(Adds forecast, analysts' comments, shares, details)
By Soham Chatterjee
June 17 Adobe Systems Inc, the maker of
Photoshop and Acrobat software, reported better-than-expected
quarterly profit and revenue, helped by higher subscription
sales of its Creative Cloud and Marketing Cloud suites.
Adobe's shares rose 8.6 percent in after-hours trading.
"These results reflect Adobe is continuing to execute well
through its transition to the cloud, which continues to be a key
ingredient in the company's long-term recipe for success," FBR
Capital Markets analyst Samad Samana told Reuters.
Adobe said in March it would 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.
Adobe said it added 464,000 paid Creative Cloud subscribers
in the second quarter ended May 30, ending the quarter with 2.3
million paid subscribers.
The company said it expects to have 3.3 million subscribers
of its Creative Cloud suite at the end of fiscal 2014, up from
its earlier forecast of 3 million.
Creative Cloud suite includes Photoshop, Illustrator and
FBR Capital's Samana said Adobe's strong uptick in net new
subscriber additions indicates that customers are increasingly
seeing the value of the Creative Cloud offering, the engine of
growth for the company's digital media business.
"All key metrics were above consensus and the company's
transition to subscriptions is proceeding well ahead of plan,"
Deutsche Bank analyst Nandan Amladi told Reuters.
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
Digital media revenue rose 3 percent to $691.6 million In
the second quarter, while digital marketing revenue rose 16
percent to $330.3 million.
The company said it expects marketing cloud revenue to grow
about 20 percent this year, from a year earlier.
The company forecast an adjusted profit of 22-28 cents per
share on revenue of $975 million to $1.025 billion for the
current quarter. (r.reuters.com/zex22w)
Analysts were expecting an adjusted profit of 27 cents per
share on revenue of $1.018 billion, according to Thomson Reuters
The company's net income rose to $88.5 million, or 17 cents
per share, in the second quarter, from $76.5 million, or 15
cents per share, a year earlier.
Excluding items, the company earned 37 cents per share,
beating the average analyst estimate of 30 cents per share.
Revenue rose about 6 percent to $1.07 billion. Analysts on
average had expected $1.03 billion.
Creative annualized recurring revenue more than tripled to
The company's shares were at $73.30 in extended trading
after closing at $67.54 on the Nasdaq on Tuesday. The stock has
gained 13 percent in the year so far.
(Reporting by Soham Chatterjee in Bangalore; Editing by Maju