Adobe Profit Falls, But Tops Street; Details Strong Q2 Outlook

(RTTNews) - Publishing and design software maker Adobe Systems Inc (ADBE), Tuesday reported a lower first-quarter profit, hurt by an increase in operating expenses and a marginal decline in revenue. However results for the quarter topped Wall Street estimates, mainly reflecting the adoption of Cloud-based services.

Moving forward, Adobe provided a strong second-quarter outlook, while reaffirming its expectations for the full year 2014.

Despite some softness in revenue, Adobe has been benefiting from increased adoption of its Creative Cloud and Adobe Marketing Cloud. CEO Shantanu Narayen said the company hopes to gain from its pipeline of innovations and the further integration of its Cloud businesses.

San Jose, California-based company Adobe posted first-quarter net income of $47 million or $0.09 per share, compared with $65 million or $0.13 per share last year.

Excluding stock-based compensation expense and other one-time items, adjusted earnings for the quarter were $151 million or $0.30 per share, compared with $178 million or $0.35 per share in the prior year. On average, 22 analysts polled by Thomson Reuters expected earnings of $0.25 per share for the quarter. Analysts' estimates typically exclude special items.

Adobe, famed for its Photoshop editing and Acrobat document-sharing software, reported revenue of $1 billion, compared with $1.01 billion in the year-ago quarter. Twenty analysts had a consensus revenue estimate of $973.09 million for the quarter.

Adobe ended the quarter with 1.844 million paid Creative Cloud subscriptions, an increase of 405 thousand from the sequential fourth quarter.

Operating expenses for the first quarter increased to $773 million from $753 million in the corresponding quarter last year.

Looking ahead to the second quarter, Adobe expects net earnings of $0.06 to $0.12 per share, adjusted earnings of $0.26 to $0.32 per share and revenue of $1 billion to $1.05 billion. Analysts currently expect earnings of $0.27 per share on revenue of $990.36 million for the quarter.

For fiscal year 2014, Adobe continues to expect earnings of about $0.27 per share, adjusted earnings of about $1.10 per share, and revenue flat with fiscal year 2013's $4.06 billion. Analysts currently expect earnings of $1.12 per share on revenue of $4.08 billion for the year.

Adobe stock closed Wednesday at $68.52, up $0.35 or 0.51%, on a volume of 10 million shares on the Nasdaq. In after hours, the stock dropped $0.27 or 0.39% at $68.20. In the past year, the stock trended in the range of $40.49 - $71.11.