Adobe (NASDAQ: ADBE) reported record financial results for the third quarter of fiscal 2024, ending on August 30. The company posted a revenue of $5.41 billion, reflecting 11% year-over-year growth. The record $504 million in net new Digital Media Annualized Recurring Revenue (ARR) played a significant role in this performance, while the company’s Remaining Performance Obligations (RPO) surpassed $18 billion, increasing 15% year-over-year.

Shantanu Narayen, CEO of Adobe, highlighted the company’s commitment to innovation, particularly in artificial intelligence (AI), as a driver behind the growth of key platforms like Creative Cloud, Document Cloud, and Experience Cloud. Dan Durn, CFO, pointed to Adobe’s ability to balance growth and profitability, with the company delivering over $2 billion in operating cash flows this quarter.

Financial Summary:

• Revenue — $5.41 billion (+11% YoY)
• Digital Media ARR — $504 million net new, exiting at $16.76 billion
• GAAP diluted EPS — $3.76, Non-GAAP EPS: $4.65
• Operating cash flows — $2.02 billion
• RPO — $18.14 billion (+15% YoY)
• Share repurchase — 5.2 million shares in Q3

Segment growth across Digital Media and Digital Experience:

• Digital Media revenue — $4.00 billion (+11% YoY)
• Creative Cloud revenue — $3.19 billion (+10% YoY)
• Document Cloud revenue — $807 million (+18% YoY)
• Digital Experience revenue — $1.35 billion (+10% YoY)

INSIDER TAKE

While Adobe’s Q3 results set new records, the stock has seen a downturn of 8.5% due to the company’s cautious Q4 guidance, which reflects expectations of slower growth amid macroeconomic challenges. Analysts remain optimistic about Adobe’s long-term trajectory, with revenue projected to grow 10% annually over the next three years, but the reduced near-term forecast may dampen investor sentiment in the short run.