* Forecasts 2nd-qtr adjusted profit $0.26-$0.32/share vs
* Forecasts 2nd-qtr revenue $1 bln-$1.05 bln vs est. $990.4
* First-quarter adjusted profit $0.30/share vs est. $0.25
* Shares rise 1 pct after the bell
By Soham Chatterjee
March 18 Adobe Systems Inc, the maker
of Photoshop and Acrobat software, forecast current-quarter
profit and revenue above analysts' estimates, citing strong
demand for its Creative Cloud suite and digital marketing
Shares of the company, which also posted
better-than-expected results for the first quarter ended Feb.
28, rose 1 percent in extended trading.
The company net added 405,000 paid users for its Creative
Cloud suite, which includes Photoshop, Illustrator and Flash
software, taking its total user base to 1.84 million as of Feb.
"We are making good progress migrating individual, team and
enterprise customers to Creative Cloud ... retention and renewal
rates after promotions expire continue to track ahead of our
internal projections," Chief Executive Shantanu Narayen said on
a conference call with analysts.
R.W. Baird analyst Steve Ashley said Adobe's results were
"solid through and through" and the company's user additions and
annualized recurring revenue (ARR) were better than expected.
Macquarie Securities analyst Brad Zelnick said the results
showed that Adobe's subscription-based growth strategy was
Adobe said it would soon phase out the traditional box
license versions of its Creative Suite 6 and offer the software
only on a web-based subscription model.
Subscription models bring in less money upfront, but they
usually ensure more predictable recurring revenue.
Revenue from the company's digital marketing software unit
rose 17 percent in the first quarter as revenue from Adobe
Marketing Cloud software rose by about a quarter.
The company offers Creative Cloud and document services
under its digital media unit, while its digital marketing unit
offers marketing analytics tools, document management and web
Adobe said ARR from Creative Cloud rose to $987 million in
the quarter from $237 million a year earlier.
The company said this was the first time that it received
more than half of its total revenue from recurring sources such
as Creative Cloud subscriptions and digital marketing software.
Adobe counts General Motors Co, Walt Disney Co
and Electronic Arts Inc as customers and its
Adobe Primetime software was used by NBC Sports to stream Sochi
Olympics coverage to desktops and other mobile devices.
Adobe forecast adjusted profit of 26-32 cents per share and
revenue of $1 billion-$1.05 billion for the second quarter
ending May 31.
Analysts on average were expecting a profit of 26 cents per
share on revenue of $990.4 million, according to Thomson Reuters
Adobe said it expected to meet or exceed its 2014 earnings
and revenue forecast.
Net income fell to $47 million, or 9 cents per share, in the
first quarter from $65.1 million, or 13 cents per share, a year
Excluding items, the company earned 30 cents per share.
Analyst on average had expected 25 cents per share.
Revenue fell about 1 percent to $1 billion, but came above
the average analyst estimate of $973.1 million.
The results were inadvertently released on Adobe's website
ahead of the expected announcement after the bell on Tuesday and
confirmed by the company later.
Adobe's shares closed 0.5 percent higher at $68.52 on the
Nasdaq on Tuesday. The stock has gained about 20 percent in the
three months to Tuesday's close.