Adobe Profit Tops Analysts' Estimates on Cloud Sales Gainsby
Software maker reaffirms 2016 revenue, profit forecast
Company announces expansion of partnership with Accenture
Adobe Systems Inc. reported profit that topped analysts’ estimates as the company signed up more customers for its cloud-based services.
Revenue increased 22 percent to $1.31 billion in the fiscal fourth quarter ended Nov. 27, the San Jose, California-based company said Thursday in a statement. Profit, excluding some items, was 62 cents a share. Analysts projected sales of $1.31 billion and profit of 60 cents, according to data compiled by Bloomberg.
After shifting most of its business from packaged software to programs distributed via the Web, Adobe is seeking to build its position in cloud-related tools that help customers with everything from digital design to online marketing. Since a decline in sales in 2013 amid the changes, the company’s revenue has rebounded, posting growth for seven straight quarters, even amid currency headwinds. The company said it added 833,000 net new individual and team creative cloud subscriptions in the quarter.
“They’re executing extremely well,” said Mark Moerdler, an analyst at Sanford C. Bernstein & Co. “They’ve really become the poster child for companies transitioning to a subscription business model.”
Adobe shares rose 2.8 percent to $91.42, even as the broader markets fell, bringing its gains for the year to 26 percent.
The software maker in October forecast fiscal 2016 sales that fell short of estimates. Adobe said it will face a revenue hit of about $200 million from currency fluctuations and $100 million from a change in billing practices during the year. Chief Financial Officer Mark Garrett also said the company needs to invest to help drive business growth.
The company on Thursday affirmed its fiscal 2016 forecast with sales expected to be about $5.7 billion and profit excluding certain items of about $2.70 a share, according to data posted on its website. For the current quarter, Adobe forecast profit of 56 cents to 62 cents a share on sales of $1.3 billion to $1.35 billion, compared with analysts’ estimates of 60 cents a share in profit on revenue of $1.32 billion.
Adobe also reaffirmed that it’s targeting compound annual growth of about 20 percent for sales from fiscal 2015 to 2018.
Fourth-quarter net income more than doubled to $222.7 million, or 44 cents a share, from $88.1 million, or 17 cents, a year earlier. Creative cloud subscriptions were 833,000 compared to estimates of 697,000.
Adobe has been looking to stoke growth with new partnerships. The company announced Thursday it struck a three-year deal to expand its agreement with Accenture to provide marketing options to life sciences, health care and financial services.