Adobe Advances as Revenue, Profit Top Analysts’ Estimates
Adobe Systems Inc. (ADBE) shares climbed the most in one year after the software company reported fiscal fourth-quarter sales and profit that topped analysts’ estimates as customers embraced its flagship Creative Suite.
Profit excluding some items for the period, which ended in November, was 61 cents a share on sales of $1.15 billion, the San Jose, California-based company said yesterday in a statement. Analysts on average had projected profit of 56 cents a share on revenue of $1.1 billion, according to data compiled by Bloomberg.
Chief Executive Officer Shantanu Narayen is transitioning the world’s largest maker of graphic design software to offer more of its products over the Web and on mobile devices such as tablets in addition to personal computers. A subscription version of Creative Suite that costs less than the software sold for desktop computers is helping the company add users, said Peter Goldmacher, an analyst at Cowen & Co.
“The move to subscriptions is happening faster,” Goldmacher said in a research report this month. Adobe “is investing aggressively to accelerate the transition.”
Adobe advanced 5.1 percent to $37.33 at 11:03 a.m. in New York, and earlier touched $38.10 for the biggest intraday gain since Dec. 16, 2011. The stock has gained 26 percent this year through yesterday.
Net income increased 28 percent to $222.3 million, or 44 cents a share, from $173.7 million, or 35 cents, a year earlier.
Through the end of November, Adobe signed up about 326,000 paying customers for its Creative Cloud tools, which include the Photoshop, Dreamweaver and Illustrator products, the company said earlier this week.
Revenue for the current quarter will be $950 million to $1 billion, Adobe said in a statement. That compared with the average analyst estimate of $1.07 billion, according to data compiled by Bloomberg. Profit excluding certain items will be 26 cents to 32 cents a share, less than the 57-cent estimate.
Adobe expects profit for the full fiscal year 2013 to be $1.40 per share on sales of $4.1 billion. Paid subscribers to the Creative Cloud service will grow to more than 1.25 million by the end of next year, the company said, meaning revenue should become more predictable.
“You could look at this as we’re guiding well below where the Street was, but that’s the wrong way of looking at it,” Chief Financial Officer Mark Garrett said in an interview yesterday. By 2014, Adobe’s sales will benefit from keeping subscribers in its fold instead of users “skipping versions and disappearing for a while.”
Narayen, CEO for five years, has also been making acquisitions such as Omniture Inc. and Efficient Frontier Inc. to move the company into software for online marketing as Adobe moves beyond the PC era.
On Dec. 5, the company added Kelly Barlow, a partner at investor ValueAct Capital Partners LP, to its board. ValueAct, a San Francisco-based investment firm with more than $8 billion under management, has a 6.3 percent stake in Adobe.
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