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Adobe 2Q profit shrinks but subscriptions grow

NEW YORK (AP) -- Software maker Adobe Systems Inc. said Tuesday that its profit shrank in the fiscal second quarter, but its Creative Cloud subscriptions kept climbing and its shares advanced in aftermarket trading.

The San Jose, Calif., company makes popular software like Adobe Reader and Photoshop. It has been shifting its business to a subscription format and said revenue from subscriptions climbed 60 percent in March through May from a year ago, to $254.5 million.

Adobe shares gained $1.93, or 4.5 percent, to $45.29 in aftermarket trading. The stock fell 3 cents to $43.36 Tuesday.

Net income shrank by two-thirds, to $76.6 million, or 15 cents per share, from $233.9 million, or 45 cents per share. The company said it earned 36 cents per share if one-time costs are excluded.

Revenue fell 10 percent, to $1.01 billion from $1.12 billion.

Analysts expected Adobe to report adjusted earnings of 33 cents per share on $1.01 billion in revenue, according to FactSet.

Adobe had 700,000 paid subscriptions at the end of the period, boosting subscription revenue. But product revenue fell 26 percent to $644.9 million. Service and support revenue grew 18 percent to $111.1 million.