Adobe reports a strong Q2 and issues upbeat guidance

Adobe Inc (NASDAQ: ADBE) is rallying in extended hours on Thursday after reporting market-beating financial results for its second quarter.

Adobe stock rallies on upbeat guidance

Investors are rewarding the stock also because the management issued encouraging guidance for the future. $ADBE now forecasts its revenue to fall between $5.33 billion and $5.38 billion on up to $4.55 a share of adjusted earnings in Q3.

Analysts, in comparison, were at $5.4 billion and $4.48 per share. Dan Durn – the chief financial officer of Adobe Inc said in a press release today:

The Nasdaq-listed firm ended its recent quarter with $17.86 billion of remaining performance obligations – up 17% versus last year. Adobe stock is still down some 20% versus its year-to-date high.

Notable figures in Adobe Q2 earnings release

• Earned $1.57 billion versus the year-ago $1.29 billion
• Per-share earnings also declined from $2.83 to $3.50
• Adjusted EPS printed at $4.48 as per the earnings report
• Revenue jumped 10% year-over-year to a record $5.31 billion
• Consensus was $4.39 a share on $5.29 billion in revenue

Adobe noted a 9.0% and 11% annualised growth in its digital experience and digital media segments revenues, respectively, in the second quarter. According to CEO Shantanu Narayen:

ADBE shares lack upside from here

Adobe Inc repurchased about 4.6 million of its shares in the second quarter that concluded with $1.94 billion of cash flow from operations.

Last month, HSBC analyst Stephen Bersey reiterated his "hold" rating on ADBE shares His $511 price target is roughly in line with where the stock is trading at writing. Bersey hardly sees any upside in Adobe as AI could actually be a negative for it.

Note that Adobe stock does not currently pay a dividend either.