Adobe fourth-quarter revenue forecast disappoints; shares drop

FILE PHOTO: An Adobe Systems Inc software box is seen in Los Angeles, California, U.S., March 13, 2017. REUTERS/Lucy Nicholson/File Photo

(Reuters) – Adobe Inc (ADBE.O) on Tuesday forecast fourth-quarter revenue below Wall Street expectations as the software maker faces intense competition in a fast-growing cloud market, sending shares down 4.3% in after-market trading.

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The company said it expects revenue of about $2.97 billion in the current quarter, below estimates of $3.03 billion.

Major technology companies are vying for a share of the cloud market, which according to research firm Canalys Cloud Channels Analysis was worth $28 billion in the second quarter.

Adobe is the world’s third largest cloud software provider, with 9.3% market share. Microsoft Corp (MSFT.O) accounts for 17.8% of the overall market and Salesforce (CRM.N) 12.5%.

Revenue from its digital media unit, home to its flagship Creative Cloud products that includes image-editing software Photoshop, rose 22% to $1.96 billion in the third quarter, beating estimates of $1.93 billion.

Net income rose to $792.8 million, or $1.61 per share, in the quarter from $666.3 million, or $1.34 per share, a year earlier.

Excluding items, Adobe earned $2.05 per share and beat analysts’ average estimate of $1.97 per share.

Overall revenue rose 24% to $2.83 billion, beating expectations of $2.82 billion, according to IBES data from Refinitiv.

Reporting by Neha Malara in Bengaluru; Editing by Arun Koyyur

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