Adobe Systems (ADBE 146.12, +5.21) has jumped 3.7% in pre-market after beating quarterly expectations and issuing upbeat guidance.
The software company reported above-consensus second quarter earnings of $1.02 per share on a 26.7% year-over-year spike in revenue to $1.77 billion, which was also ahead of expectations.
Subscription revenue surged 36.9% year-over-year to $1.48 billion. Subscription revenue made up 83.7% of the total, up from 77.5% one year ago. The change in revenue make-up at Adobe has been mirrored by other publishers of productivity software, who have convinced many customers to switch to a subscription model instead of purchasing new software when updates are released.
Product revenue fell 12.7% year-over-year to $171.55 million while Services and Support revenue declined 1.3% year-over-year to $116.96 million.
Gross margin improved to 86.49% from 85.55% one year ago.
Digital Media revenue grew 29.0% year-over-year to a record of $1.21 billion. The company ended the quarter with Digital Media Annualized Recurring Revenue of more than $4.56 billion.
Looking ahead, the company expects to report third quarter earnings of $1.00 per share while revenue is expected around $1.82 billion. This puts Adobe's outlook ahead of market expectations.