Adobe third-quarter revenue forecast largely below Wall St. estimates

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Adobe company logos are seen in this picture illustration taken in Vienna July 9, 2013. REUTERS/Leonhard Foeger/File Photo
Adobe company logos are seen in this picture illustration taken in Vienna July 9, 2013.

Reuters/Leonhard Foeger/File Photo

Photoshop maker Adobe Systems Inc forecast third-quarter revenue largely below analysts’ estimates, sending the company’s shares down 4.5 percent after the bell on Tuesday.

Adobe, which is generally conservative with its forecast, forecast revenue of $1.42-$1.47 billion, largely below analysts average estimate of $1.47 billion, according to Thomson Reuters I/B/E/S.

Adobe also reported a 20.4 percent rise in second-quarter revenue, as more customers subscribed for its Creative Cloud package of software tools, such as Photoshop.

However, that also just met analysts’ estimates.

For the past few years, Adobe has been focused on selling its software through web-based subscriptions, which ensures a predictable and recurring revenue stream compared with the lumpy revenue earned through the sale of packaged-licensed software.

The switch has helped Adobe’s revenue rise for nine straight quarters, including in the latest second quarter ended June 3.

Adobe’s net income rose to $244.1 million, or 48 cents per share, from $147.5 million, or 29 cents per share.

Revenue rose to $1.40 billion from $1.16 billion. Analysts were expecting $1.40 billion.

Revenue from the company’s digital media business, which houses Creative Cloud, jumped 26 percent to $943 million.

Excluding items, Adobe earned 71 cents per share, beating analysts’ estimates of 68 cents.

The company’s shares were trading down 4.5 percent at $95.20 in extended trading.

(Reporting by Anya George Tharakan in Bengaluru; Editing by Savio D’Souza)