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Adobe posts mixed third-quarter earnings

Company reports higher-than-expected earnings in the third quarter, but they come in lower than they were during the same quarter last year.

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Adobe's third fiscal quarter earnings came in higher than Wall Street expected, but lower than the company posted during the same quarter last year.

Adobe Systems today posted a profit of $195 million, or 39 cents a share on revenue of $1.013 billion. That was down 15 percent from the same time last year when the company posted earnings of $230 million, or 44 cents a share, on revenue of $990.3 million.

The performance also came in 1 cent per share above Wall Street's non-GAAP estimates.

"Our industry is in the midst of a major transformation," said Shantanu Narayen, president and CEO of Adobe in a statement. "We are aligning around two large initiatives: content authoring and digital marketing. Each of these opportunities offers significant growth potential, and Adobe is well-positioned to be the market leader in both."

The software company, which is based in San Jose, Calif., gave guidance for the next quarter and expects between $1.075 billion to $1.125 billion in revenue and projected earnings between 41 to 50 cents per share.

Shares of Adobe were down in regular trading, closing at $24.64, but are up in after hours trading.

Adobe financials.
Adobe

In its third-quarter earnings call, Adobe Executive Vice President and Chief Financial Officer Mike Garrett said that the company's Creative Suite 5.5 software suite continues to maintain a "solid run rate," and that CS5 and CS5.5's combined revenue is about the same as CS3. It's also exceeded CS4 revenue by around 25 percent, Garrett said.

The company's also drawing new customers with the subscription version of its CS5.5 product, Garrett said. More than a third of subscribers have never bought an Adobe product before.

The company also talked up HTML5, saying it was "doubling down" on its investments there. Adobe President and Chief Executive Officer Shantanu Narayen specifically called out its preview of its Edge tool, which drew more interest than the company expected. Narayen also called out the company's introduction of its Web site builder Muse, and additions to Webkit.

Other tidbits from the earnings call:

  • Adobe closed out the quarter with 10,041 employees.

  • Adobe repurchased approximately 3.6 million shares of company stock.

  • Acrobat's seen 7 percent year over year growth.

  • Adobe said weakness in European sales was enterprise-related, with most enterprises saving purchases for the fourth quarter.

  • Cash and short-term investments came in at $2.7 billion.

  • Deferred revenue increased to $484 million.

  • Narayen referred to Adobe's video business as "strong" saying the company was doing well against both Apple and Avid. Narayen said a bit part of that was offering authoring tools and a way to deliver that content and keep it protected.

  • More HTML5 features are coming to the next version of Creative Suite, Narayen teased.

  • "Tablets will not just be for consumption, but creation." Narayen also suggested that styluses will continue to be added to these tablet devices.

Correction at 1:54 p.m. PT to note that earnings beat expectations based on non-GAAP estimates, and updated at 2:30 p.m. PT with notes from the earnings call.