clock menu more-arrow no yes

Adobe Profit Beats Estimates, but Forecast Disappoints

The Street was looking for a less conservative outlook.

wellesenterprises / iStock

Photoshop maker Adobe Systems reported a better-than-expected profit for the sixth straight quarter, helped by a 12 percent sequential jump in annualized recurring revenue in its digital media segment.

However, the company’s shares fell about 2 percent in extended trading after it forecast lower-than-expected revenue and profit for the current quarter.

Adobe said on Tuesday it expected an adjusted profit of 45-51 cents per share on revenue of $1.18 billion-$1.23 billion for the third quarter.

Analysts were expecting a profit of 54 cents per share and revenue of $1.25 billion, according to Thomson Reuters I/B/E/S.

FBR Capital Markets analyst Samad Samana said the company usually gives “conservative” forecasts and then beats them.

“I think some people would like to see not just a conservative (forecast) and beating that, but maybe perhaps even stronger results as the benefits of this multi-year transition start to show up,” he said.

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

The company said it expects revenue in its print and publishing business to be relatively flat in the current quarter.

Adobe earlier on Tuesday launched Adobe Stock, a collection of 40 million photographs, illustrations and graphics, available in 36 countries and 13 languages.

The company’s net income rose to $147.5 million, or 29 cents per share, in the second quarter ended May 29, from $88.5 million, or 17 cents per share, a year earlier.

Excluding items, the company earned 48 cents per share, beating analysts’ average estimate of 45 cents per share.

Total revenue rose 8.8 percent to $1.16 billion, in line with analysts’ average estimate.

Up to Tuesday’s close, the company’s shares had risen about 10 percent this year.

(Reporting By Lehar Maan and Arathy S Nair in Bengaluru; Editing by Sriraj Kalluvila)

This article originally appeared on Recode.net.