Adobe Profit Tops Estimates as Web-Software Sales Jump
Adobe Systems Inc. (ADBE) reported fiscal first-quarter sales and profit that exceeded analysts’ estimates as more customers flocked to online versions of the company’s graphic-design software.
Sales for the period that ended March 1 were $1.01 billion, San Jose, California-based Adobe said in a statement today. That topped the average $985.8 million projection, according to analysts’ estimates compiled by Bloomberg. Profit excluding some items was 35 cents a share, beating a prediction for 31 cents.
Chief Executive Officer Shantanu Narayen is pushing to sell more products over the Web and on mobile devices such as tablets to cut Adobe’s reliance on software that’s installed and stored on computers. Adobe added 153,000 subscribers to its Creative Cloud tools -- including Photoshop, Dreamweaver and Illustrator -- during the first quarter.
“They’re making this migration even faster than expected,” said Brendan Barnicle, an analyst at Pacific Crest Securities LLC. He rates the shares sector perform, the equivalent of hold. “They’re adjusting their revenues to a subscriptions basis and they still well exceeded expectations.”
Shares of Adobe jumped as much as 7.2 percent in extended trading after declining less than 1 percent to $40.75 at the close in New York. The stock has gained 8.1 percent so far this year.
Kevin Lynch, Adobe’s chief technology officer, resigned this week to take a job at Apple Inc. (AAPL), Adobe said. The CTO position won’t be filled, and Bryan Lamkin will assume responsibilities for cross-company research and technology initiatives, Adobe said.
Steve Dowling, a spokesman for Apple, didn’t immediately respond to a request for comment.
First-quarter net income fell 65 percent to $65.1 million, or 13 cents a share, from $185.2 million, or 37 cents, a year earlier.
For the current quarter, which ends in May, Adobe forecast revenue of $975 million to $1.03 billion, compared with analysts’ average estimate for $1.02 billion. Profit, excluding stock-based compensation, restructuring, amortization and other items, will be 29 cents to 35 cents a share in the current period, Adobe said. Analysts are projecting 34 cents a share.
Narayen has also been moving Adobe further into software for online marketing. A revised version of Adobe’s Marketing Cloud software, to go on sale in the coming months, will include touch-screen capabilities for use on tablets and digital “cards” that can embed charts or snippets of advertising campaigns for sharing between co-workers. There are now more than 500,000 Creative Cloud subscribers, Adobe said.
“The majority of the subscriber base will come from existing customers,” Adobe Chief Financial Officer Mark Garrett said on a conference call.
Adobe is driving sales of Creative Cloud and will eventually tailor pricing to keep customer subscriptions, according to Peter Goldmacher, an analyst at Cowen & Co.
“The speed of the transition is the paramount thing on investors’ minds,” said Steven Ashley, an analyst at Robert W. Baird & Co. Ashley, who is based in Milwaukee, has a neutral rating for Adobe shares. “We all know this is the transition year.”
Sales for the current fiscal year will be about $4.1 billion, Adobe said, reiterating its previous outlook. The company raised its forecast for full-year profit, excluding items, to $1.45 a share from $1.40.
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