By Maria Armental
Adobe Systems Inc. reported a higher profit for the second
quarter as digital media recurring revenue rose to $2.35 billion
and added 639,000 creative cloud subscribers in the latest
period.
The company raised its digital media recurring revenue target
for the year to about $2.93 billion, but cut the revenue projection
citing the negative impact of currency fluctuations. The San Jose,
Calif., company now targets $4.85 billion in revenue, down from
$4.93 billion.
For the current quarter, Adobe projects profit of 45 cents to 51
cents a share on $1.18 billion to $1.23 billion in revenue,
compared with the consensus of 54 cents on $1.25 billion in
revenue, according to Thomson Reuters.
As part of a broader digital restructuring, the maker of
Photoshop, Illustrator design software and the ubiquitous portable
document format or PDF, said in 2013 it would no longer sell
packaged software. Like industry peers, Adobe opted for
subscription cloud services, which in the latest period accounted
for 66.6% of revenue.
Shares, up 18% over the past 12 months, fell nearly 2% to $78.65
in late trading.
Adobe, founded in 1982, hasn't paid a dividend since 2005,
opting instead for share buybacks as a way to pass on some of its
cash to shareholders. In the latest period, it retired about 2.6
million shares.
Company officials had said they would consider higher returns to
shareholders in 2016 or 2017 as the company cash flow
strengthens.
Overall, for the period ended May 29, Adobe reported a profit of
$147.5 million, or 29 cents a share, up from $88.5 million, or 17
cents a share, a year earlier. Excluding stock-based compensation
and other items, profit rose to 48 cents from 37 cents.
Revenue rose nearly 9% to $1.16 billion.
Adobe had projected a profit of 41 cents to 47 cents a share on
$1.13 billion to $1.18 billion in revenue.
Gross margin narrowed to 84.1% from 85.5% a year earlier.
Write to Maria Armental at maria.armental@wsj.com
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