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Adobe's fourth-quarter forecast, marketing software unit disappoint

FILE PHOTO: An Adobe Systems Inc software box is seen in Los Angeles

(Reuters) - Adobe Inc <ADBE.O> on Tuesday gave a tepid current-quarter revenue forecast and said that bookings in its newly acquired marketing software unit were growing slower than expected, sending shares nearly 3% in after-market trading.

The company bought marketing software firm Marketo for $4.75 billion last year, adding business-to-business marketing applications to its creative tools.

Adobe is best known for its content creation tools used by marketers to reach consumers, but of late it has been shifting focus to woo business marketers who target other companies.

"Third-quarter bookings growth from Marketo in the mid-market did not meet our expectations," Chief Executive Officer Shantanu Narayen said on a conference call with analysts.

Major technology companies are vying for a share of the cloud market, which according to research firm Canalys Cloud Channels Analysis was worth $28 billion in the second quarter.

Adobe is the world's third-largest cloud software provider, with a 9.3% market share. Microsoft Corp <MSFT.O> accounts for 17.8% of the overall market and Salesforce <CRM.N> 12.5%.

Adobe said it expects revenue of about $2.97 billion in the fourth quarter, below estimates of $3.03 billion, according to IBES data from Refinitiv.

Revenue from its digital media unit, home to image-editing software Photoshop, rose 22% to $1.96 billion in the third quarter, but that was the slowest year-on-year increase in at least 10 quarters.

Net income rose to $792.8 million, or $1.61 per share, in the third quarter from $666.3 million, or $1.34 per share, a year earlier.

Excluding items, Adobe earned $2.05 per share and beat analysts' average estimate of $1.97 per share, .

Revenue rose 24% to $2.83 billion, beating expectations of $2.82 billion.

The company's shares, which have risen nearly 26% this year, were down 2.7% at $277.09 in after-market trading.


(Reporting by Neha Malara in Bengaluru; Editing by Arun Koyyur and Shounak Dasgupta)