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Shares of Adobe Systems Incorporated (ADBE 2.25%) jumped more than 9% Friday after the company announced better-than-expected fiscal fourth quarter results.
Why it's happening
Quarterly revenue climbed 3% year-over-year to $1.073 billion -- near the high end of Adobe's own targeted range -- which translated to adjusted earnings of $0.36 per diluted share. Note the latter figure was bolstered in part by Adobe's decision to repurchase roughly 1.8 million shares for $127 million during the quarter. Analysts, on average, were only modeling earnings of $0.30 per share on sales of $1.06 billion.
More importantly, Adobe added 644,000 net new Creative Cloud subscribers during the quarter. This marks yet another sequential acceleration from the 502,000 and 464,000 Creative Cloud subscribers Adobe added last quarter and in fiscal Q2, respectively. Meanwhile, Adobe Marketing Cloud revenue rose to $330 million, which is a much more modest 4.4% year-over-year gain, but also came amid record bookings for the product. All told, 66% of Adobe's revenue came from recurring sources during the quarter, compared to 63% in fiscal Q3 and 44% during the same year-ago period.
Adobe also announced it has entered into an agreement to acquire privately held stock photo specialist Fotolia, which it insists will add a "vibrant marketplace" for Creative Cloud users.
Finally, Adobe CFO Mark Garrett summed it up well, and added color on things to come by stating, "2014 was a pivotal year for Adobe as we completed our business model transition. In 2015, we expect revenue and earnings to grow sequentially every quarter during the year."