Adobe Systems Q3 Results Beat Street, But Shares Down 4% On Weak Outlook

(RTTNews) - Enterprise software maker Adobe Systems Inc. (ADBE), Tuesday reported a profit and revenues for the third quarter that trumped Wall Street estimates. However, outlook for the fourth quarter were below current expectations, sending its shares down 4% in after-hours trade.

San Jose, California-based Adobe's third-quarter profit rose to $792.8 million or $1.61 per share from $666.3 million or $1.34 per share last year.

Adjusted earnings for the quarter rose to $2.05 per share from $1.73 per share last year. On average, 27 analysts polled by Thomson Reuters expected earnings of $1.97 per share for the quarter. Analysts' estimates typically exclude special items.

Adobe said its revenue for the quarter rose 24% to $2.83 billion from $2.91 billion last year. Analysts had a consensus revenue estimate of $2.82 billion for the quarter.

Digital Media segment revenue jumped 22% to $1.96 billion, with Creative revenue growing to $1.65 billion and Document Cloud achieving revenue of $307 million, Adobe said in a statement.

"Adobe delivered another quarter of record revenue in Q3," said John Murphy, executive vice president and CFO, Adobe. "Highlights include 24 percent year-over-year total revenue growth, strong subscription revenue performance and operating margin expansion."

Adobe has been focusing on cloud based subscriptions to boost revenue. Its Creative Cloud software as a service offering gives users access to a range of its software, for a monthly or annual subscription. Customers prefer the cloud route instead of buying individual products and software suites for a licensee fee.

Digital Experience segment revenue rose 34% to $821 million.

Looking forward to the fourth quarter, Adobe expects revenues of about $2.97 billion and adjusted earnings of $2.25 per share. Analysts currently estimate earnings of $2.30 per share and revenues of $3.03 billion.

ADBE closed Tuesday's trading at $284.69, up $1.76 or 0.62%, on the Nasdaq. The stock, however, slipped $9.69 or 3.40% in the after-hours trade.