Adobe shares topped the $400 level for the first time in history amid robust demand for its digital media products, which led the company to post record second-quarter revenue of $3.13bn. Its second-quarter revenue grew 14% year-over-year.
In addition, Adobe management has successfully turned robust revenue growth into big profits. The company has generated a second-quarter operating income of $1.10bn compared to $633m in the past year period.
“Adobe delivered another quarter of record revenue and expanding profitability despite the challenging environment, demonstrating the resiliency of our business model,” said John Murphy, executive vice president, and CFO, Adobe. “We drove record Digital Media net new ARR for Q2, highlighting how mission-critical creative and document solutions are in engaging remotely.”
Adobe shares gained investors’ confidence despite a challenging market environment and the big stock market selloff in February. After trading below $300 level in March, the shares regained momentum and erased all the previous losses. Adobe stock price is up 33% in the past six months alone, extending the twelve months gains to 44%.
“The tectonic shift towards ‘all things digital’ across all customer segments globally will serve as a tailwind to our growth initiatives as we emerge from this crisis,” said Shantanu Narayen, president, and CEO, Adobe.
Adobe expects to extend the revenue growth momentum into the third quarter. The company anticipates third-quarter revenue in the range of $3.15bn, with digital media revenue growth of 16% year over year. The earnings per share for the third quarter is likely to stand around $2.40bn while analysts are forecasting third-quarter earnings in the range of $2.47bn.
The market analysts look bullish over the Adobe shares price performance despite the recent gains. Jefferies analyst Brent Thill provided a Buy rating with a price target of $450.