Adobe stock hits new record as investors cheer move to cloud

Adobe’s six-year transition from packaged software to the cloud has turned it into one of the hottest names in technology and lifted the stock to a record.

Shares of the software maker, known for products like Photoshop and Acrobat, climbed almost 4% on Friday to $317.94, the highest close in the company’s 23 years on the public market. Its previous high was in July.

Friday’s jump came after Adobe reported better-than-expected results for the fiscal fourth quarter. Earnings per share of $2.29 topped the average analyst estimate of $2.26, according to Refinitiv, while revenue of $2.99 billion exceeded the $2.97 billion consensus estimate.

Subscription revenue jumped 23% and now accounts for almost all of Adobe’s sales. The biggest product is its Creative Cloud, which includes photo and film editing tools as well as design software.

“We’re attracting new customers with over 50% of our cumulative subscribers being new to our Creative Cloud franchise,” CEO Shantanu Narayen told investors on the company’s earnings call late Thursday.

Like Microsoft, Adobe has transitioned from the old world of desktop and licensed software to cloud and subscriptions, where consumers can access products from a multitude of devices, paying by the month. Most legacy software companies failed to make that change, ceding market share to companies like Salesforce and Workday as well as newer businesses like Zoom and Slack.

With a market capitalization of over $150 billion, Adobe is the third most valuable U.S. business software company, behind Microsoft and Oracle.

Adobe said in its earnings report that it’s projecting fiscal 2020 revenue of $13.15 billion, which would represent 18% growth from $11.17 billion in 2019.