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 the company added 639,000 creative cloud subscribers in the
latest period.
The San Jose, Calif., company raised its digital media recurring
revenue target for the year to about $2.93 billion--on a constant
currency basis--but cut the revenue projection, citing an estimated
$80 million negative currency impact due to the stronger dollar.
More than 40% of Adobe's revenue comes from outside the U.S.
Adobe now targets $4.85 billion in revenue for the year that
ends in November, 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, below
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 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.
Deferred revenue, meanwhile, rose 32% to $1.23 billion at the
end of the quarter.
Write to Maria Armental at maria.armental@wsj.com
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