Shares of Adobe (ADBE 275.51, +6.99, +2.60%) have broken out to all-time highs
this morning after the company reported another strong quarter yesterday
The digital marketing giant has beaten estimates on the top and bottom line nine quarters in a row.
Adobe said that it is empowering people to create and transforming how businesses compete. Their execution against this strategy is driving strong financial results across their Digital Media and Digital Experience businesses.
In every market around the world, students, creatives, enterprises, and governments are choosing Adobe Creative Cloud, Document Cloud, and Experience Cloud to deliver the transformative digital experiences required to compete and win today, says the company.
Third quarter revenue grew 24% year/year to $2.29 bln while adjusted EPS grew 57% to $1.73/share.
Perhaps more importantly, Digital Media Annualized Recurring Revenue (ARR) grew to $6.40 bln exiting the quarter, a quarter/quarter increase of $339 mln vs. $310 mln guidance.
Analysts noted that the recent Magento Commerce acquisition contributed to some upside in the quarter.
Adobe guided fourth quarter EPS and revenue in-line with estimates. The company called for $385 mln in net new digital media ARR in the fourth quarter.
The stock has been on a tear in recent years and was up 53% year-to-date heading in to the report. Revenue has grown north of 20% for thirteen consecutive quarters. The stock is up some 250% over that period.
The valuation now stands at a whopping ~$135 bln. While the low double-digit sales multiple seems aggressive, investors are more focused on the current ~30x FCF multiple and strong outlook as the company has consistently delivered strong growth and margin expansion.
Adobe's financial performance puts it in the top tier of cloud players, hence the premium valuation. The next catalyst for the stock will come on October 18 when the company hosts a Financial Analyst Meeting at Adobe Max -- The Creativity Conference.
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