Financial analysts last night ejected everyone from Adobe’s party prematurely as weaker-than-expected forecasts for the current quarter eclipsed the good progress made in cloud services, causing a share dip.
The Creative Suite developer reported a 21 per cent bounce in turnover to $1.22bn in its Q3 of fiscal ’15 ended ended 28 August – subscriptions for the fluffy white stuff are now three time greater than traditional product sales.
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Subscriptions grew more than 51 per cent year-on-year to $829m, while licences sold in the classic way fell 21 per cent to $275.3m and services and support edged up to $113.3m from $108.8m.
Highlights from the portfolio included the Digital Media area growing to $770m; Creative Cloud adding $262m of annualised recurring revenues and 684,000 subscribers to 5.3 million in total; and Document Cloud brought in $194m in revenue, giving it an ARR of $357m.
In Digital Marketing, the Marketing Cloud grew 27 per cent to $368m and the Print and Publishing subset came in at $46m.
The strong dollar dampened turnover by $58m, Adobe confirmed, but aside from some currency hedging there was not much more the company could do to mitigate this.
Operating expenses swelled slightly to $780.7m from $773.5m, but the navigation of the business to the cloud was starting to feed through to operating profits, which grew to $246m from $74m.
Mark Garrett, enterprise veep and chief beanie, said in a conference call with analysts:
We continue to drive large portions of our legacy perpetual businesses to a recurring model and this shift has improved the overall long-term health of our business.
ARR deferred revenue and unbilled backlog have all grown faster than expected with some short-term impact to revenue.
But Wall Street types are a fickle bunch: they expected the app developer to peg revenues for the current fourth and final quarter of the year at $1.36bn, but Adobe offered a guidance of $1.3bn.
The company explained the revenue forecast was lower than expected due to implementation cycles being longer than it had planned for.
The result, despite the healthy Q3 outing, was a share price drop of 3.5 per cent in extended trading. ®