Thanks in large part to its acquisition last December of Macromedia, Adobe Systems Inc. disclosed record revenues of $655.5 million for its first fiscal quarter ended March 3 -- up 38.6% from the comparable period last year.
Increased expenses and restructuring charges related to the acquisition, however, caused Adobe's net income for the quarter to drop 30.8% to $105.1 million compared to the $151.9 million that the company reported in the first quarter of last year.
Adobe officials did not separate Macromedia from Adobe's first-quarter results for comparison purposes. Adobe CEO Bruce R. Chizen, however, told financial analysts on a conference call that, excluding results from Macromedia's business, Acrobat's revenues in the first quarter would have grown at a double-digit rate compared to the year-earlier period.
"The business continues to perform well," Chizen said. "We saw record revenues, and earnings per share exceeded our target ranges."
Adobe reported adjusted earnings of 17 cents per share compared to 30 cents per share in the first quarter of last year.
The company's operating expenses, meanwhile, grew faster than its revenues, largely as a result of the acquisition, officials said. Adobe saw $447.8 million in operating expenses in the first quarter, a 62.7% increase over the $276.2 million reported in the first quarter last year.
Adobe reported that its Knowledge Worker group of products -- which includes the Acrobat 3D tool targeted at manufacturers -- grew rapidly in the first quarter. Knowledge Worker revenue in the period reached $168.8 million, and was second only to the first quarter of last year, when Adobe began shipping Acrobat in all major languages, said President and Chief Operating Officer Shantanu Narayen. Narayen said Adobe has seen strong demand for Acrobat 3D, which began shipping in late January.
"We've been very pleased with the early response," Narayen said. "We believe Acrobat has more vertical uses, and we will continue to explore [these] uses."
Adobe reported strong demand for its products in the first quarter in all major geographies.
Company officials predicted that the company's second-quarter revenues would be in a similar range as the first quarter figure -- between $640 million and $670 million, and that earnings per share would grow slightly to between 18 cents and 21 cents per share.
Chizen, however, also said that the third quarter could see a drop-off. That period, he said, is traditionally slow, particularly in Japan and Europe where the summer months cut into buying.
But Chizen predicted that the fourth quarter will be Adobe's largest revenue period of the year, in large part due to the company's plans to begin shipping the next version of Acrobat, release 4.