Adobe Systems, the maker of Photoshop and Acrobat software, forecast current-quarter profit and revenue above analysts' estimates, citing strong demand for its Creative Cloud suite and digital marketing software.
Shares of the company, which also posted better-than-expected results for the first quarter ended Feb. 28, rose 1 percent in extended trading.
The company net added 405,000 paid users for its Creative Cloud suite, which includes Photoshop, Illustrator and Flash software, taking its total user base to 1.84 million as of Feb. 28.
"We are making good progress migrating individual, team and enterprise customers to Creative Cloud ... retention and renewal rates after promotions expire continue to track ahead of our internal projections," Chief Executive Shantanu Narayen said on a conference call with analysts.
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R.W. Baird analyst Steve Ashley said Adobe's results were "solid through and through" and the company's user additions and annualized recurring revenue (ARR) were better than expected.
Macquarie Securities analyst Brad Zelnick said the results showed that Adobe's subscription-based growth strategy was working.
Adobe said it would soon phase out the traditional box license versions of its Creative Suite 6 and offer the software only on a web-based subscription model.
Subscription models bring in less money upfront, but they usually ensure more predictable recurring revenue.
Revenue from the company's digital marketing software unit rose 17 percent in the first quarter as revenue from Adobe Marketing Cloud software rose by about a quarter.
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The company offers Creative Cloud and document services under its digital media unit, while its digital marketing unit offers marketing analytics tools, document management and web conferencing software.