Earlier this week Adobe (Nasdaq: ADBE) reported its quarterly results that outpaced market expectations. But a weak outlook failed to impress the market and its stock fell 3% post result announcement.

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Adobe’s Financials

For the third quarter of the year, Adobe’s revenues grew 23.7% to a record $2.83 billion, ahead of the market’s projections of $2.81 billion. Adjusted EPS of $1.61 was also significantly ahead of the Street’s forecast of $1.42. The robust performance was attributed to the strength of Adobe Creative Cloud, Document Cloud, and Experience Cloud.

For the quarter, Adobe’s Subscription revenues grew 26% to $2.55 billion and Product revenues grew 5.5% to $157.3 million. Services & support revenues grew 8% to $130.2 million.

By segment, Digital Media grew 22% to $1.96 billion and Digital Experience revenues grew 34% to $821 million. Within the Digital Media segment, Creative Cloud grew 22% over the year to $1.65 billion with Creative ARR coming in at $6.87 billion. Adobe saw significant growth in Lightroom, which reported a 130% growth in its monthly active user base. Document Cloud’s revenues climbed 16% to $307 million. Within Digital Experience, Adobe Experience Cloud subscriptions grew 37% to $679 million.

Despite the strong performance in the reported quarter, Adobe failed to deliver a stronger outlook. For the fourth quarter of the year it forecast revenues of $2.97 billion with an EPS of $2.25, which was lower than the market’s estimate of revenues of $3.02 billion with an EPS of $2.97. Adobe attributed the weak outlook to slow growth in the mid-market segment for its subscription bookings growth for Marketo and delays in Analytics Cloud subscription and consulting services bookings associated with the launch of the Adobe Experience Platform. Adobe is increasing its focus and investment on demand generation and inside sales to rectify the issue.

Adobe’s Product Innovation

Adobe continues to improve its product offering across its key segments to expand market base. Within the Document Cloud, Adobe saw more than 2.5 billion PDFs accessed in Adobe Reader on mobile devices. Adobe Scan has now become the leading document scanning app for both iOS and Android devices with more than 35 million installs. Recently, Adobe launched a new web-based services that offers instant access to Adobe PDF creation and compression capabilities from any browser. These services are not only useful for individuals wanting to access documents, but also to developers wanting to build a high quality PDF document support into their web applications.

Adobe is also seeing stronger adoption of Adobe Sign, its cloud-based electronic signature solution, across businesses. During the quarter, it introduced Adobe Sign for Small Business, which is another electronic signature solution focused on providing small and mid-market businesses with enterprise-level e-signature capabilities.

It is also pushing on the mobile initiative. Adobe wants mobile devices to be used not only for consumption, but also for creation of documents. The recently launched Adobe Fresco is a mode of achieving this vision. Adobe Fresco is a digital drawing and painting application. The application will be launched for the iPads later this fall. The application will help illustrators and artists by allowing them to use various tools such as vector and raster brushes and different media such as digital watercolors and oils to illustrate their ideas. Users will also get access to a library of Photoshop images and celebrated master artists as part of the service.

Adobe’s moves to enhance its offerings is not doing much to impress investors. The market is particularly worried about Adobe’s Experience cloud division which includes marketing, analytics, and e-commerce tools where sales are projected to grow 23% this quarter compared with a 34% growth delivered in the previous one. Analysts are worried that Adobe’s Marketo acquisition is not delivering as fast as the company had expected. Adobe had acquired Marketo nearly a year ago for an estimated $4.75 billion.

Its stock is currently trading at $279.72 with a market capitalization of $135.8 billion. It touched a year high of $313.11 in July this year. It was trading at year low of $204.95 in December last year, when most technology stocks had fallen.