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 Adobe's shares jumped 4.7 percent to $93.10 in extended trading on
Thursday and are set to hit a record high on Friday.
The company said 833,000 subscribers signed up for Creative Cloud in
the fourth quarter ended Nov. 27, more than the 678,200 additions
analysts were expecting, according to research firm FactSet
StreetAccount.
Creative Cloud includes graphic design tool Photoshop, web design
software Dreamweaver and web video building application Flash, among
other software.
Adobe, which has seen strong growth from Creative Cloud, has been
nimble enough to attract users other than enterprises and
professionals to the software suite.
About 52 percent of customers subscribe to the highest-priced full
Creative Cloud while the rest subscribe to individual products. Of
those, Photoshop Lightroom was the fastest growing, Chief Financial
Officer Mark Garrett said in an interview.
"It's growing the most because it's attracting new users ...
hobbyists and consumers and people that would never buy the Creative
products before, so it's expanded our market opportunity," Garrett
said.
San Jose-based Adobe has been switching to web-based subscriptions
from traditional licensed software to enjoy a more predictable
recurring revenue stream.
"(Adobe has) largely completed this transition to a recurrent
revenue model. You are starting to see revenue stack even though
your expenses aren't rising as quickly," said FBR Capital Markets
analyst Samad Samana.
Revenue from its digital media business, which houses Creative
Cloud, jumped 35 percent to $875.3 million.
The business – also home to Acrobat, which enables the ubiquitous
PDF format for e-books – makes up the bulk of Adobe's revenue.
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Revenue from its digital marketing business, which offers tools for
businesses to analyze customer interactions and manage social media
content, rose 2.3 percent to $382.7 million.
Total revenue rose to $1.31 billion.
Despite the 21.7 percent increase in fourth-quarter revenue only
matching analysts' estimates, a much lower 3.4 percent bump in total
operating costs also helped Adobe's profit beat estimates.
Adobe's net income soared to $222.7 million, or 44 cents per share,
in the quarter, from $88.1 million, or 17 cents per share, a year
earlier.
Excluding items, it earned 62 cents per share, beating average
analyst estimate of 60 cents, according to Thomson Reuters I/B/E/S.
Adobe's shares have risen 22.4 percent this year through Thursday's
close.
(Additional reporting by Arathy S Nair in Bengaluru; Editing by
Savio D'Souza and Cynthia Osterman)
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