Adobe Profits Up in Q3
Web Design & Technology News, December 11, 2003

December 11, 2003

Software publisher Adobe Systems reported record revenue and income for Q4, buoyed by a new version of one of its main graphics packages and by strong growth for its publishing products.
By David Becker

The San Jose, California-based company reported net income of $83.3M, or 35¢ per share, for Q4 of fiscal 2003, which ended November 28. That compares with income of $40.1M, or 17¢ per share, in the same period a year ago.

Excluding one-time charges, Adobe reported earnings of $83M, or 34¢ per share. On that basis, estimates from analysts research firm First Call polled averaged 32¢ per share.

Revenue for Q4 was $358.6M, compared with $294.7M a year ago.

For the year, Adobe reported revenue of $1.29B, up from $1.17B in 2002. Net income for the year was $266.3M, or $1.10 per share, compared with $191.4M, or 79¢ per share, in 2002.

The most significant growth came from Adobe's ePaper division, which produces products and services based on the company's widespread Portable Document Format (PDF) for electronic distribution and presentation of documents. Adobe launched a number of projects during the year aimed at expanding PDF into a broad set of tools for exchanging business data.

Revenue in the ePaper division was $444.1M for 2003, up 42% from a year ago. The division now accounts for more than a third of Adobe's overall revenue.

Shantanu Narayen, executive vice president of worldwide products for Adobe, said he expects continued steady growth from the ePaper division, as businesses migrate to new Adobe server products and services. "I think the results we're seeing are a validation that the platform we've built on the intelligent document side is resonating with customers," he said.

Adobe also launched its most significant product upgrade for the year in Q4, introducing a new version of Photoshop, the company's market-leading image editing application. Photoshop is sold as a standalone product and as part of a Creative Suite that includes new versions of the InDesign page layout program and Illustrator graphics tools.

Narayen said initial response to Creative Suite has been strong but it's still too early to tell how the package will fare against the stand-alone version of Photoshop and other products. "We think the value proposition to the customer in being able to reuse their assets across Web and print production" will push customers toward Creative Suite and boost InDesign's market share over competitor QuarkXpress, Narayen said.

For Q1 of fiscal 2004, Adobe predicted revenue of $460M to $380M and per-share earnings of 33¢ to 36¢. For the full year, revenue is targeted at $1.43B.