Adobe Systems Incorporated (ADBE +3.25%) announced stronger-than-expected fiscal third-quarter 2018 results on Thursday after the market closed. The creative software specialist sustained its impressive momentum with fresh revenue records and solid earnings growth as creative professionals continue to flock to its cloud-based products.

With shares up modestly on Friday as of this writing, let's dig deeper to see what drove Adobe over the past few months, as well as what investors should expect as it closes the year.

IMAGE SOURCE: ADOBE SYSTEMS.

Adobe Systems results: The raw numbers

DATA SOURCE: ADOBE SYSTEMS.
* FOR THE PERIOD ENDED AUG. 31, 2018.

What happened with Adobe Systems this quarter?

• On an adjusted (non-GAAP) basis, which excludes items like acquisition costs and stock-based compensation, net income was $859.8 million, or $1.73 per share, up 57.3% from $1.10 per share in the same year-ago period.
• By comparison, Adobe's guidance (provided in June) called for lower earnings of $1.68 per share on revenue of $2.24 billion.
• Digital media segment revenue climbed 21% year over year to $1.61 billion, including Creative revenue of $1.36 billion and Document Cloud revenue of $249 million. 
• Digital experience segment revenue grew 21% year over year to $614 million.
• Digital media annualized recurring revenue (ARR) jumped $339 million sequentially to $6.40 billion exiting the quarter, including 5.66 billion in Creative ARR and $744 million of Document Cloud ARR.
• Roughly 90% of Adobe's revenue this quarter came from recurring sources (up from 89% last quarter).
• Deferred revenue grew 23% year over year to $2.71 billion.
• Adobe generated operating cash flow of $955 million and repurchased 2.9 million shares for $714 million.
• Adobe completed its previously announced $1.68 billion acquisition of Magento Commerce and delivered the first integrated deployment of Adobe Experience Manager and Magento Commerce Cloud.

What management had to say

"Adobe delivers all the capabilities to enable transformative digital experiences, including content creation and management, predictive analytics and commerce," added Adobe CEO Shantanu Narayen. "Our record results in Q2 reflect continued execution against this significant opportunity where Adobe is the clear market leader."

Looking forward

For the current fiscal fourth quarter of 2018, Adobe is targeting total revenue (including Magento) of $2.42 billion, assuming a 22% increase in digital media segment revenue and 20% growth from the digital experience business. That should translate to GAAP earnings of $1.42 per share and adjusted earnings of $1.87 per share. For perspective -- and while we typically don't lend much credence to Wall Street's expectations -- both the top and bottom lines were slightly above consensus estimates for fiscal Q4 earnings of $1.86 per share on revenue of $2.41 billion.

All things considered, there was nothing not to love about Adobe's latest results, from its record recurring revenue streams to its healthy bottom-line growth, its generous share repurchases, and its outlook indicating more of the same strength ahead. And it should be no surprise to see the stock hitting new all-time highs in response today.