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People enter the Adobe Systems Inc. office in San Francisco, California, U.S., on Tuesday, June 21, 2011.

David Paul Morris/Bloomberg/David Paul Morris/Bloomberg

Adobe Systems Inc. , maker of Photoshop and Acrobat software, said revenue growth slowed as sales declined ahead of major upgrades to the company's Creative Suite line of digital media programs later this year.

Revenue rose 1.7 per cent to $1.045-billion (U.S.) in its fiscal first quarter ended March 2, slightly below the $1.054-billion average forecast of analysts polled by Thomson Reuters I/B/E/S.

The company had predicted the sales slowdown in December, when it disclosed that fourth-quarter revenue surged 14 per cent.

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The software maker also reported that it had a first-quarter profit, excluding one-time items, of 57 cents per share, matching the average analyst forecast.

Adobe released its results as analysts are increasingly concerned about the company's plans to launch a Web-based subscription service known as Creative Cloud this year. The company is also preparing a major upgrade to its flagship Creative Suite line of design programs, CS6, which include new versions of widely used design titles such as Photoshop, Illustrator, InDesign, Flash and Dreamweaver.

Adobe's sales typically surge after a Creative Suite upgrade, but analysts have said the upswing might be smaller than in the past because customers who switch to the new service will no longer need to buy their software up front. Instead they will enter into long-term subscription agreements that allow them to rent the software and make lower initial payments. They will get extra features such as document storage at Adobe data centres.

Adobe said it expects to post second-quarter revenue of $1.090-billion to $1.140-billion, compared with the average analyst forecast of $1.1-billion.

It forecast second-quarter profit, excluding items, of 57 to 61 cents per share, compared to the Street view of 60 cents.

Shares of Adobe closed at $34.51 on Nasdaq and fell 4.4 per cent to $33.00 in extended trading.

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