Adobe reported strong fiscal second quarter results and gave some color on Creative Suite 3 demand, which is strong, and AIR's role in the jam-packed rich internet application space.
Fueled by Creative Suite 3 sales--the product launched in April--Adobe reported record revenue of $745.6 million, up 17 percent from a year ago. Excluding charges, Adobe reported a profit of $223.2 million, or 37 cents a share. Wall Street was expecting earnings of 35 cents a share, according to Thomson Financial.
Here are some key tidbits from Adobe's earnings conference call:
Adobe sees Google Gears as a complement to AIR: Adobe executives were asked about AIR's (formerly Apollo's) adoption and potential synergy with Google Gears (gallery). Adobe chief operating officer Shantanu Narayen said:
We were really pleased that we were able to get out the next version to our developers and we’re actually starting to see a number of applications that have been built that take advantage of this particular platform and demonstrate the obvious benefits of being able to combine the power of the web with the power of the desktop, you know, applications like eBay. So it’s early on. Clearly the revenue model for us with Apollo is associated with the tools that we deliver, it’s associated with the Flex and Lifecycle data services that we will be able to do and the creative authoring applications.
Google Gears is complementary. I think again that demonstrates the need for offline database that allows people to do more with web-based applications, but the reality with even Google Gears is that it is still just in conjunction with a browser. What we have with Apollo allows you to have even a stronger set of applications.
Some time was spent on Flex Builder 2. Narayen noted that customer response to open source Flex has been good. He also added that integration with Flex and Creative Suite is critical. Narayen said:
I think it’s important to remember that what we can really provide our customers is great workflow between our Creative applications and our developer applications. And even in Creative Suite 3, we’ve enhanced quite a bit the ability to go from the Creative applications into the developer applications.
But most of the conference call was spent on Adobe's meal ticket: Creative Suite 3. While sales were strong out of the gate, Adobe executives were conservative about predicting much beyond the current quarter.
Some key points on Creative Suite 3:
- Premiums versions of Creative Suite 3 (CS3) are selling better than others. CS3's revenue is 30 percent higher than CS2's sales at this point in the launch. "We caution everyone that it is early in the CS3 launch and it is premature to draw long-term conclusions from these initial results," said Narayen.
- Demand for the Macintosh version of CS3 on Intel architecture is strong.
- French and German versions of CS3 have shipped. Japanese version will ship in summer.
Analyst reaction to the quarter was generally positive. Most research notes indicated that Adobe was being conservative with its outlook leaving a lot of room to top expectations later. "There are plenty of unknowns, but the way CS3 has started suggests we are in for some very nice numbers ahead," said Jeffries analyst Ross MacMillan.