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Adobe Systems Q2 Results Beats Street

Enterprise software maker Adobe Systems Inc. (ADBE), Tuesday reported a profit and revenues for the second quarter that trumped Wall Street estimates. However, outlook for the third quarter were below current expectations.

San Jose, California-based Adobe's second-quarter profit dropped to $632.6 million or $1.29 per share from $663.167 million or $1.33 per share last year.

Adjusted earnings for the quarter rose to $1.83 per share from $1.66 per share last year. On average, 28 analysts polled by Thomson Reuters expected earnings of $1.78 per share for the quarter. Analysts' estimates typically exclude special items.

Adobe said its revenue for the quarter rose 25% to $2.74 billion from $2.20 billion last year. Analysts had a consensus revenue estimate of $2.70 billion for the quarter.

Digital Media segment revenue jumped 22% to $1.89 billion, with Creative revenue growing to $1.59 billion and Document Cloud achieving revenue of $296 million, Adobe said in a statement.

"Adobe's continued momentum is being fueled by the explosion of creativity across the globe and the widespread business transformation agenda to deliver engaging customer experiences," said CEO Shantanu Narayen. "With an innovative technology platform, exciting product roadmap and strong ecosystem of partners, we are well positioned for the second half of FY19 and beyond."

Adobe has been focusing on cloud based subscriptions to boost revenue. Its Creative Cloud software as a service offering gives users access to a range of its software, for a monthly or annual subscription. Customers prefer the cloud route instead of buying individual products and software suites for a licensee fee.

Digital Experience segment revenue rose 34% to $743 million.

Looking forward to the third quarter, Adobe expects revenues of about $2.80 billion and adjusted earnings of $1.95 per share. Analysts currently estimate earnings of $2.05 per share and revenues of $2.83 billion.

ADBE closed Tuesday's trading at $276.78, up $1.18 or 0.43% on the Nasdaq. The stock further gained $10.22 or 3.69% in the after-hours trading.

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