Adobe Systems Inc, maker of Photoshop and Acrobat software, raised its full-year adjusted earnings forecast after reporting first-quarter results above Wall Street estimates as more customers chose its subscription-based model.<\/p>\n
The company raised its full-year adjusted earnings forecast to about $1.45 per share from about $1.40 per share, above analysts’ estimates of $1.41 per share.<\/p>\n
Shares of the company, which said Chief Technology Officer Kevin Lynch would be leaving, rose 7 percent in extended trade.<\/p>\n
Adobe has been shifting to web-based subscription service Creative Cloud since last year from a licensing model.<\/p>\n
“We’re seeing higher-than-expected conversion rate to the paid model and that’s a very positive sign. What that implies is that customers are happy,” Edward Jones analyst Josh Olson said.<\/p>\n
Creative Cloud enables a customer to subscribe to the company’s Creative Suite that includes its popular design titles such as Photoshop, Illustrator, InDesign, Flash and Dreamweaver.<\/p>\n
“The growth is coming from attracting a whole new class of creative professionals,” Chief Executive Shantanu Narayen said of Creative Cloud on CNBC.<\/p>\n
Adobe said its Creative Cloud exceeded 500,000 paid individual members and free and trial memberships exceeded 2 million, which the company said could lead to more paid membership.<\/p>\n
The company said it added about 153,000 net paid subscriptions during the first quarter and that it expects to reach 1.25 million paid subscriptions by the end of this year.<\/p>\n
“It looks like consumers are choosing the Creative Cloud… and that’s what seems to be driving the results, driving the stock,” Macquarie Research analyst Brad Zelnick told Reuters.<\/p>\n
Adobe backed its full-year revenue forecast of about $4.1 billion.<\/p>\n
Lynch, who had been CTO since 2008, would be leaving effective March 22 to take a position at Apple Inc, Adobe told Reuters in an email.<\/p>\n
“We will not be replacing the CTO,” an Adobe spokesperson said.<\/p>\n
Net income fell to $65.1 million, or 13 cents per share, in the first quarter, from $185.2 million, or 37 cents per share, a year earlier.<\/p>\n
Excluding items, the company earned 35 cents per share.<\/p>\n
Analysts on average expected adjusted earnings of 31 cents per share, according to Thomson Reuters I\/B\/E\/S.<\/p>\n
Total revenue, however, fell 4 percent to $1 billion due to the transition to the subscription model, but beat analysts’ expectation of $986 million.<\/p>\n
Subscription revenue more than doubled to $224.3 million.<\/p>\n
Adobe’s revenue beat analysts’ estimates for the second consecutive quarter.<\/p>\n
A rapid adoption of subscription model tends to lower revenue in the short term as fees are collected monthly, instead of upfront one-time payment.<\/p>\n
Adobe shares, which have risen about 10 percent in the last three months, were up 7 percent at $43.45 in aftermarket trading. They closed at $40.75 on the Nasdaq on Tuesday.<\/p>\n
Adobe reports financial hits and misses<\/strong><\/a><\/p>\n