Adobe Tops 4Q Expectations as Cloud Service Grows

Adobe (NASDAQ:ADBE) reported stronger-than-expected fourth-quarter profit and sales late Thursday as its new cloud service and subscription model continued to gain traction.

The San Jose, Calif.-based software maker posted net income of $222.3 million, or 44 cents a share, compared with a year-earlier profit of $173.7 million, or 35 cents.

Excluding one-time items, Adobe earned 61 cents, topping average analyst estimates of 57 cents in a Thomson Reuters poll.

Revenue for the three-month period ended Nov. 30 was $1.15 billion, virtually flat from a year ago but beating the Street’s view of $1.1 billion.

Adobe CEO Shantanu Narayen touted the company’s success with its entry into the cloud, noting that Adobe surpassed its Creative Cloud subscription goals.

“In fiscal 2013 we intend to accelerate our pace of innovation, and drive integration between Creative Cloud and Adobe Marketing Cloud,” Narayen said

The company added about 10,000 Creative Cloud subscriptions per week during the quarter, compared with an average of just 8,000 weekly in the third quarter, with Adobe Marketing Cloud revenues reaching a record $220.4 million, a 32% increase year-over-year.

At the same time, Adobe said it was driving migration to a subscription model in its creative business faster than it predicted a year ago.

“We are confident fiscal 2013 will be the pivotal year for the transition,” Adobe CFO Mark Garrett said. “This will yield a stronger, more predictable recurring revenue model with higher long-term revenue growth.”