What Drove Adobe’s Revenue in the Second Quarter?

Digital Media revenue

Adobe’s (ADBE) revenue rose 25.0% YoY (year-over-year) to $2.74 billion in the second quarter of fiscal 2019. Its Digital Media segment’s revenue was $1.89 billion, accounting for 69.0% of its total sales and reflecting a rise of 22.7% YoY.

Adobe’s management believes that the company’s solutions have become the standard for creating and managing digital experiences. Millions of customers depend on Photoshop and PDFs for personal and professional use. Global enterprises are also leveraging Adobe’s solutions to transform their businesses.

Adobe continues to create large addressable markets, especially in the document and customer experience management categories.

Adobe is gaining traction in mobile

During its second-quarter earnings call, Adobe’s management stated that user growth had increased due to its creative cloud applications on mobile devices coupled with its international expansion.

Adobe CEO Shantanu Narayen stated, “Mobile is a tailwind in our Digital Media business and we’re driving significant increases in mobile traffic and member sign-ups for our offerings.”

Adobe’s Creative Cloud offerings can now be used by students, YouTubers, designers, and marketers. Its Adobe Spark offering helps turn ideas into compelling stories easily and is gaining traction among creators at the student and enterprise level. Spark’s mobile traffic has more than doubled, according to Adobe.

Adobe Sign is also quickly becoming popular. Its customer base includes Merck, Hitachi, and Iowa State University. Adobe Sign is the company’s cloud-based electronic signature solution.

Adobe’s focus on expanding its subscription business has meant a higher proportion of recurring revenue. Its new Digital Media ARR (annual recurring revenue) was $406 million, while its total Digital Media ARR rose to $7.47 billion in the second quarter. Its Document Cloud ARR was $921 million, while its Creative ARR rose by $341 million in the quarter.