* Raises FY adj EPS forecast to about $1.45 from about $1.40
* First-quarter adjusted earnings $0.35/shr vs est $0.31/shr
* Revenue down 4 pct to $1 bln vs est $986 mln
* Says CTO Kevin Lynch to leave for a position at Apple
* Shares up 7 pct in aftermarket trade
By Chandni Doulatramani
March 19 Adobe Systems Inc, maker of
Photoshop and Acrobat software, raised its full-year adjusted
earnings forecast after reporting first-quarter results above
Wall Street estimates as more customers chose its
The company raised its full-year adjusted earnings forecast
to about $1.45 per share from about $1.40 per share, above
analysts' estimates of $1.41 per share.
Shares of the company, which said Chief Technology Officer
Kevin Lynch would be leaving, rose 7 percent in extended trade.
Adobe has been shifting to web-based subscription service
Creative Cloud since last year from a licensing model.
"We're seeing higher-than-expected conversion rate to the
paid model and that's a very positive sign. What that implies is
that customers are happy," Edward Jones analyst Josh Olson said.
Creative Cloud enables a customer to subscribe to the
company's Creative Suite that includes its popular design titles
such as Photoshop, Illustrator, InDesign, Flash and Dreamweaver.
"The growth is coming from attracting a whole new class of
creative professionals," Chief Executive Shantanu Narayen said
of Creative Cloud on CNBC.
Adobe said its Creative Cloud exceeded 500,000 paid
individual members and free and trial memberships exceeded 2
million, which the company said could lead to more paid
The company said it added about 153,000 net paid
subscriptions during the first quarter and that it expects to
reach 1.25 million paid subscriptions by the end of this year.
"It looks like consumers are choosing the Creative Cloud...
and that's what seems to be driving the results, driving the
stock," Macquarie Research analyst Brad Zelnick told Reuters.
Adobe backed its full-year revenue forecast of about $4.1
Lynch, who had been CTO since 2008, would be leaving
effective March 22 to take a position at Apple Inc,
Adobe told Reuters in an email.
"We will not be replacing the CTO," an Adobe spokesperson
Net income fell to $65.1 million, or 13 cents per share, in
the first quarter, from $185.2 million, or 37 cents per share, a
Excluding items, the company earned 35 cents per share.
Analysts on average expected adjusted earnings of 31 cents
per share, according to Thomson Reuters I/B/E/S.
Total revenue, however, fell 4 percent to $1 billion due to
the transition to the subscription model, but beat analysts'
expectation of $986 million.
Subscription revenue more than doubled to $224.3 million.
Adobe's revenue beat analysts' estimates for the second
A rapid adoption of subscription model tends to lower
revenue in the short term as fees are collected monthly, instead
of upfront one-time payment.
Adobe shares, which have risen about 10 percent in the last
three months, were up 7 percent at $43.45 in aftermarket
trading. They closed at $40.75 on the Nasdaq on Tuesday.