Shares of the company, which also posted better-than-expected
results for the first quarter ended February 28, rose 1 percent in
The company net added 405,000 paid users for its Creative Cloud
suite, which includes Photoshop, Illustrator and Flash software,
taking its total user base to 1.84 million as of February 28.
"We are making good progress migrating individual, team and
enterprise customers to Creative Cloud ... retention and renewal
rates after promotions expire continue to track ahead of our
internal projections," Chief Executive Shantanu Narayen said on a
conference call with analysts.
R.W. Baird analyst Steve Ashley said Adobe's results were "solid
through and through" and the company's user additions and annualized
recurring revenue (ARR) were better than expected.
Macquarie Securities analyst Brad Zelnick said the results showed
that Adobe's subscription-based growth strategy was working.
Adobe said it would soon phase out the traditional box license
versions of its Creative Suite 6 and offer the software only on a
web-based subscription model.
Subscription models bring in less money upfront, but they usually
ensure more predictable recurring revenue.
Revenue from the company's digital marketing software unit rose 17
percent in the first quarter as revenue from Adobe Marketing Cloud
software rose by about a quarter.
The company offers Creative Cloud and document services under its
digital media unit, while its digital marketing unit offers
marketing analytics tools, document management and web conferencing
Adobe said ARR from Creative Cloud rose to $987 million in the
quarter from $237 million a year earlier.
The company said this was the first time that it received more than
half of its total revenue from recurring sources such as Creative
Cloud subscriptions and digital marketing software.
Adobe counts General Motors Co, Walt Disney Co and Electronic Arts
Inc as customers and its Adobe Primetime software was used by NBC
Sports to stream Sochi Olympics coverage to desktops and other
[to top of second column]
Adobe forecast adjusted profit of 26-32 cents per share and revenue
of $1 billion-$1.05 billion for the second quarter ending May 31.
Analysts on average were expecting a profit of 26 cents per share on
revenue of $990.4 million, according to Thomson Reuters I/B/E/S.
Adobe said it expected to meet or exceed its 2014 earnings and
Net income fell to $47 million, or 9 cents per share, in the first
quarter from $65.1 million, or 13 cents per share, a year earlier.
Excluding items, the company earned 30 cents per share. Analyst on
average had expected 25 cents per share.
Revenue fell about 1 percent to $1 billion, but came above the
average analyst estimate of $973.1 million.
The results were inadvertently released on Adobe's website ahead of
the expected announcement after the bell on Tuesday and confirmed by
the company later.
Adobe's shares closed 0.5 percent higher at $68.52 on the Nasdaq on
Tuesday. The stock has gained about 20 percent in the three months
to Tuesday's close.
(Reporting by Soham Chatterjee in Bangalore;
editing by Kirti Pandey)
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