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Adobe delivers strong Q2 with 2.3 million Creative Cloud subscriptions

The creative software maker managed to beat estimates with growth fueled by accelerated cloud-subscription adoption.

Adobe CEO Shantanu Narayen

Adobe reported its fiscal second quarter earnings Tuesday after the bell. The creative software maker managed to beat estimates with growth fueled by accelerated cloud-subscription adoption. 

The company reported earnings of $88.5 million, or 17 cents a share on revenue of $1.07 billion.

Wall Street was looking for 29 cents per share in earnings and revenue of $1.025 billion.

An important takeaway from the report is that Adobe added 464,000 paid Creative Cloud subscriptions from a year ago, and has annualized recurring revenue of $1.20 billion for its Creative business.

Shantanu Narayen, president and chief executive of Adobe, reflected on the quarter in prepared remarks:

In Q2, Creative ARR grew to $1.2 billion and we exited with more than 2.3 million Creative Cloud
subscriptions – well ahead of the target we set for the quarter. More importantly, moving forward all
Adobe and channel focus will solely be on Creative Cloud offerings and CS6 perpetual revenue becomes
de minimis.

Screen Shot 2014-06-17 at 5.02.26 PM

Outlining the company's next steps, Narayen said that on Wednesday Adobe will unveil a set of Creative Cloud innovations including desktop and mobile applications, new services and specialized offerings for key customer segments: 

In addition to targeting Creative Professionals and CS customers, we will expand the core Creative Cloud platform to target hobbyists and consumers including former Photoshop Elements and Photoshop Lightroom customers. We believe this addresses a larger market opportunity.

As for its earnings outlook, Adobe is targeting revenue for its fiscal third quarter in a range of $975 million to $1.25 billion, also expecting Marketing Cloud revenue to grow 20 percent year-over-year.

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