Adobe CEO Weighs In On Second-Quarter Numbers And Stock Buybacks

Adobe Systems Incorporated ADBE reported better than expected second-quarter earnings earlier on Wednesday. The company declared EPS of $0.48 on revenue of $1.16 billion, slightly better than analysts’ estimate of EPS of $0.45 on revenue of $1.16 billion. The company also recently launched a new stock photo service and unveiled its 2015 version of Creative Cloud tools and services.

Shantanu Narayen, Adobe Systems CEO, was on CNBC following the earnings release to weigh in on the numbers and to discuss the company’s stock buyback and acquisition plans.

‘The Company Is Executing’

"I think it was a really strong quarter," Narayen began. “We had a tremendous migration of people who use the old Creative Suite to Creative cloud. We are attracting brand new set of customers; over 20 percent of the customers who are now on Creative Cloud are first-time users of Adobe and we are early in the transition.

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"So, it was a strong quarter…over 630,000 subscribers and the underlying health of the business, which is reflected in our recurring revenue, has also never been stronger. Seventy-two (72) percent of the revenue that we reported is now recurring, up from 5 percent a few years ago. So, the company is executing."

Buybacks And Acquisitions

On the company’s $200 million stock buyback and plans for acquisitions, Narayen said, "We had a very strong quarter in terms of operating cash flow. Operating cash flow was over $470 million, which I think just reflects the underlying health of the business. And we have always returned money to shareholders by buying back stock.

"The board of directors authorized a new multi-billion dollar buyback, and so, we are executing against it. And in terms of our ability to do acquisitions whether it’s through cash or stock, we feel good about what we are able to do if we find the right company," Narayen concluded.