Technology

Adobe Systems: Predictably Predictable

Cloud computing
Source: Thinkstock
Adobe Systems Inc. (NASDAQ: ADBE) reported fiscal third quarter 2013 results after markets closed today. The software company reported adjusted earnings per share (EPS) of $0.32 on revenue of $995.1 million. In the same period a year ago, the company reported adjusted EPS of $0.58 on revenue of $1.08 billion. Third-quarter results compare to the Thomson Reuters consensus estimates for EPS of $0.34 and $1.01 billion in revenue.

The company’s press release did not offer fourth-quarter or fiscal year guidance, but plans to discuss financial targets on its conference call. The consensus estimates for the fourth quarter call for EPS of $0.41 on revenues of $1.08 billion. For the full year, analysts are looking for EPS of $1.45 on revenues of $4.11 billion.

Second quarter EPS totaled $0.31, second quarter totaled $0.36, and next quarter is forecast at $0.41. Revenues are pretty flat as well. Subscriptions to the firm’s Creative Cloud products rose by 331,000 quarter-over-quarter to a total of 1.03 million. Adobe said enterprise adoption of its cloud-based products was “stronger than expected.

The company’s CFO said:

Our customers are overwhelmingly choosing subscriptions instead of perpetual model licenses which is accelerating our business model transition. During Q3, 41 percent of our revenue was recurring and we exited the quarter with record deferred revenue on our balance sheet. These results are building a stronger, more predictable revenue model for Adobe which will drive higher long-term growth.

Well, earnings and revenues haven’t varied much at all in the first nine months of Adobe’s fiscal year. While predictability is good, growth would help. Perhaps the conference call will offer some encouragement on that front.

The company’s shares are up nearly 5% in after-hours trading, at $50.37, well above the top of the stock’s 52-week range of $31.33 to $48.70. Thomson Reuters had a consensus analyst price target of around $50.90 before today’s results were announced.

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