Adobe's Q3, Q4 outlook fall short, but Creative Cloud surges

Adobe handles the cloud transition well, but the third quarter and fourth quarter outlook miss Wall Street expectations.

Adobe's third quarter results fell short of expectations, but the company continues to prove it can transition to be a software as a service player.

The company reported third quarter earnings of $83 million, or 16 cents a share, on revenue of $995.1 million, a tally that was down from $1.08 billion a year ago. Non-GAAP earnings were 32 cents a share. Wall Street was expecting Adobe to report third quarter earnings of 34 cents a share on revenue of $1.01 billion.

On the positive side of the ledger, Adobe said that it has more than 1 million Creative Cloud subscriptions with strong enterprise adoption. Cloud revenue for Adobe was up 28 percent in the third quarter to $254.9 million.

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CEO Shantanu Narayen said that Adobe was on a $1 billion annual revenue run rate with its marketing cloud.

As for the outlook, Adobe projected fourth quarter revenue of $1 billion to $1.05 billion with non-GAAP earnings of 28 cents a share to 34 cents a share. Wall Street was expecting fourth quarter earnings of 41 cents a share on revenue of $1.08 billion.

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