Last Thursday Adobe (NASDAQ: ADBE) reported its first quarter fiscal year 2017 results for the period ended March 3, 2017, achieving record results for revenue, profit and cash flow. Motley Fool calls the quarter Adobe’s “best-ever.” Quarterly revenue was $1.68 billion, an increase of $298.3 million year-over-year. Subscription revenue for the first quarter was $1.38 billion, an increase of $313.6 million year-over-year.

Other financial highlights for Q1 of fiscal year 2017 include:

• Digital Media segment revenue was $1.14 billion.
• Digital Media Annualized Recurring Revenue (ARR) was $4.25 billion, an increase of $265 million over the previous quarter.
• Creative revenue was $942 million.
• Adobe Marketing Cloud had record revenue of $477 million, growth of 26 percent year-over-year.
• Document Cloud revenue was $196 million, and Document Cloud ARR was $493 million.
• 85 percent of revenue was from recurring sources, with 82.3 percent from subscriptions.
• Net income (GAAP) was $398.4 million, compared to $254.3 million year-over-year.
• Diluted net income was $0.80 per share (GAAP), compared to $0.50 per share year-over-year.
• Cash flow from operations was $730 million.
• The company repurchased approximately 2.2 million shares during Q1, returning $238 million in cash to stockholders.

“Adobe achieved record revenue, profit and cash flow in Q1,” said Mark Garrett, Adobe executive vice president and CFO, in a March 16 press release. “Our solid execution and business momentum combined with strong market tailwinds give us confidence in our ability to continue to deliver strong financial results. We remain bullish about our prospects for the rest of 2017 and beyond.”

In Adobe’s earnings call, president and CEO Shantanu Narayen also commented on the successful quarter.

“We continue to execute well against our strategy and are driving momentum across our entire business. Digital transformation has created a tailwind for Adobe among a diverse spectrum of customers in a broad number of industries – from students to designers to the public sector and the world’s largest brands,” Narayen said.

“At Adobe, we have always known that a great customer experience is the differentiator that separates market leaders from the pack. At the center of every great experience are customer intelligence and amazing design – and these are Adobe’s core competencies. Our mission to help our customers design and deliver great experiences has never been more relevant as is reflected in our outstanding Q1 results,” the CEO added.

For the second quarter of fiscal year 2017, the company projects revenue of approximately $1.73 billion, including $290 million of net new Digital Media ARR. They are targeting GAAP earnings per share of $0.66.

Predictably, investors reacted favorably to Adobe’s first quarter financials, closing at $122.35 on March 16, 2017, the day the earnings report was released. As of 7:17 PM EDT yesterday, stock was valued at $126.21 per share. This is significantly higher than where Adobe stock sat this time last year – $92.16 per share on March 23, 2016.

Insider Take:

In 2011, Adobe announced that it would transition away from traditional software licenses to a subscription-based model. With recurring revenue now at 85 percent of Adobe’s total revenue, the transition is almost complete, and with record revenues in the first quarter of fiscal 2017, Adobe continues to have success with its new model.