Adobe rises despite soft guidance

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Adobe expects fiscal third-quarter earnings and revenue that are below what analysts were looking for.

shares rose more than 3% after hours on Tuesday after the company announced better-than-expected earnings for the second quarter of its 2019 fiscal year, which ended on May 31, and lighter-than-expected guidance.$1.83 per share, excluding certain items, vs. $1.78 per share as expected by analysts, according to Refinitiv.

In the quarter Adobe reported $7.47 billion in annualized recurring revenue for its Digital Media business. That's above the FactSet consensus of $7.44 billion. "With Digital Media ARR growth coming down from 30%-plus range in the last couple of quarters, investors have begun to question the long-term growth potential of the segment," Stifel analysts led by Tom Roderick wrote in a note distributed to clients on Sunday. "While the potential for seat conversion still remains internationally, we view existing account penetration and new use-cases as the primary seat and ARR growth drivers in the near-term.

 

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