Adobe beats revenue, profit estimates for fourth quarter, shares rise

The Adobe Systems Creative Cloud application is displayed on an Apple iPhone in an arranged photograph taken in Tiskilwa, Illinois.Daniel Acker | Bloomberg | Getty Images

Adobe beat Wall Street estimates for fourth-quarter revenue and profit on Thursday on higher subscriptions in its core digital media business, which includes the flagship Creative Cloud suite of software.

The company's shares were up 2.7% in trading after the bell.

In a cloud market dominated by application software providers such as Microsoft and Salesforce.com, Adobe has carved a niche for its creativity and design-related software offerings such as Photoshop and Illustrator.

Revenue from its digital media unit rose about 22% to $2.08 billion in the quarter, edging past estimates of $2.05 billion according to IBES data from Refinitiv.

The company's net income rose to $851.9 million, or $1.74 per share, in the quarter ended Nov. 29, from $678.2 million, or $1.37 per share, a year earlier.

Excluding items, Adobe earned $2.29 per share. Analysts, on average, had expected $2.26 per share.

The company, however, forecast first-quarter revenue of $3.04 billion below Wall Street expectations of $3.09 billion, as it faces intense competition in a fast-growing cloud market, which is expected to grow to $266.4 billion in 2020, according to a report by Statista.

Total quarterly revenue rose about 21% to $2.99 billion. Analysts were expecting revenue of $2.97 billion.