Adobe reported a better-than-expected second quarter as the company expanded its customer base due to generative AI features.

The company reported second-quarter earnings of $3.49 a share on revenue of $5.31 billion, up 10% from a year ago. Non-GAAP earnings in the quarter were $4.48 a share.

Wall Street was expecting Adobe to deliver second quarter earnings of $4.39 a share on revenue of $5.29 billion.

Going into the earnings report, Wall Street was most concerned about Adobe's ability to monetize generative AI. Those concerns appeared following Adobe's first quarter report and was only magnified as enterprise software vendors disappointed investors.

Adobe CEO Shantanu Narayen said the company's "highly differentiated approach to AI and innovative product delivery" is delivering value to current customers and attracting new ones.

The company's Digital Media revenue was $3.91 billion, up 11% from a year ago. Most of that was Creative Cloud revenue, but Document Cloud delivered 19% revenue growth compared to a year ago.

Digital Experience revenue was $1.33 billion, up 9% from a year ago.

In prepared remarks, Narayen said:

"In Creative Cloud, we have invested in training our Firefly family of creative generative AI models with a proprietary data set and delivering AI functionality within our flagship products including Photoshop, Illustrator, Lightroom and Premiere."

He added that Firefly has been used to generate more than nine billion images.

As for Document Cloud, Narayen said Acrobat AI Assistant is now available as an add-on subscription for Reader and Acrobat enterprise customers.

Adobe raised its guidance with third quarter revenue of $5.33 billion to $5.38 billion with non-GAAP earnings of $4.50 a share to $4.55 a share. For fiscal 2024, Adobe projected $21.4 billion to $21.5 billion with non-GAAP earnings of $18 a share to $18.20 a share.

Other key points:

  • Adobe is extending its applications to integrate third-party multi-modal LLMs.
  • The company is seeing early success monetizing AI across its Digital Media and Digital Experience platforms.
  • Adobe is seeing strong usage and demand for AI across all customer segments.
  • The company said it was seeing new demand for Creative Cloud apps powered by new releases and digital channels.