Adobe Systems (NASDAQ:ADBE) fell in morning trades after the photoshop maker forecast lower-than-expected revenue and profit for the current quarter.
Shares were down 1.4 percent to $78.86 at 10:19 a.m. in New York, paring this year’s gain to 8.4 percent.
Adobe expected an adjusted profit of $0.45 to $0.51 per share on revenue of $1.18 billion to $1.23 billion for the third quarter, the San Jose, California-based company said in a statement late yesterday.
Analysts were expecting a profit of $0.54 per share and revenue of $1.25 billion, according to Capital IQ.
Adobe is switching from traditional box licenses to Web-based subscriptions for its Creative Cloud software bundle for more predictable recurring revenue. Online subscriptions let customers access the latest software versions for a monthly payment. Like industry peers, Adobe opted for subscription cloud services, which in the latest period accounted for 66.6% of revenue.
The company said it expects revenue in its print and publishing business to be relatively flat in the current quarter.
For the fiscal second quarter ended May 29, net income rose to $147.5 million, or $0.29 per share, from $88.5 million, or $0.17 per share, a year earlier.
Stripping out items, the company earned $0.48 per share, beating analysts’ average estimate of $0.45 per share.
Total revenue rose 8.8 percent to $1.16 billion, in line with analysts’ average estimate.
Adobe earlier yesterday launched Adobe Stock, a collection of 40 million photographs, illustrations and graphics, available in 36 countries and 13 languages.
Adobe, founded in 1982, hasn't paid a dividend since 2005, opting instead for share buybacks as a way to pass on some of its cash to shareholders. In the latest period, it retired about 2.6 million shares.
Company officials had said they would consider higher returns to shareholders in 2016 or 2017 as the company cash flow strengthens.