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Adobe Reports Better Earnings, Buying Stock Photo Service Fotolia for $800 Million

The company added 644,000 new Creative Cloud subscribers in the quarter, with various forms of recurring revenue now making up two-thirds of its quarterly sales.

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Software maker Adobe reported better-than-expected third-quarter earnings on Thursday, adding that it has signed a deal to buy stock photo service Fotolia for roughly $800 million in cash.

Adobe said that it earned 14 cents per share on revenue of $1.073 billion, which was at the high end of the guidance range the company had given Wall Street. Excluding certain items, it earned $73.3 million, or 36 cents per share, ahead of the 30 cents per share analysts were expecting.

The company also projected continued positive financial news, saying in a statement it expects earnings and revenue to grow sequentially each quarter through 2015.

Adobe said that recurring revenue now accounts for two-thirds of quarterly sales, up from 44 percent a year ago. It added 644,000 new Creative Cloud subscribers; revenue from that business is now $1.676 billion on an annualized basis.

As for Fotolia, Adobe’s David Wadhwani said that the goal was to add stock photo acquisition as another thing that Creative Cloud members can do from within Adobe’s community. The company earlier this year added a “talent search” feature that connects would-be employers with those seeking to offer their services.

Even before the Fotolia deal was announced, Wadhwani said that some subscribers were starting to offer their work for sale, while others were seeking out content.

“That’s an opportunity to become the one-stop shop for creatives,” Wadhwani said in a telephone interview on Thursday.

He said that Adobe has nearly 3.5 million paid subscribers now and expects that to reach 5.9 million by the end of next year.

Adobe plans to continue to also offer Fotolia as a standalone stock photo business. Fotolia was started in 2004 and has been owned by buyout firm Kohlberg Kravis Roberts. It has 130 employees, mostly in offices in Paris and Berlin.

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