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Unsurprisingly, Adobe (NASDAQ: ADBE) continued to outpace market expectations. Adobe has had a strong run this year. Its stock has climbed more than 50% since the start of the year. But analysts suspect that it may be time for a slowdown. After the recent result announcement, the stock fell because its forecast was in line but not higher than market expectations.

Adobe’s Financials

Adobe’s third quarter revenues grew 26% over the year to $1.84 billion, ahead of the market’s projections of $1.82 billion. EPS of $1.10 was also ahead of the Street’s estimated $1.01 per share for the quarter.

By segment, revenues from subscription services grew 34% over the year to $1.57 billion. Product revenues fell 13% to $159 million and Services and Support revenues declined 2% to $111.8 million.

During the quarter, revenues from Adobe’s digital media business, which includes Creative Cloud, increased 28.3% percent to $1.27 billion, ahead of the Street’s estimates of $1.25 billion. Among other metrics, Digital Media Annualized Recurring Revenue grew to $4.87 billion exiting the quarter. Adobe Experience Cloud recorded revenue of $508 million, accounting for a 26% growth over the year.

For the current quarter, Adobe expects revenue of $1.95 billion, in line with market expectations. It forecast an EPS of $1.15 for the quarter, which was ahead of the market expectations of $1.10.

Adobe’s Expansion

Adobe continued to expand its offerings through partnerships and new product upgrades. Earlier this quarter, it announced the expansion of its strategic tie-up with Microsoft. Together, the companies will build solutions to help organizations improve their customer experience by leveraging the capabilities of Adobe Experience Cloud, Microsoft Azure, and Microsoft Dynamics.

The alliance will help improve workforce productivity and drive more efficient business processes. For instance, Adobe Sign will now become Microsoft’s preferred e-signature solution across the company’s portfolio. Similarly, the new chat-based workspace in Microsoft Office 365, will now become the preferred collaboration service for Adobe Creative Cloud, Document Cloud, and Experience Cloud. Additionally, Adobe will also make Microsoft Azure its preferred cloud platform for Adobe Sign.

Among product upgrades, Adobe recently released new email innovations for brand marketing management. It is integrating artificial intelligence and machine learning capabilities in the service through Adobe Sensei. Sensei now powers Adobe Campaign’s predictive capabilities and helps predict the best images for emails and predict customer churn. The improved capabilities also include a dynamic reporting capability that presents actionable and visualized data in real-time to improve reaction time. It is also helping marketers scale their campaigns across the globe with an integration between Adobe Campaign and Adobe Experience Manager so that email marketers can now author and translate emails directly.

Finally, Adobe is also growing its market reach by offering its services in web connected vehicles. Recently, it announced plans to provide new auto-focused analytics, personalization, and advertising capacities for Adobe Experience Cloud. It is allowing marketers to use Sensei, analytics, and market capacities to assess data from web-connected vehicles so that marketers can personalize audio as well as in-car screen ads based on behavioral patterns of car drivers.

This is an interesting move for Adobe as it extends its reach to a new market and will open up additional opportunities for the company. Marketers will be able to carry highly specific location-based promotions and deliver targeted messages based on the location of the vehicle.

Its stock is currently trading at $156.60 with a market capitalization of $77.3 billion. It touched a 52-week high of $157.89 earlier this week. It has been growing steadily from the 52-week low of $98.00 it had fallen to in November last year.

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