Adobe Tops Estimates; But Stock Down

(RTTNews) - Adobe Systems Inc (ADBE) on Tuesday reported a surge in first-quarter profit after having added more subscribers to its Creative Cloud service and incurred lower non-operating expenses, partly offset by weak gross margins.

The publishing and design software maker's earnings and revenue for the quarter topped Wall Street estimates. Adobe shares dropped 4 percent in after-hours trade on the Nasdaq.

During the quarter, Adobe added a net 517,000 Creative Cloud subscribers,a 28 percent jump from last year.

"Adobe Marketing Cloud and Creative Cloud continue to be growth engines for Adobe," said Shantanu Narayen, the company's chief executive officer.

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.

Adobe, based in San Jose, California, posted quarterly net income of $84.9 million or $0.17 per share, compared with $47 million or $0.09 per share last year.

Excluding stock-based compensation expense and other one-time items, adjusted earnings for the quarter were $0.44 per share, compared with $0.30 per share in the prior year.

On average, 21 analysts polled by Thomson Reuters expected earnings of $0.39 per share for the quarter. Analysts' estimates typically exclude special items.

Adobe said its revenue for the quarter rose to $1.11 billion from $1.00 billion a year ago.

Nineteen analysts had a consensus revenue estimate of $1.09 billion for the quarter.

Adobe's gross margin for the quarter dropped to 85 percent from 85.2 percent last year.

Earlier today, the company introduced Adobe Document Cloud that will enable customers to create, store and manage documents online.

ADBE closed on Tuesday at $79.66, up $1.33 or 1.70%, on a volume of 5.6 million shares on the Nasdaq. In after hours, the stock dropped $3.01 or 3.78% at $76.65.