$Adobe (ADBE.US)$ reported financial results for its third quarter fiscal year 2024 ended Aug. 30, 2024. In the third quarter, Adobe's revenue exceeded expectations, achieving a year-over-year increase of 11% and setting a new record for the highest revenue in a single quarter. The key performance indicator for its core business, Annual Recurring Revenue (ARR), unexpectedly rose by 8.6%. However, the revenue guidance for the fourth quarter indicates a maximum increase of nearly 10%, which is slower than expected, and the ARR guidance is projected to decrease by 3.3%, more than double the decline anticipated by analysts.
Third Quarter Fiscal Year 2024 Financial Highlights
• Adobe achieved revenue of $5.41 billion in its third quarter of fiscal year 2024, which represents 11 percent year-over-year growth as reported and in constant currency. Diluted earnings per share was $3.76 on a GAAP basis and $4.65 on a non-GAAP basis.
• GAAP operating income in the third quarter was $1.99 billion and non-GAAP operating income was $2.52 billion. GAAP net income was $1.68 billion and non-GAAP net income was $2.08 billion.
• Cash flows from operations were $2.02 billion.
• The remaining performance obligations (“RPO”) that exited the quarter were $18.14 billion.
• Adobe repurchased approximately 5.2 million shares during the quarter.
Third Quarter Fiscal Year 2024 Business Segment Highlights
• Digital Media segment revenue was $4.00 billion, representing 11 percent year-over-year growth or 12 percent in constant currency. Document Cloud revenue was $807 million, representing 18 percent year-over-year growth as reported and in constant currency. Creative revenue grew to $3.19 billion, representing 10 percent year-over-year growth or 11 percent in constant currency.
• Net new Digital Media Annualized Recurring Revenue (“ARR”) was $504 million, exiting the quarter with Digital Media ARR of $16.76 billion. Document Cloud ARR grew to $3.31 billion and Creative ARR grew to $13.45 billion.
• Digital Experience segment revenue was $1.35 billion, representing 10 percent year-over-year growth as reported and in constant currency. Digital Experience subscription revenue was $1.23 billion, representing 12 percent year-over-year growth as reported and in constant currency.
Financial Targets
Adobe is providing fourth-quarter targets that factor in current macroeconomic conditions and year-end seasonal strength.
The following table summarizes Adobe’s fourth-quarter fiscal year 2024 targets:
