Adobe’s stock gains from solid quarterly results

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Adobe Inc.’s (NASDAQ: ADBE) stock was up 4.5% in afternoon trade on Friday after the company reported solid fourth-quarter 2019 results a day earlier. The company beat estimates with a 21% increase in revenue and a 25% growth in adjusted EPS.

The growth in topline numbers was driven by double-digit increases in the Digital Media and Digital Experience segments. Digital Media results were fueled by growth in Creative and Document Cloud. Adobe is investing in multiple new growth drivers, and believes the total addressable market for Creative Cloud will reach approx. $31 billion by 2022.

Adobe reports Q4 2019 earnings results

The growth in Document
Cloud is being driven by new customer acquisition, migration from Acrobat
perpetual licenses to subscriptions, and the monetization of an ever-increasing
universe of Document Cloud mobile app users. Adobe estimates the
total addressable market for Document Cloud will grow to approx. $13 billion by
2022.

On its quarterly conference call, the company said it is rapidly evolving its Customer Experience Management (CXM) product strategy to deliver generational technology platforms, launch innovative new services and introduce enhancements to its market-leading applications.

Also read: Adobe Q4 2019 Earnings Conference Call Transcript

Within the Digital Experience division, Adobe saw a 31%
growth in subscription revenue. The company also saw strong year-over-year growth
in its Content & Commerce solutions led by Adobe Experience Manager.

For the first quarter of 2020, the company expects total
revenue of about $3.04 billion, GAAP EPS of $1.76, and adjusted EPS of $2.23. For
fiscal 2020, total revenue is projected to be about $13.15 billion. GAAP EPS is
expected to be about $7.40 per share, and adjusted EPS is estimated to be $9.75.

Following the results announcement, a number of analyst firms have increased their price targets for Adobe’s stock.

Listen to on-demand earnings calls and hear how management responds to analysts’ questions