excluding certain items, on $2.23 billion in revenue for its fiscal third quarter, according to Thomson Reuters.
Because of recent U.S. tax reform, the company now expects to have a 7 percent tax rate in the fiscal third and fourth quarter, Murphy said.
Adobe expects its Digital Media business segment — which delivers around 70 percent of its revenue — to grow around 25 percent year over year in the fiscal third quarter. The FactSet analyst consensus for segment growth was 23.4 percent.
Narayen said the company wants to ensure it fully grasps the implications of the recently enacted General Data Protection Regulation, or GDPR, during the fiscal third quarter. But in general that quarter is seasonally weak, while the fiscal fourth quarter is typically strong, Narayen said.
Adobe expects that Magento will contribute around $40 million in revenue during those two quarters, Murphy said, although it was excluded from the fiscal third quarter guidance.
Adobe’s stock is up 47 percent since the beginning of the year.
Programming Note: For more on Adobe, watch “Mad Money” host Jim Cramer’s interview with Chairman and CEO Shantanu Narayen tonight at 6 p.m. ET.