Adobe Results Top Estimates; To Buy Fotolia

(RTTNews) - Publishing and design software maker Adobe Systems Inc. (ADBE) said Thursday after the markets closed that its fourth quarter profit rose 12% from last year, helped by strong growth in subscription revenue amid accelerated adoption of the company's cloud solutions.

The company's quarterly earnings per share, excluding items, also came in above analysts' expectations as did its quarterly revenue. However, the company gave weak outlooks for the current quarter and the current fiscal year.

Adobe also said that it has agreed to buy privately-held Fotolia, a marketplace for royalty-free photos, images, graphics and HD video, for about $800 million in cash.

Founded in 2004, with offices in New York, Paris and Berlin, Fotolia is currently owned by Kohlberg Kravis Roberts & Co. L.P., TA Associates and management. Fotolia currently operates in 23 countries and has websites in 14 languages.

The deal is expected to close in the second half of Adobe's fiscal 2015 first quarter. Fotolia will be integrated into Adobe Creative Cloud, providing current and future Creative Cloud members with the ability to access and purchase over 34 million images and videos, significantly simplifying and accelerating the design process.

"Adobe had an outstanding 2014. Creative Cloud adoption outpaced expectations and the acquisition of Fotolia will add a vibrant marketplace for our customers. Adobe Marketing Cloud, the leader in the explosive digital marketing category, continued to drive strong bookings at the world's biggest brands, agencies and media companies," said Shantanu Narayen, Adobe president and chief executive officer.

"2014 was a pivotal year for Adobe as we completed our business model transition," said Mark Garrett, Adobe executive vice president and chief financial officer. "In 2015 we expect revenue and earnings to grow sequentially every quarter during the year."

Adobe shares are currently gaining 7.80% in after hours trading after closing the day's regular trading session at $69.74, down 11 cents. The shares trade in a 52-week range of $53.93 to $74.69.

For the fourth quarter ended November 28, 2014, the San Jose, California-based company reported net income of $73.3 million or $0.14 per share, compared to $65.3 million or $0.13 per share for the year-ago quarter.

Excluding items, adjusted net income for the fourth quarter was $180.3 million or $0.36 per share, compared to $164.6 million or $0.32 per share in the prior year quarter.

On average, 20 analysts polled by Thomson Reuters expected the company to earn $0.30 per share for the fourth quarter. Analysts' estimates typically exclude special items.

Adobe, famous for its Photoshop editing and Acrobat document-sharing software, said total revenue for the fourth quarter rose 3% to $1.07 billion from $1.04 billion in the same quarter last year. Eighteen analysts had a consensus revenue estimate of $1.06 billion for the fourth quarter.

For the fourth quarter, Adobe had forecast adjusted earnings of $0.26 to $0.32 per share and revenue of $1.03 billion to $1.08 billion.

The company said 66% of its fourth quarter revenue was from recurring sources, compared to 44% of last year's fourth quarter revenue.

Products revenue for the quarter fell 42% from a year ago to $3328.0 million, while subscription revenue surged 75% to $639.0 million and services and support revenue increased 1.5% from last year to $116.4 million.

Adobe added 644,000 net new Creative Cloud subscriptions in the quarter.

The company repurchased about 1.8 million shares during the fourth quarter, returning about $127 million of cash to shareholders.

Looking forward to the first quarter, the company forecasts revenue of $1.05 billion to $1.10 billion, earnings of $0.14 to $0.20 per share and adjusted earnings of $0.34 to $0.40 per share. Analysts currently expect the company to earn $0.39 per share on revenue of $1.10 billion for the first quarter.

For the fiscal year 2015, the company forecasts revenue of about $4.85 billion, earnings of $1.20 per share and adjusted earnings of $2.05 per share. Analysts currently expect the company to earn $2.07 per share on revenue of $4.93 billion for the fiscal year 2015.