Adobe Profit Forecast Misses Estimates, Shares Slide

Photoshop maker Adobe Systems forecast a second-quarter profit that missed the average analyst estimate and reported a lower-than-expected rise in subscriptions for its Creative Cloud software suite.

The company’s shares fell nearly 4 percent in after-hours trading on Tuesday.

Adobe said it added about 517,000 Creative Cloud subscriptions in the first quarter, compared with the 573,000 net additions that analysts were expecting, according to research firm StreetAccount.

The Creative Cloud offering includes Photoshop, Illustrator and Flash software.

The company is switching from traditional box licenses to Web-based subscriptions for its Creative Cloud software bundle to help attract more predictable recurring revenue. Online subscriptions let customers access the latest software versions for a monthly payment.

Adobe forecast an adjusted profit of 41-47 cents per share for the second quarter, below the average analyst estimate of 48 cents, according to Thomson Reuters I/B/E/S.

The company’s revenue forecast of $1.13 billion-$1.18 billion was also largely below the average analyst estimate of $1.18 billion.

Adobe’s net income rose to $84.9 million, or 17 cents per share, in the first quarter ended Feb. 27, from $47 million, or nine cents per share, a year earlier.

Excluding items, the company earned 44 cents per share, beating the average analyst estimate of 39 cents.

Revenue rose 11 percent to $1.11 billion, above analysts’ average estimate of $1.09 billion.

Up to Tuesday’s close, the company’s shares had risen about 17 percent in the last 12 months.

(Reporting by Anya George Tharakan in Bengaluru; Editing by Simon Jennings)

This article originally appeared on Recode.net.

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