Adobe revenue trails estimates, hurt by 'cloud' model
Revenue will be recognized over a longer period, the company says.
Adobe (ADBE) trailed Wall Street's revenue estimates in its third quarter as the company ramps up its subscription business.
The San Jose, Calif.-based firm reported revenue of $1.081 billion, below analysts' expectations of $1.10 billion and at the low end of its own guidance of $1.075 billion to $1.125 billion. Adobe took a $9 million hit from currency losses.
Excluding items, Adobe earned 58 cents a share, in line with the forecast from analysts surveyed by Thomson Reuters.
Adobe, however, said that as customers migrate from its older Creative Suite perpetual licensing model to new Creative Cloud subscriptions, revenue is recognized over a longer period of time.
"We're on a path to drive millions of subscribers to our Creative Cloud offering, as well as build a billion dollar SaaS [software as a service] business in Digital Marketing," said Mark Garrett, Adobe CFO's, in a statement. "This will drive higher long-term growth and create a large recurring revenue stream."
The Apple (AAPL) and Microsoft (MSFT) rival expects fourth-quarter revenue between $1.075 billion and $1.125 billion, compared to analysts' forecast of $1.21 billion. Excluding items, Adobe's looking for fourth-quarter earnings between 53 cents and 58 cents a share. Analysts surveyed by Thomson Reuters are predicting earnings of 67 cents a share.
Adobe shares slipped 0.7% to $32.90 in extended trading on Wednesday.
More from TheStreet.com
Copyright © 2014 Microsoft. All rights reserved.
Start investing in technology companies with help from financial writers and experts who know the industry best. Learn what to look for in a technology company to make the right investment decisions.
With new apps geared toward booking business trips, two startup stars of the sharing economy aim to tap into the lucrative -- and highly competitive -- corporate travel market.
VIDEO ON MSN MONEY
MUST-SEE ON MSN
A charcuterie master shares his process for cold-smoking meat at home.
- Jetpacks about to go mainstream
- Weird things covered by home insurance
- Bing: 70 percent of adults report 'digital eye strain'