Adobe Tops Expectations

SAN FRANCISCO - - Adobe Systems (ADBE Quote) outpaced the Street's second-quarter expectations Monday on growing demand for its creative and Web-based software.

The San Jose, Calif., software company's revenue grew 19% to $886.9 million, from $745.6 million in the same quarter of last year. Analysts were expecting revenue of $880 million, according to Thomson Reuters.

"Demand for digital content continues to explode," CEO Shantanu Narayen said on the conference call. The company is well positioned going forward in terms of product mix and geographic diversity, he added.

Net income jumped 41% to $214.9 million, or 40 cents a share, from $152.5 million, or 25 cents a share, in the year-ago period.

Excluding items, EPS was 50 cents. On that basis, analysts were looking for EPS of 46 cents.

Shares were down 35 cents, or 0.8%, to $42.50 in extended trading.

For the third quarter, Adobe expects revenue of $855 million to $885 million and EPS, excluding items, of 45 cents to 47 cents. Analysts were expecting a top line of $878 million and EPS, less items, of 45 cents.

Deferred revenue was $216.4 million, up 3.4% year over year. Foreign exchange rates provided a $44 million benefit, CFO Mark Garrett said.

Creative Solutions revenue grew 21% year over year to $527.2 million, Garrett said. Business-productivity software rose 10% year over year to $252.8 million. And other revenue was up 25% to $84.7 million.

Adobe's fledgling mobile software business grew 80% to $22.2 million, largely on the basis of a single contract with a mobile device manufacturer. Garrett said that growth rate will not be typical going forward.