Adobe (NASDAQ:ADBE) has been on a tear over the past several years. After making the switch from packaged software to a software-as-a-service (SaaS) model, the company got its footing, and the stock has tripled since 2015. It's up 80% in the past year alone on the heels of a strong first quarter, while also hitting an all-time high earlier this week -- so expectations were high.

Going into its second quarter financial release, investors were looking to see if Adobe could continue its impressive growth on the back of a record year in 2017. The company's growth continued at a torrid pace, topping analysts' expectations for the eighth consecutive quarter. Unfortunately, it guided for growth that was somewhat slower than investors have become accustomed to, putting pressure on the shares.

Adobe's San Jose Headquarter's building.

Image source: Adobe.

Adobe results: The raw numbers

Metric

Q2 2018

Q2 2017

Year-Over-Year Change

Revenue

$2.195 billion

$1.772 billion

24%

Operating income

$698 million

$504 million

38%

Diluted earnings per share

$1.33

$0.75

77%

Data source: Adobe Second-Quarter 2019 Financial Release. Chart by author.

What happened with Adobe this quarter?

For the just-completed quarter, Adobe generated record revenue of $2.2 billion, up 24% year over year, exceeding analysts' consensus estimates of $2.16 billion and its own forecast of $2.15 billion. The company reported adjusted earnings per share of $1.66, up 63% compared to the prior-year quarter and surpassing analysts' estimates for adjusted earnings per share of $1.54.

The growth was broad-based, with record sales in the digital media segment hitting $1.55 billion, up 28% year over year, while the digital experience segment grew 18% compared to the prior-year quarter. Both beat Adobe's guidance for increases of 25% and 15%, respectively.

Within the digital media segment, revenue from the creative business grew to a record $1.3 billion, with strong subscription growth in its various user segments and geographic markets. The company also saw stable or increasing average revenue per user across all of its key offerings.

Annualized recurring revenue (ARR) in the digital media segment grew to $6.06 billion, up $343 billion during the quarter, and 89% of the company's revenue during the quarter was from recurring sources.

The company's document cloud also achieved record revenue of $243 million, up 22% year over year driven by demand for Acrobat subscriptions. The digital experiences business also realized record revenue of $586 million up 18% compared to the prior-year quarter, while subscription revenue grew 24% year over year.

Late last month, Adobe revealed that it acquired Magento Commerce, which I described at the time as "the biggest e-commerce company you've never heard of." On the conference call, Adobe's CEO Shantanu Narayen said the acquisition made them "the only company with leadership in content creation, marketing, advertising, analytics and now commerce."

Reflecting on the quarter, Adobe's CFO John Murphy said, "Adobe delivered record revenue with strong earnings and cash flow, and we expect our momentum to continue into the second half of fiscal 2018."

Looking ahead

For the upcoming third quarter, Adobe expects revenue of about $2.24 billion, which would represent a 21.7% gain year over year. The company expects revenue in the digital media segment to jump 25% and the digital experience segment to increase 15%, both compared to the prior-year quarter. The company expects GAAP earnings per share of $1.27 and adjusted profits of $1.68 per share.

Investors didn't seem pleased that the Adobe's guidance was several percentage points lower than its recent growth, but it's also important to point out that the numbers were consistent with the forecast the company gave for the current quarter. It seems like Adobe was being conservative, and with eight consecutive quarters of exceeding expectations, I don't see any reason to panic.

Danny Vena owns shares of Adobe Systems. The Motley Fool owns shares of and recommends Adobe Systems. The Motley Fool has a disclosure policy.