Adobe profits slower than expected

Adobe HQ - Wikimedia CommonsAdobe is doing worse than its company executives predicted, despite an increase in its cloud based subscriptions.

Adobe has been switching to web-based subscriptions from traditional licensed software to help attract more predictable recurring revenue and that move seems to be paying off

Recurring revenue had reached 73 percent of total revenue, Chief Financial Officer Mark Garrett said in a statement.

The company said it added 684,000 Creative Cloud net subscriptions in the quarter ended August 28, compared with the 640,000 net additions that analysts had expected, according to research firm FactSet Street Account.

Creative Cloud, which includes Photoshop, Illustrator and Indexing, is the biggest of the company’s cloud businesses. The other two are Marketing Cloud and Document Cloud.

Adobe said it had 5.3 million Creative Cloud subscriptions at the end of the third quarter.

Adobe raised its full-year annualized recurring revenue forecast for the digital media to $2.95 billion from $2.93 billion.

The company forecast revenue of $1.28 billion-$1.33 billion for the fourth quarter ending November.

Wall Street expected revenue of $1.36 billion.

Adobe’s net income rose to $174.5 million in the third quarter, from $44.7 million a year earlier.

Revenue rose 21 percent to $1.22 billion which was better than what analysts expected.