The quarterly revenue of Adobe Systems Inc (NASDAQ: ADBE), a software developer, and its annual revenue forecast barely reached the analysts' estimates, disappointing investors who had hoped that the demand for Adobe Creative Cloud, a package of applications, will exceed all expectations.
Moreover, if Adobe's revenue in the second quarter were generally in line with expectations of analysts polled by Reuters, the company's forecast for the current quarter was significantly below market estimates.
Despite the fact that Adobe, which is usually quite conservative in their forecasts, said it expects "to reach or surpass" the projected figures for 2016, the developer did not revise upward their expectations for profits and revenues for the period, as was done in March.
Adobe's revenue in the second quarter rose 20.4 % to $ 1.40 billion due to the increase in the number of subscribers to the Creative Cloud package, which include applications such as Photoshop, Dreamweaver and Flash.
The sales of digital media division, which includes the Creative Cloud, jumped 26% to $ 943 million, which is a little bit lower than analysts' estimates of $ 944.3 million, according to market research firm FactSet StreetAccount.
According to the forecast of Adobe, total revenue in the third quarter will be in the range of $ 1.42- $ 1.47 billion, implying a growth of 16.4-20.5% year on year. The forecast nevertheless proved to be much worse than analysts' expectations – they expect a growth to $ 1.47 billion.
Wall Street analysts predict that the company's revenue will increase by 19-22 % in the next four quarters.
Adobe net profits in the second quarter rose 65 % to $ 244.1 million, or 48 cents per share. Excluding one-time balance sheet items, the company earned 71 cents per share, beating analysts' estimates at 68 cents.