Adobe Systems Incorporated (NASDAQ: ADBE) Continues To Outperform
Adobe Systems Incorporated (NASDAQ: ADBE) recently reported its fourth quarter fiscal 2017 earnings, which beat market expectations by a wide margin. The company reported quarterly revenues of $2.01 billion for the first time ever, which was above analysts’ expectations of $1.95 billion.
Adobe recently reported its Q4 2017 earnings, which beat analysts’ expectations.
The company’s cloud-based products reported double-digit revenue growth.
The company continues to invest in developing new innovative products.
The company reported significant growth in revenues from its subscription services, which accounted for about 85% of overall revenues, as compared to just 34% in the previous year. This is a critical indicator of the massive success of Adobe’s SaaS products given that the company has been transitioning from a licensing model to a subscription model since 2012.
The company’s digital media solutions revenue grew by 29%, while the annualized recurring revenues from the same division generated $5.23 billion in revenues. Much of the growth in this division was attributed to its Document Cloud and Creative Cloud services. It is evident from this data that Adobe’s cloud services are responsible for most of the company’s revenues.
Adobe’s transition into the cloud services market is similar to Oracle Corporation’s (NYSE: ORCL) transition from a licensing business model to a subscription-based model. However, Adobe seems to be more successful with its SaaS products, which have witnessed mass adoption in their target market, and they contribute significantly to the company’s overall revenues.
All of Adobe’s cloud-based services reported double-digit revenue growth, which indicates that they are growing at a healthy rate. The company further raised its overall revenue estimates for fiscal 2018 including revenues for the current quarter as well as higher earnings per share as compared to analysts’ expectations.
The company is also focusing on expanding its product portfolio as it currently developing its artificial intelligence product dubbed Adobe Sensei, which will revolutionize customer experience across its different products. The company also recently launched Adobe XD for UI and UX design as well as Adobe character animator and Adobe Dimension, which are all focused on improving its design platforms.
Adobe will continue outperforming its peers if it keeps investing in developing new products tailored to meet the needs of its target market by leveraging its core capabilities. Fiscal 2018 looks extremely promising for Adobe, especially if it maintains its current growth trajectory.
To find out more about where we believe ADBE stock is going to go in the future, subscribe to our proactive investment newsletter. As a free trial member, you will have access to over 1300 real time stock trading reports full of actionable trading strategies.