Adobe Systems (ADBE 151.54, -5.06) has slid 3.2% in pre-market despite beating quarterly expectations. While the stock trades lower today, it is still up nearly 8.0% since the company's last earnings release and up almost 50.0% since the start of 2017.
The software company reported above-consensus third quarter earnings of $1.10 per share on a 25.8% year-over-year increase in revenue to $1.84 billion, which was also ahead of expectations.
Digital Media segment revenue totaled $1.27 billion while Digital Media Annualized Recurring Revenue grew to $4.87 billion, representing a $308 million sequential increase.
The Digital Media segment has been responsible for a growing share of Adobe's revenue. The segment accounted for 69.0% of third quarter revenue, up from 68.0% of revenue one year ago and 63.0% of revenue in 2015.
Creative revenue grew 32.5% year-over-year to $1.06 billion.
Adobe's Document Cloud Annualized Recurring Revenue continued growing at a steady pace, increasing nearly 26.0% year-over-year to $556 million.
Looking ahead, the company expects fourth quarter earnings of $1.15 per share, which is ahead of market expectations. Revenue for the fourth quarter is expected to total $1.95 billion. The company expects that its Digital Media segment revenue will grow 25.0% and cloud revenue will increase 17.0% during the fourth quarter. Adobe expects to grow its Digital Media Annualized Recurring Revenue by about $330 million during the quarter.