Magento Commerce, which Adobe Inc. acquired last year for $1.68 billion, is producing good a return on investment, Adobe executives said last week.
“Through integration with Magento Commerce, we are making every experience shoppable,” CEO Shantanu Narayen said a conference call with stock analysts, according to a transcript from Seeking Alpha. “This has led to strong performance of our integrated content and commerce offering” in Adobe’s Experience Cloud software suite, which includes the Magento-based Adobe Commerce Cloud.
For the fiscal third quarter ended Aug. 30, revenue from Adobe’s Experience Cloud software, which includes marketing and analytics technology as well as ecommerce, increased 34% year over year to $821 million, as total revenue increased 24% to $2.83 billion, Adobe said.
A sharp increase in Magento bookings
Moreover, Adobe reported an increase of more than 40% in third-quarter customer bookings of Magento Commerce.
Not all of Adobe’s digital technology applications, however, were performing as well as the company had expected, executives said.
Products gained from Adobe’s $4.75 billion 2018 acquisition of Marketo aren’t growing as fast as anticipated, they said. Adobe plans to invest more money to boost sales in the unit, according to prepared remarks from John Murphy, chief financial officer.
Murphy said Adobe also has had challenges generating bookings for its Analytics Cloud, which sits atop a new Experience Platform meant to connect clients’ data. The company believes the ongoing global introduction of the software platform will lift revenue, he said.
Adobe gave a revenue forecast for the current period that fell short of Wall Street estimates, signaling slower sales growth for its newer marketing products.
Revenue will be about $2.97 billion in the period ending in November, the San Jose, California-based company said Tuesday in a statement. Analysts projected $3.02 billion, according to data compiled by Bloomberg.
Competing against Salesforce, Oracle
Narayen has made several acquisitions in the past two years for marketing and e-commerce products to boost revenue, which has climbed at least 20% each quarter since 2015. While the company has put more emphasis on corporate applications to compete with rivals Salesforce.com Inc. and Oracle Corp., it also recently unveiled new augmented reality and 3D-imaging technology to maintain its advantage as the leader in creative software such as its flagship product, Photoshop.
Adobe’s shares declined about 3% in extended trading after closing at $284.69 in New York on Sept. 17, following the company’s Q3 report. The stock has climbed 26% this year after a 29% gain in 2018.
Profit, excluding some items, will be $2.25 per share in current quarter, the company said. Analysts estimated $2.30 a share.
Sales in the creative cloud division, which includes Photoshop, jumped 22% to $1.96 billion in the quarter and are projected to increase 20% in the current period.
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