Graphic design software maker Adobe Systems Inc (ADBE), Tuesday reported a plunge in third-quarter profit, hurt mainly by one-time expenses that offset some growth in revenue. Earnings, however, surpassed Wall Street estimates, but revenue fell shy of expectations.
The company detailed some weak earnings and revenue outlook for the fourth quarter, signifying pressure even as it strives to enhance its cloud-based revenue strategy.
Adobe shares slid 4 percent in after-hours trade on the Nasdaq.
The company's CEO Shantanu Narayen said that adoption of Creative Cloud and Adobe Marketing Cloud continues to accelerate.
Adobe, based in San Jose, California, posted quarterly net earnings of $44.7 million or $0.09 per share, compared with $83 million or $0.16 per share last year.
Results for the quarter included stock-based compensation expense of $83.7 million, amortization costs of $31.8 million and tax adjustments of $19 million.
Excluding items, adjusted earnings for the quarter were $0.28 per share, compared with $0.32 per share in the prior year.
On average, 18 analyst polled by Thomson Reuters expected earnings of $0.26 per share for the third quarter. Analysts' estimates typically exclude special items.
Revenue for the quarter climbed to $1.01 billion from $995.1 million a year ago. Sixteen analysts had a consensus revenue estimate of $1.02 billion for the quarter.
Adobe, famed for its Photoshop editing and Acrobat document-sharing software, ended the quarter with 2.81 million paid Creative Cloud subscriptions, an increase of 502 thousand subscriptions from a quarter ago.
For the fourth quarter, Adobe projects adjusted earnings of $0.26 to $0.32 per share and revenue of $1.03 billion to $1.08 billion. Analysts currently expect earnings of $0.31 per share on revenue of $1.09 billion for the quarter.
Adobe stock closed Tuesday at $70.73, up $0.46 or 0.65%, on a volume of 4.5 million shares. In after hours, the stock dropped $2.93 or 4.14% at $67.80. In the past year, the shares have traded in the range of $47.92 - $74.69.
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