Adobe Systems Incorporated (NASDAQ:ADBE) shares climbed as much as 7 percent on Wednesday after the company announced that it had reached 1 million paid subscribers to its Creative Cloud. The share surge came even though the company’s quarterly revenue dropped by 8 percent.
Adobe adds more subscribers
The company is known for its Acrobat and Photoshop software. It actually came out ahead of its own forecast for paid subscribers during the third quarter, adding 331,000 to Creative Cloud, according to Reuters (via CNBC). Creative Cloud is the subscription-based version of Adobe Systems Incorporation (NASDAQ:ADBE)’s main software package, which includes not just Photoshop, but also Flash and Illustrator. At the end of the third quarter, the company had 1.3 million paid subscribers to the program.
The software company said strong corporate demand will likely also drive even greater subscriber growth for the next quarter. Adobe Chief Financial Officer Mark Garrett told analysts on a phone call that they closed more corporate deals with companies during the third quarter alone than they did in the entire first half of the year.
The company forecast fourth quarter adjusted earnings of between 28 and 34 cents a share on revenue of $1 billion to $1.05 billion.
Adobe reports other results
Adobe Systems Incorporated (NASDAQ:ADBE) reported that its net income dropped to $83 million or 16 cents a share in the third quarter of the year. That’s compared to $201.4 million or 40 cents a share in the same quarter a year ago.
After items were excluded, the company’s earnings per share were 32 cents. Revenue for the quarter was also down, declining to $995.1 million from $1.08 billion in the same quarter a year ago. Edward Jones analyst Josh Olson told Reuters that the fact Adobe Systems Incorporated (NASDAQ:ADBE) missed revenue during the third quarter suggests that the company’s shift to subscription pricing is actually ahead of schedule. He said this means that the company is deferring more revenues and that he had not been expecting Adobe to pass 1 million subscribers until sometime in the fourth quarter of the year.