Adobe Agrees to Buy Stock-Photography Web Firm for $800 Million

By Tess Stynes 

Adobe Systems Inc. agreed to acquire privately-held stock-photography website company Fotolia for roughly $800 million and reported, earnings excluding one-time items, that topped expectations as well as strong growth in Creative Cloud subscriptions for the quarter ended November.

Shares rose 7.1% to $74.69 in recent after-hours trading.

Fotolia company is owned by Kohlberg Kravis Roberts & Co. LP, TA Associates and management. When the deal closes, expected in the second half of Adobe's recently started business year, Fotolia Chief Executive Oleg Tscheltzoff, will continue to lead the Fotolia team as part of Adobe's digital media business.

The maker of Photoshop and Illustrator design software has been transitioning to cloud services, which generate monthly subscription revenue, and away from packaged software, which has been based on large upfront payments.

Adobe in September said it acquired privately held Aviary, a deal that gives it a developer of software development kits, or mobile SDKs, used to create mobile apps. Adobe expects that deal will step up its strategy to make its Creative Cloud a platform for third-party apps.

The company added 644,000 new Creative Cloud subscriptions in the latest quarter. Adobe had subscriber additions to surpass the 502,000 subscribers added in the previous quarter.

For the period ended Nov. 28, Adobe reported a profit of $73.3 million, or 14 cents a share, up from $65.3 million, or 13 cents a share, a year earlier. Excluding stock-based compensation, restructuring charges and other items, earnings rose to 36 cents from 32 cents. Revenue increased 3% to $1.073 billion.

Adobe expected per-share profit of 26 cents to 32 cents and revenue of $1.025 billion to $1.075 billion.

Write to Tess Stynes at [e-mail]

Access Investor Kit for Adobe Systems, Inc.

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US00724F1012

Access Investor Kit for KKR & Co. LP

Visit http://www.companyspotlight.com/partner?cp_code=P479&isin=US48248M1027

Subscribe to WSJ: http://online.wsj.com?mod=djnwires