Earnings Results: Adobe stock falls as recurring revenue figures barely top Street view

The company reported third-quarter net income of $1.21 billion, or $2.52 a share, compared with $955 million, or $1.97 a share, in the year-ago period. Adjusted earnings were $3.11 a share, compared with $2.57 a share a year ago. Revenue rose to a record $3.94 billion from $3.23 billion in the year-ago quarter.

Analysts surveyed by FactSet had forecast earnings of $3.01 a share on revenue of $3.89 billion, based on Adobe’s forecast of about $3 a share on revenue of about $3.88 billion.

“Adobe had another outstanding quarter as Creative Cloud, Document Cloud and Experience Cloud continue to transform storytelling, learning and conducting business in a digital-first world,” said Shantanu Narayen, president and chief executive of Adobe, in a statement.

Annual recurring revenue, a software-as-a-service metric that shows how much revenue the company can expect based on subscriptions, for digital media was $11.67 billion. Analysts had forecast $11.65 billion.

ARR for Adobe’s creative segment was $9.87 billion, while the Street had forecast $9.86 billion, and ARR for its document cloud segment was $1.79 billion, compared with the Street forecast of $1.79 billion.

“We drove record revenues and strong profitability in the quarter, demonstrating our ability to succeed in a dynamic environment,” said John Murphy, Adobe chief financial officer, in a statement.

Adobe expects fourth-quarter adjusted earnings of about $3.18 a share on revenue of about $4.07 billion, while analysts forecast earnings of $3.08 a share on revenue of $4.04 billion.

Adobe shares are up 36% over the past 12 months, compared with a 33% gain in the S&P 500 index 
SPX,
-0.08%,
a 37% rise in the tech-heavy Nasdaq Composite Index 
COMP,
+0.22%,
 and a 36% increase in the iShares Expanded Tech-Software Sector ETF 
IGV,
+0.20%.