Stock tumbles nearly 4%.
Adobe Systems on Tuesday reported better-than-expected quarterly revenue, driven by subscriber additions to Creative Cloud, a package of software tools that houses Photoshop.
However, the company’s shares adbe fell 3.6% to $150.90 in after-market trading, as Adobe forecast fourth-quarter revenue in line with estimates.
The shift to a cloud-based subscription has brought a more predictable revenue stream for Adobe, by selling its software through web-based subscriptions, and not through the sale of packaged-licensed software.
Revenue from Adobe’s digital media unit, which includes Creative Cloud, rose 28.3% to $1.27 billion, beating estimates of $1.25 billion, according to financial data and analytics firm FactSet.
The software maker said it expected an adjusted profit of $1.15 per share and revenue of $1.95 billion for the fourth quarter. Analysts were expecting earnings of $1.10 per share and revenue of $1.95 billion, according to Thomson Reuters I/B/E/S.
However, CEO Shantanu Narayen said on a post-earnings call he was disappointed with Experience Cloud bookings in the third quarter.
Adobe’s Experience Cloud is a set of cloud services and part of its digital marketing unit.
The Experience Cloud business recorded revenue of $507.8 million in the reported quarter, about 27% of the company’s total quarterly revenue.
The company’s net income rose to $419.6 million, or 84 cents per share, in the third quarter ended Sept. 1, from $270.8 million, or 54 cents per share, a year earlier.
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Total revenue rose 25.8% to $1.84 billion.
Excluding items, Adobe earned $1.10 per share, beating the average analyst estimate of $1.01 per share.