Adobe Beats Estimates as Demand Surges for Cloud Servicesby
Adobe Systems Inc. reported profit that topped analysts’ estimates as more customers signed up for its cloud-based services.
Profit, excluding some items, was 66 cents a share in the fiscal first quarter, the San Jose, California-based company said in a statement Thursday. Revenue increased 25 percent to $1.38 billion during the quarter ended March 4. Analysts had projected profit of 61 cents and revenue of $1.34 billion, according to data compiled by Bloomberg.
The company also boosted its forecast for sales and profit in the fiscal year. It now sees annual revenue of $5.8 billion, up from $5.7 billion, Adobe said in prepared remarks. Earnings per share will be about $2.80 on an adjusted basis, compared with the company’s previous estimates of 2.70.
After a multi-year effort to overhaul its lineup and shift away from desktop software, Adobe is benefiting from the growing interest in software stored in the cloud, where clients can access its products like Photoshop for creative projects or the online document sharing program Acrobat. The company has now topped revenue estimates for three straight quarters and profit for nine.
"They have very good momentum," said Kirk Adams, an analyst with Rosenblatt Securities. "They have wind behind them -- and they’re the ones out there really leading the marketplace."
Adobe shares rose as much as 8.6 percent to $97.70 in extended trading. The company’s shares are down 4 percent this year.
The report comes after investors worried about results from business software companies in early February following a disappointing report from Tableau Software Inc. A key concern was that Tableau’s weakness was a sign that customers were slowing purchases amid economic uncertainty.
Still, cloud-based companies such as Salesforce.com Inc. and Workday Inc., which initially saw their stocks decline after Tableau’s report, posted their own results that beat estimates and their shares climbed. Earlier this week, Oracle Corp., one of the largest business software companies, reported sales for its modern cloud-based services that topped expectations, and its stock jumped 3.8 percent Wednesday.
Net income tripled to $254 million or 50 cents a share, compared with 17 cents a year earlier.
The company said it added 798,000 thousand net new creative cloud subscriptions in the quarter.
Many of Adobe’s new subscribers are being lured by mobile applications for creative cloud products, especially for photography, the company said.
“Our exceptional performance in Q1 is an indicator of the strong momentum we are seeing across our cloud businesses,” Chief Executive Officer Shantanu Narayen said in the statement.