Adobe Projects Sales Topping Estimates on Creative Growth

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(Bloomberg) -- Adobe Inc. gave a forecast for revenue in the current quarter that topped analysts’ estimates and raised its annual guidance, a sign that creative software applications continue to drive strong growth.

Sales will be about $3.72 billion in the period ending in May, the San Jose, California-based company said Tuesday in a statement. Analysts, on average, estimated $3.69 billion, according to data compiled by Bloomberg. Profit, excluding some items, will be about $2.81 a share. Analysts projected $2.70.

The maker of Photoshop raised its 2021 fiscal year revenue forecast to $15.45 billion from $15.15 billion and said sales in its main digital media segment would increase 22% after earlier projecting 19% growth. Adjusted earnings will be about $11.85 a share, an increase from $11.20 previously forecast.

Chief Executive Officer Shantanu Narayen has pitched new creative software tools to continue Adobe’s revenue growth. The company in October introduced a version of its popular app, Illustrator, for Apple Inc.’s iPad, as part of an effort to offer its products on more devices being used by professionals and hobbyists. Document Cloud products, including PDF and electronic signature software, have surged with millions working from home. That experience appears to have changed behavior in a lasting way, according to a note from Cowen & Co., allaying concerns that these digital tools would become less popular once people return to the office.

“Adobe’s Creative Cloud, Document Cloud and Experience Cloud have become mission critical to all customer segments -- from students to individuals to large enterprises -- across the world,” Narayen said in the statement.

Shares were little changed in extended trading after closing at $460.20 in New York. The stock has declined 8% this year, after jumping about 50% each of the past two years.

In the fiscal first quarter, sales increased 26% to $3.91 billion, and profit, excluding certain items, was $3.14 a share, compared with the average estimates of $3.76 billion in sales and earnings of $2.79 a share.

Revenue from digital media, which includes the creative and document cloud units, jumped 32% to $2.86 billion in the period. Sales in digital experience, which includes marketing software, increased 24% to $934 million. Both units topped analysts’ average estimates.

Separately, Adobe announced that Chief Financial Officer John Murphy would retire this year. Murphy will remain on the job while the company seeks a successor.

(Updates with CFO retirement in the final paragraph.)

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