SAN JOSE (dpa-AFX) - Publishing and design software maker Adobe Systems Inc. (ADBE) said Thursday after the markets closed that its third quarter profit rose sharply from last year, helped by strong growth in subscription revenue amid robust demand for the company's cloud solutions.
The company's quarterly earnings per share, excluding items, also came in above analysts' expectations as did its quarterly revenue. However, the company gave a weak outlook for the current quarter.
'Our execution and momentum continued in Q3, resulting in record quarterly revenue with outstanding profit and earnings growth,' said Shantanu Narayen, Adobe president and chief executive officer.
Adobe also said that Senior Vice President David Wadhwani has decided to leave the company to pursue a CEO opportunity. Bryan Lamkin, who currently leads the Document Cloud business, will now lead the Digital Media business, which includes Creative Cloud and Adobe Document Cloud.
Abhay Parasnis, who joined Adobe in July as CTO and SVP of Cloud Technology, will also expand his current role. He will now assume responsibility for the company's Security and Research teams.
Adobe shares are currently losing 2.89% in after hours trading after closing the day's regular trading session at $80.31, down 22 cents. The shares trade in a 52-week range of $58.51 to $87.25.
For the third quarter ended August 28, 2015, the San Jose, California-based company reported net income of $174.5 million or $0.34 per share, compared to $44.7 million or $0.09 per share for the year-ago quarter.
Excluding items, adjusted net income for the third quarter was $275.4 million or $0.54 per share, compared to $140.6 million or $0.28 per share in the prior year quarter.
On average, 23 analysts polled by Thomson Reuters expected the company to earn $0.50 per share for the third quarter. Analysts' estimates typically exclude special items.
Adobe, famous for its Photoshop editing and Acrobat document-sharing software, said total revenue for the third quarter rose 21% to $1.22 billion from $1.01 billion in the same quarter last year. Twenty analysts had a consensus revenue estimate of $1.21 billion for the third quarter.
For the third quarter, Adobe had forecast adjusted earnings of $0.45 to $0.51 per share and revenue of $1.175 billion to $1.225 billion.
Digital Media Annualized Recurring Revenue grew to $2.65 billion at the end of the quarter, driven by strong sequential growth in Creative ARR of $262 million.
Products revenue for the quarter fell 21% from a year ago to $275.3 million, while subscription revenue surged 51% to $829.1 million and services and support revenue increased 4% from last year to $113.4 million.
The company repurchased about 1.6 million shares during the quarter, returning $132 million of cash to shareholders.
Looking forward to the fourth quarter, the company forecasts revenue of $1.275 billion to $1.325 billion, earnings of $0.32 to $0.38 per share and adjusted earnings of $0.56 to $0.62 per share. Analysts currently expect the company to earn $0.64 per share on revenue of $1.36 billion for the fourth quarter.
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