SAN FRANCISCO — Adobe Systems Inc. reported Monday that its third-quarter profit more than doubled from last year, setting a revenue record and easily exceeding Wall Street’s expectations as the software company comes off its biggest-ever product launch.
Net income for the three months ending Aug. 31 was $205.2 million, or 34 cents a share, surging 117 percent from $94.4 million, or 16 cents a share, in the same quarter of last year.
Third-quarter sales were a record $851.7 million, up 41 percent from $602.2 million in the third quarter of 2006.
Excluding costs for expenses, such as stock-based compensation and restructuring charges related to the December 2005 acquisition of Macromedia Inc., profit was $269.4 million, or 45 cents per share, compared with $171.5 million, or 29 cents per share, in the year-ago quarter.
Analysts were expecting Adobe to earn $246.6 million, or 40 cents per share, on revenue of $789.3 million, according to a Thomson Financial survey.
“By any account, it was an extraordinary quarter,” said Shantanu Narayen, Adobe’s president and chief operating officer. “As long as the economy continues to perform, we believe we can be a double-digit growth company for many years to come.”
Shares of San Jose, Calif.-based Adobe dropped 35 cents, or less than 1 percent, to close at $43.06 Thursday before the financial report. They surged another $1.65 in after-hours trading.
Adobe executives said Monday they expected fourth-quarter revenue of $860 million to $890 million. They expect net income to be 35 cents to 37 cents per share, or 46 cents to 48 cents per share excluding certain one-time expenses.
Even analysts who’ve followed Adobe for years said third-quarter results were a pleasant surprise.
“This kind of high upside doesn’t happen too often with big-revenue companies,” said analyst Gene Munster of Piper Jaffray &Co., who said much of the quarter’s success can be traced back to strong early sales of Creative Suite 3, which Adobe launched in April and includes updates to some of the company’s most popular programs, such as Photoshop and Illustrator.
“CS3 is a game-changing product,” Munster said.
The company, which employs roughly 6,700 workers, had $559.3 million in cash at the end of last quarter.
Adobe is just coming off the most significant product launch in the company’s 25-year history. Adobe is known for software that’s both popular and expensive, and it enjoys cult status among creative professionals such as photographers, video editors and Web designers.
In June, Adobe unveiled its Visual Communicator 3 software, which is designed to create video broadcasts. The company also released its LiveCycle Enterprise Suite, which contains applications for automating processes.
Walter Pritchard, an analyst at Cowen and Co. LLC, said Adobe’s biggest challenge is staying ahead of competing products from Microsoft Corp. and of open-source software that rivals Adobe mainstays such as Flash.
To maintain its stock price, Pritchard said, the company must maintain scorching growth rates as the product launch tapers off.
“After May 2008, they run into tougher comparisons,” Pritchard said. “The biggest challenge is then being able to continue this kind of momentum and not have investors think it has peaked.”
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