For years, Adobe Systems Inc. has slowly but steadily changed its focus from developing desktop software solutions to cloud-based computing services. Looking at the company's latest data from the fiscal first quarter, it seems like Adobe's gambit is starting to pay off.
Over the quarter which ended March 4, Adobe's revenue increased 25 percent year-over-year to about $1.38 billion, a number significantly higher than initial analysts' estimates of about $1.34 billion.
Due to the strong performance of the company so far, Adobe has boosted its forecast for sales and profit in the fiscal year. Recently, Adobe announced that it is expecting annual revenue of about $5.8 billion, with earnings per share to reach about $2.80 on an adjusted basis. Once more, the updated forecasts of the company have beat previous estimates, which set the company's annual revenue at $5.7 billion and its earnings per share at $2.70.
What really made the difference for Adobe's extremely impressive performance during the first fiscal quarter is increasingly strong demand for the company's flagship cloud-based product, the Creative Cloud Package of software tools. Creative Cloud includes three of the company's most popular products, Photoshop Illustrator and Indexing, which could be accessed by users through the cloud.
With the company's admirable performance in the fiscal first quarter, Adobe has now topped revenue estimates for three straight quarters. Its profits have an even more positive trend, beating analysts' expectations for nine quarters straight.
Kirk Adams, an analyst from Rosenblatt Securities, stated that Adobe's efforts are finally beginning to bear fruit.
"I think it's a culmination of all the execution that these guys have put in place for the last 2-3 years. They have very good momentum. They have the wind behind them, and they're the ones out there really leading the marketplace," he said.
The strong performance of the company was received well by investors, prompting Adobe's stocks to surge 6.99 percent to $96.25 after in hours trading on Thursday. A number of analysts have also given the company's stocks a solid "Buy" rating, due to its strength.
Among the factors listed by analysts were Adobe's good revenue growth, solid financial position and reasonable debt levels.
