Design software maker Adobe Systems Inc's sales outlook for the fourth quarter was buoyed by new customer additions, allaying investor fears of a slowdown in its growth.
The forecast sent shares of the software maker up 7 percent in extended trade. They have fallen 21 percent since June, when the company warned that a weak European economy could sap demand for its products.
Adobe is trying to woo web developers by updating its suite of products to keep pace with new trends and is moving to support the increasingly popular HTML5 programing language as technology giants like Apple and Microsoft avoid its once ubiquitous Flash technology.
The company, also known for its Photoshop software and Acrobat reader, expects all of its business segments to grow sequentially barring the print and publishing segment which is expected to remain flat, CFO Mark Garrett said on a call with analysts.
We would also expect all of our major geographies to grow sequentially, he said, easing concerns over slowing demand in Europe, which contributes 30 percent to its sales.
The company expects adjusted profit of 57-64 cents a share, largely topping analysts' forecast of 58 cents, according to Thomson Reuters I/B/E/S.
Adobe, which reported third-quarter revenue below expectations, projected sales of $1.08-$1.13 billion for the fourth quarter, ahead of the average forecast of $1.07 billion.
The quarter was at the low-end in terms of revenue. I think there were some challenges there during the quarter, said Pacific Crest Securities analyst Chad Bartley.
The stock is rallying after market, however, because their fourth-quarter guidance is very strong and that is surprising people.
For the fiscal third-quarter, net profit fell to $195.1 million, or 39 cents per share, from $230.1 million, or 44 cents per share, in the year-ago quarter.
Excluding items, it reported a profit of 55 cents per share. Wall Street expected 54 cents per share, on average, according to Thomson Reuters I/B/E/S.
Sales rose 2 percent to $1.01 billion. Analysts were expecting $1.03 billion. Product revenue fell 2 percent to $815 million in the quarter.
Shares of the company were up $1.86 in after-market trading on Nasdaq, after closing at $24.64 earlier in the day.
(Reporting by Siddharth Cavale in Bangalore; Editing by Saumyadeb Chakrabarty)