Adobe Q1 earnings soar as Creative Cloud subscriptions surpass 500K
Summary: Subscriptions for Adobe's Creative Cloud suite surpass the half-million mark as the software giant reports more than a billion in revenue for Q1.
As the company's digital marketing and cloud strategies continue to unfold, Adobe's latest quarterly earnings report was closely watched after the bell on Tuesday.
The software giant reported first fiscal quarter earnings of $65.1 million, or 13 cents a share (statement). Non-GAAP earnings were 35 cents a share on a revenue of $1.008 billion.
See also: Adobe confirms CTO's departure in SEC filing
Wall Street expected Adobe to report first quarter earnings of 31 cents a share on revenue of $986 million. Following the relese, Adobe shares were initially up by six percent in after hours trading.
Adobe's push to shift its Creative Suite desktop applications to the cloud have proven to be a spectacular success so far.
To get an idea, right ahead of publishing Q1 results, Adobe also revealed a milestone for its Creative Cloud suite as the number of paid subscriptions has surpassed 500,000 in less than one year of availability.
On top of that, free and trial memberships have exceeded at least two million.
In the Q1 earnings report, CEO Shantanu Narayen only highlighted Creative Cloud when reflecting on the quarter:
Creative Cloud is quickly becoming mainstream, with the overwhelming majority of Creative purchases on Adobe.com now being Creative Cloud subscriptions. With Adobe Marketing Cloud, we are the partner of choice for Chief Marketing Officers as we help our customers migrate their businesses online.
Adobe's chief financial officer Mark Garrett hinted that the Creative Cloud is still being built out, remarking that the San Jose-based company is working on "building a stronger, more predictable recurring revenue model which will drive higher long-term growth."
For reference, the paid version of Creative Cloud includes everything from the desktop version of Adobe's popular applications (i.e. Photoshop, etc.) along with additional developer tools, cloud storage, device syncing capabilities and now social media features from the recent acquisition of Behance.
While largely ignored in the report despite being in center stage at the 2013 Adobe Summit this month, the Marketing Cloud platform also performed solidly with a quarterly revenue of $215.4 million, up 20 percent annually.
As for the outlook, analysts are expecting Adobe to report earnings of 34 cents a share on revenue of $1.015 billion.
Adobe is projecting Q2 revenue to fall within the range of $975 million to $1.025 billion with non-GAAP earnings of 29 to 35 cents per share.
Slides via Adobe Investor Relations
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Talkback
I'm thinking this is the one and only reason Apple hired Kevin Lynch
LOL
...Have you TRIED buying Photoshop on a plastic disc from their website? You're basically stuck getting it from Amazon if you explicitly want to get anything besides a Creative Cloud subscription anymore.
It seems that their solution was this:
1.) Have the de facto standard media creation tools.
2.) Make users have to take extra, very explicit steps to avoid getting those tools through conventional (legal) means.
3.) Make every 'buy' button on the website point to a subscription.
4.) Congratulate yourself as to how many people have "chosen" to subscribe to the software.
5.) Apparently, Profit.
Joey
500,000 is not a lot!
It isn't time for this. People do not trust the internet like that and they certainly do not trust big business. All it's going to do is force people to use other options - and despite what some are saying there ARE other options to each program and function. You might not find 3D and animation in another paint program - but you can find two programs that have the same or even superior functionality (lets say, for example the combination of the FREE DAZ3D or Blender with Corel Graphic Suite or Paint Shop Pro). Some people are saying other software is not as intuitive or buggy - well so is Adobe's products - that's why people need to take tutorials and read books in order to "Master" it. You put that same effort into any other software and it will be easy to use too.
We shall see how this pans out - not right now, they are riding the wave of the newbie customers. later, when the real Pros are fully knowledgeable about Adobe's Cloud - after analyzing the guinea pigs - is when Adobe is going to be hit hard with the realization that it isn't going to work. Personally, I'm tired of all this "sharing" bullcrap. I want and need to be disconnected from other people when I am doing certain things, and I want it to stay that way.