Adobe Systems reported third quarter earnings, missing analyst expectations. Adobe’s revenue came in at $1.08 billion, up 7 percent from the same quarter last year (analysts expected sales of $1.1 billion). Earnings were $0.58 on a non-GAAP basis ($0.40 on a GAAP-basis), which is inline with what Wall Street expected.
Operating income was $278.3 million and net income was $201.4 million on a GAAP-basis. Operating income was $391.8 million and net income was $291.2 million on a non-GAAP basis. Cash flow from operations was $263.3 million for the quarter.
“Customers globally are adopting our new Creative Cloud subscription offering more quickly than we projected,” said Shantanu Narayen, president and CEO of Adobe, in a release. “We are the leader in the fast-growing Digital Marketing category with 40 percent year-over-year Digital Marketing Suite revenue growth this quarter.”
Adobe says Creative Cloud paid subscriptions grew to approximately 200,000 in the third quarter, exceeding targets for the company. The company’s Digital Marketing Suite achieved record quarterly revenue with 40 percent year-over-year growth. The company also said that as Adobe customers migrate from a legacy Creative Suite perpetual licensing model to new Creative Cloud subscriptions, revenue is recognized over time as opposed to at the time of purchase. This resulted in approximately $29 million more perpetual revenue than expected to Creative Cloud.
In addition, the effect of currency impacted Q3 revenue negatively by approximately $9 million. Adjusting for these amounts in Adobe’s reported results would have enabled the Company to achieve third-quarter revenue toward the high-end of its targeted range.
For the fourth quarter of fiscal 2012, Adobe is targeting revenue of $1.075 billion to $1.125 billion, and earnings of $0.53 to $0.58 on a non-GAAP basis.