Adobe's (ADBE 0.68%) revenue growth rate is speeding up. In the earnings report it delivered Thursday, the software giant announced surprisingly strong sales gains to close out its fiscal year. Management issued a bullish outlook for fiscal 2022 while being careful to point out some challenges ahead.

Despite those issues, Adobe is projecting potentially phenomenal revenue growth over the next several years.

A man working on a laptop.

Image source: Getty Images.

Sales trends remain strong

Sales rose 21% to $4.11 billion in its fiscal fourth quarter, which ended Dec. 3. That result was enough to beat management's guidance. It also meant the company grew at a 23% pace for the full year compared to 2020's 15% increase.

Adobe's prime position in the global digital transformation trend was clear from its growth trends. Its software-as-a-service revenue expanded to over $12 billion on an annual basis as more customers signed up for its consumer and enterprise products. Executives credited the company's steady flow of popular innovations, like Creative Cloud and Experience Cloud software, for helping keep annual growth above 20%.

More wins on the profits side

The news was just as good further down the income statement. Cash flow hit a record $2 billion in fiscal Q4, and gross profit landed at $3.6 billion (88% of sales), compared to $3 billion a year earlier. Adobe's gross profit margin held steady, but bottom-line profitability expanded. Operating income was 37% of sales compared to 35% last year.

ADBE Operating Margin (TTM) Chart

ADBE Operating Margin (TTM) data by YCharts

Earnings dropped for the full fiscal year, but only because the company reaped a one-time tax benefit in 2020. Operating cash flow hit a record $7.23 billion over the past 12 months, equating to 48% of revenue.

"Adobe's financial performance ... was outstanding," CFO Dan Durn said in a press release, "with top-line acceleration resulting in more than $7 billion in operating cash flows."

The new outlook

Adobe's first crack at guidance for fiscal 2022 warns of a slowdown ahead. Sales will grow by about 13% to $17.9 billion, management said, compared to this past year's 23% increase. Those gains will be tempered by comparisons with fiscal 2021, when demand soared, but also by accounting issues including currency-exchange swings and the fact that its fiscal 2021 benefited from an extra selling week on the calendar. Management believes non-GAAP earnings will rise to $13.70 per share compared to $12.48 last year and $10.10 per share in fiscal 2020.

These predictions imply continued solid momentum for Adobe, although perhaps not as aggressive a growth rate as some investors would wish to see. The stock price dropped immediately following the report but remains significantly higher through 2021.

Adobe promised to offer shareholders more detail about its long-term targets in an upcoming conference call and meeting with Wall Street analysts. But the company did say that it believes its total addressable market will expand over the next few years. Adobe has a shot at capturing a big piece of a market that will be worth more than $200 billion by 2024, management said.

Gaining an edge in that race will be tough -- the market for consumer and enterprise service software is crowded. But Adobe has a leg up thanks to its massive customer base and its annual recurring revenue of more than $12 billion. Those advantages should serve it well in fiscal 2022 as it takes another big step toward its longer-term goal of $20 billion in annual sales.