Photoshop maker Adobe Systems forecast third-quarter revenue largely below analysts’ estimates, sending the company’s shares down 4.5 percent after the bell on Tuesday.
Adobe, which is generally conservative with its forecast, forecast revenue of $1.42-$1.47 billion, largely below analysts average estimate of $1.47 billion, according to Thomson Reuters.
Adobe (adbe) also reported a 20.4% rise in second-quarter revenue, as more customers subscribed for its Creative Cloud package of software tools, such as Photoshop.
However, that also just met analysts’ estimates.
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For the past few years, Adobe has been focused on selling its software through web-based subscriptions, which ensures a predictable and recurring revenue stream compared with the lumpy revenue earned through the sale of packaged-licensed software.
The switch has helped Adobe’s revenue rise for nine straight quarters, including in the latest second quarter ended June 3.
Adobe’s net income rose to $244.1 million, or 48 cents per share, from $147.5 million, or 29 cents per share.
Revenue rose to $1.40 billion from $1.16 billion. Analysts were expecting $1.40 billion.
Revenue from the company’s digital media business, which houses Creative Cloud, jumped 26 percent to $943 million.
Excluding items, Adobe earned 71 cents per share, beating analysts’ estimates of 68 cents.
The company’s shares were trading down 4.5% at $95.20 in extended trading.