Monday - Sep 25, 2017

Software giants Adobe falls short on their profit forecasts for the quarter

Software giants Adobe falls short on their profit forecasts for the quarter

San Jose, California -based software manufacturer Adobe Systems, best known for their Photoshop image manipulation software, has surprisingly reported sluggish figures for the last quarter, largely driven by a drop in quarterly sales, particularly in their recently launched Creative Cloud software suite, which allows those seeking the Adobe range of digital products to access them through the web without any need to purchase the software.

According to estimates issued by the company before the figures were released, Adobe expected an adjusted profit of around 29 cents per share on revenue, which was expected to run between $1.03 billion-$1.08 billion for the third quarter of the year, which ended at the end of August, while market analysts generally concurred, with estimates averaging an adjusted profit of 31 cents per share on revenue of $1.09 billion.

Ultimately revenue for the period came to just $1.01 billion, with profit per share reaching just 28 cents a share, with revenue from Adobe’s digital media business, taking in the Creative Cloud and document services, dropped by around 2.4 percent to $621.4 million for the quarter.

In the last year Adobe has made a concerted effort to offering web-based subscription for its Creative Suite 6 as well as selling through traditional box licenses in an effort to enjoy recurring income from online subscriptions which allows the software users to access all of the most up-to-date versions of their software for a fixed monthly payment.

According to figures recently issued by Adobe the number of customers subscribing to Creative Cloud, which takes in the super popular Photoshop, Illustrator and InDesign graphics software has risen by half a million so far in 2014, now currently sits at approximately 2.8 million.

In this industry experts point out that the surprise drop in revenue and profits has been driven by an innate resistance from small to medium-size customers to commit themselves to taking long-term subscriptions to access software through the cloud, preferring to hang onto older versions of the software instead.

Doing slightly better was Adobe’s digital marketing business, which offers marketing campaign management and analytics tools, who succeeding in increasing their revenue by 8 percent for the quarter to $336.6 million.

On the news Adobe shares dropped by close to 5% in extended trading, although shares in the company have risen steadily this year, up by 18% since the beginning of the year, before the current setback.

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