SAN JOSE (dpa-AFX) - Publishing and design software maker Adobe Systems Inc. (ADBE) said Wednesday after the markets closed that its third quarter profit rose 3.2% from last year, helped by strong growths in Creative Cloud subscriptions and Digital Marketing Suite revenues.
The company's quarterly earnings per share, excluding items, came in line with analysts' expectations, but its quarterly revenue fell shy of analysts' forecast.
At the same time, the company forecast fourth quarter revenue and earnings below analysts' current consensus estimates.
'Customers globally are adopting our new Creative Cloud subscription offering more quickly than we projected,' said Shantanu Narayen, president and CEO of Adobe. 'We are the leader in the fast-growing Digital Marketing category with 40 percent year-over-year Digital Marketing Suite revenue growth this quarter.'
Adobe shares are currently losing 0.66% in after hours trading after closing the day's regular trading session at $33.12, up 55 cents or 1.69%. The shares trade in a 52-week range of $22.67 to $34.78.
For the third quarter ended August 31, 2012, the San Jose, California-based reported net income of $201.4 million or $0.40 per share, compared to $195.1 million or $0.39 per share for the year-ago quarter.
Excluding items, adjusted net income for the third quarter was $291.2 million or $0.58 per share, compared to $272.8 million or $0.55 per share in the prior year quarter.
On average, 25 analysts polled by Thomson Reuters expected the company to earn $0.58 per share for the third quarter. Analysts' estimates typically exclude special items.
Adobe Systems, famous for its Photoshop editing and Acrobat document-sharing software, said total revenue for the third quarter rose 7% to $1.08 billion from $1.01 billion in the same quarter last year. Twenty-three analysts had a consensus revenue estimate of $1.10 billion for the third quarter.
The company noted that it drove faster adoption of Creative Cloud subscriptions during the third quarter than originally projected. The overachievement in subscriptions during the latest quarter effectively transitioned about $29 million more perpetual revenue than expected to Creative Cloud. In addition, the effect of currency impacted third quarter revenue negatively by about $9 million.
Product revenue for the quarter fell 0.2% from a year ago, while subscription revenue rose 51% and services and support revenue increased 12% from last year.
Adobe Creative Cloud paid subscriptions grew to about 200,000 in the third quarter. The company added about 8,000 Creative Cloud subscriptions per week during the quarter, exceeding the addition of 5,000 subscriptions per week that was assumed in its third quarter financial targets.
Looking forward to the fourth quarter, the company forecast revenue of $1.075 billion to $1.125 billion, earnings of $0.34 to $0.39 per share and adjusted earnings of $0.53 to $0.58 per share.
Analysts currently expect the company to earn $0.67 per share on revenue of $1.21 billion for the fourth quarter.
Adobe said the guidance reflects the effect of higher migration of customers to Creative Cloud than forecast earlier in the year.
The company said the guidance ranges factor in the addition of 125,000 new Creative Cloud subscriptions in the fourth quarter, which represents about $94 million in fourth perpetual revenue which would effectively move to subscription and ratable monthly recognition.
'We're on a path to drive millions of subscribers to our Creative Cloud offering, as well as build a billion dollar SaaS business in Digital Marketing,' said Mark Garrett, executive vice president and CFO of Adobe. 'This will drive higher long-term growth and create a large recurring revenue stream.'
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