By Tess Stynes
Adobe Systems Inc. agreed to acquire privately-held
stock-photography website Fotolia for roughly $800 million and
reported better-than-expected earnings as well as strong growth in
Creative Cloud subscriptions for the quarter ended in November.
Shares rose 7.5% to $75 in recent after-hours trading.
Fotolia company is owned by Kohlberg Kravis Roberts & Co.
LP, TA Associates and management. When the deal closes, expected by
early next year, Fotolia Chief Executive Oleg Tscheltzoff will
continue to lead that group as part of Adobe's digital media
business.
Adobe, which makes of Photoshop and Illustrator design software,
plans to continue to operate Fotolia as a stand-alone stock
service, accessible to anyone.
KKR said it made an equity investment during June 2012 to
acquire a 50% stake in Fotolia, which offers royalty-free images,
vector illustrations and high-definition videos, starting at less
than $1 per image. Fotolia has more than 5 million members.
Adobe has been transitioning to cloud services, which generate
monthly subscription revenue, and away from packaged software,
which has been based on large upfront payments.
Adobe in September said it acquired privately held Aviary, a
deal that gives it a developer of software development kits used to
create mobile apps. Adobe expects that deal will step up its
strategy to make its Creative Cloud a platform for third-party
apps.
The company added 644,000 new Creative Cloud subscriptions in
the latest quarter. Adobe had expected subscriber additions to
surpass the 502,000 subscribers added in the previous quarter.
Adobe ended the quarter with 3.45 million paid Creative Cloud
subscribers, an increase of more than 2 million subscribers from a
year earlier.
The company said 66% of its revenue was from recurring sources
such as Creative Cloud and Adobe Marketing Cloud in the latest
period, compared with 63% in the prior quarter and 44% a year
earlier.
For the period ended Nov. 28, Adobe reported a profit of $73.3
million, or 14 cents a share, up from $65.3 million, or 13 cents a
share, a year earlier. Excluding stock-based compensation,
restructuring charges and other items, per-share earnings rose to
36 cents from 32 cents.
Revenue increased 3% to $1.073 billion.
Adobe expected per-share profit of 26 cents to 32 cents and
revenue of $1.025 billion to $1.075 billion.
The company reported Adobe Marketing Cloud revenue rose to $330
million, up 4.4% from a year earlier.
Write to Tess Stynes at tess.stynes@wsj.com
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