Imaging software giant Adobe (Nasdaq: ADBE) 
, saw a 28 percent jump in revenue and 70 percent increase in net income in its fiscal second quarter 2004, which ended June 5th. Company president and CEO Bruce R. Chizen attributed much of the growth to a strong product line.
"Continued strong demand for the Adobe Creative Suites and the Adobe Acrobat product family, combined with solid execution across our business, highlighted another exceptional quarter," he said in the earnings announcement.
Adobe's Creative Suite is composed of popular software applications, including Illustrator and Photoshop for graphic editing and design, InDesign for publishing and the Acrobat family, with tools for document distribution and management, along with a free PDF Acrobat Reader.
Adobe's Numbers
On Thursday, Adobe reported revenues of US$410.1 million compared to $320.1 million in the second quarter of 2003, and a net income of $109.4 million for the quarter compared to $64.2 million during the same period last year. This translated into earnings per share of 44 cents, beating Wall Street estimates by 2 cents per share.
Shares of Adobe closed at $44.61 yesterday, prior to the earnings announcement. In after-hours trading, shares hovered at $44.00. Its stock surged to a 52-week high of $47.36 earlier this month, in contrast to lows last year of around $30 per share.
Adobe spokesperson Katie Juran told MacNewsWorld that Adobe's leveraged operating model was the reason why the percentage rise in company's net income was nearly three times the percentage rise in revenues.
"When we drive strong revenue growth higher than we anticipate -- as we did in the second quarter, we often can achieve higher growth in earnings because expenses have a baseline that doesn't necessarily grow with the outperformance in revenue," Juran explained.
Capturing the Enterprise Market
Laurie Orlov, vice president and research director at Forrester, told MacNewsWorld that Adobe, traditionally known for its desktop applications, is in the process transitioning to the enterprise with server tools, and this will be a driver behind continued growth for the company.
"Adobe can now gain access to commercial enterprises running [enterprise-resource planning] applications like SAP (NYSE: SAP) and Oracle (Nasdaq: ORCL) with server based document-management tools," she said.
Orlov said Adobe's acquisition of Acelio, a Canadian software maker of interfaces designed for ERP applications, has given it an edge.
"Adobe can capture output from these systems -- for example invoices -- in PDF format and offer server-based collaboration tools for users," she added.
Networking Documents
In a report provided by Forrester entitled Crossing the Document-Data Divide, the networked document ultimately will not remain something accessed through a browser, but will become a digital document capable of providing the tools for editorial collaboration and regulatory compliance.
"Their server-side tools offer administrators access control, along with the traditional document review tools," Orlov explained, citing Adobe's popular Acrobat tools for adding comments and "Post-It" notes to PDF files in a workflow-review process.
Nothing But Growth
According to Jupiter Research senior analyst Joe Wilcox, today's enterprise needs functionality and ease of distribution to function properly.
"Our research shows IT managers consistently rate interoperability as their top priority, and 91 percent of Mac users and 78 percent of Windows users have an Acrobat product," he told MacNewsWorld, adding that his firm's research indicates deep penetration by the Acrobat line, including the free Acrobat Reader.
For her part, Orlov sees nothing but growth if Adobe emerges as a dominant enterprise 
player.
"Adobe has the potential for getting into enterprise-wide document management," Orlov said. "They have partnered with SAP and IBM (NYSE: IBM) and can bring enterprise ready tools for customers."
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