Adobe Projects Slower Sales Growth for Marketing Products

(Bloomberg) -- Adobe Inc. gave a revenue forecast for the current period that fell short of Wall Street estimates, signaling slower sales growth for its newer marketing products.

Revenue will be about $2.97 billion in the period ending in November, the San Jose, California-based company said Tuesday in a statement. Analysts projected $3.02 billion, according to data compiled by Bloomberg.

Chief Executive Officer Shantanu Narayen has made several acquisitions in the past two years for marketing and e-commerce products to boost revenue, which has climbed at least 20% each quarter since 2015. While the company has put more emphasis on corporate applications to compete with rivals Salesforce.com Inc. and Oracle Corp., it also recently unveiled new augmented reality and 3D-imaging technology to maintain its advantage as the leader in creative software such as its flagship product, Photoshop.

Sales from Adobe’s experience cloud division, which includes marketing, analytics and e-commerce tools, are projected to increase 23% in the current period after climbing 34% in the fiscal third quarter. Executives said products gained from its 2018 acquisition of Marketo aren’t growing as fast as anticipated. Adobe plans to invest more money to boost sales in the unit, according to prepared remarks from Chief Financial Officer John Murphy.

Murphy said Adobe also has had challenges generating bookings for its Analytics Cloud, which sits atop a new Experience Platform meant to connect clients’ data. The company believes the ongoing global introduction of the software platform will lift revenue, he said.

Adobe’s shares declined about 3% in extended trading after closing at $284.69 in New York. The stock has climbed 26% this year after a 29% gain in 2018.

Profit, excluding some items, will be $2.25 per share in current quarter, the company said. Analysts estimated $2.30 a share.

In the period ended Aug. 30, sales jumped 24% to $2.83 billion from a year earlier. Adjusted profit was $2.05 a share. Analysts projected profit of $1.97 a share on revenue of $2.82 billion.

Sales in the creative cloud division, which includes Photoshop, jumped 22% to $1.96 billion in the quarter and are projected to increase 20% in the current period.

(Updates with additional details on experience cloud’s slower growth in fifth paragraph.)

To contact the reporter on this story: Nico Grant in San Francisco at ngrant20@bloomberg.net

To contact the editors responsible for this story: Jillian Ward at jward56@bloomberg.net, Andrew Pollack, Alistair Barr

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