Grizzle has been an ardent bull on Adobe (NASDAQ: ADBE). During the market pullback in December 2018, we pounded the table hard for investors to back the truck up. We don’t mess around with a company that churns out a billion in free cash flow quarterly, it’s a next level franchise that grows north of 20% annually.

Very rarely do blue-chip tech franchises like Adobe go on sale, investors have been handsomely rewarded since — the stock is up +40% from it’s December lows and up nearly 5% in trading today.

Adobe Share Price – 5 Year

Source: Yahoo Finance

We nailed big tech in 2018 and we’ve crushed it again in 2019 — Adobe and Visa being the standout calls.

Adobe Q2 2019 Earnings Review

Adobe notched Q2 revenue of $2.74B, representing growth of +25% year-over-year, beating street estimates by 1.4%.

Digital Media (Adobe’s core business) which includes Creative Cloud (e.g. Photoshop and Premiere) and Document Cloud (Acrobat – i.e. PDF) had a strong quarter with revenue of $1.89B growing 22% year-over-year.

On the conference call CEO Shantanu Narayen characterized the structural opportunity for the Digital Media division perfectly:

This is the golden age of creativity and our vision for Creative Cloud is to be the creative platform for all. Whether your a student, an experience designer, a You Tuber, or a marketer, storytelling is central to the way you communicate and connect.Shantanu Narayen, Adobe CEO

Amen to that, this has been Grizzle’s underlying long-term thesis and why we believe Adobe is dominantly positioned in an era of creative supremacy.

Their second largest division Digital Experience continues to be a core driver of incremental sales growth for the company with revenues up 34% year-over-year to $784M. Digital Experience is a suite of products that serves many companies’ growing needs for marketing, analytics and advertising.

Adjusted net income for the quarter stood at $901M, and non-GAAP EPS came in at $1.83/share, up +10.2% y/y and 3% ahead of analyst estimates.

Q3 2019 Earnings Outlook

The company is guiding to $2.8B for revenue in Q3, effectively in-line with analyst estimates. Adobe anticipates continued strong revenue growth from both Digital Media and Digital Experience segments, at +20% y/y and +34% y/y respectively.

Adobe estimates that non-GAAP earnings per share for Q3 will be $1.95/share — representing a +12.7% increase YoY, however, it is 5% shy of average analyst estimates of $2.05.

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