A million cloud subscribers in Adobe results

ADOBE, known for its photoshop and acrobat software, reported an eight per cent drop in quarterly revenue last night but exceeded its forecast of paid subscriber additions, sending its shares up four per cent in late trading.

Revenues of $995.1m (£655.4m) were well within the company’s target range with the company’s recent purchase of Neolane adding around $6m.

The company added 331,000 paid subscribers in the third quarter to creative cloud, the subscription-based version of its flagship software package, which includes photoshop, illustrator and flash, ending the quarter with 1.3m paid subscribers.

Adobe said in June it expects the addition to paid subscribers for creative cloud in the third quarter to top the 221,000 subscribers it added in the second quarter. Net income fell to $83m, or 16 cents per share, in the third quarter, from $201.4m, or 40 cents per share, a year earlier.

Shantanu Narayen, president and CEO of Adobe, said: “We exceeded one million subscriptions during the third quarter, demonstrating that the transition to creative cloud is happening sooner than expected.”

Mark Garrett, the firm’s chief financial officer, added: “Our customers are overwhelmingly choosing subscriptions instead of perpetual model licenses which is accelerating our business model transition.”

“During the third quarter, 41 per cent of our revenue was recurring and we exited the quarter with record deferred revenue on our balance sheet. These results are building a stronger, more predictable revenue model for Adobe which will drive higher long-term growth.”

The company also appears to be taking a bigger step into hardware, announcing definitive plans to release a digital ruler and “cloud pen” yesterday. The ruler has been named Project Napoleon, and the pen is being referred to as Project Mighty.