Adobe (ADBE) +4%is flirting with all-time highs after reporting strong second quarter results but guiding third quarter modestly below estimates.
It was an all-around strong second quarter from the marketing technology leader. Recent acquisitions have made for some messy reports on the bottom line as of late, but this marks the twelfth consecutive quarter in which the company has exceeded revenue estimates. Digital Media segment revenue grew 22% vs. +20% guidance while digital experience revenue grew 34% vs. +32% guidance.
Net new digital annualized recurring revenue (ARR) grew $406 mln sequentially to $7.47 bln vs. guidance for a $370 mln increase. The company has averaged a $30 mln beat on that key metric in recent years.
Adobe offered soft guidance for the second consecutive quarter. The third quarter EPS outlook was 5% below estimates while the revenue outlook was 1% below estimates. Investors are unfazed by the seemingly conservative outlook.
Enterprise software stocks remain red hot, and Adobe is the largest digital marketing cloud company growing cash flow at scale. The ~30x forward free cash flow multiple is on par with rival Salesforce (CRM).
The stock has been consolidating after hitting a new all-time last month.