Adobe beats Q4 expectations, outlines growth strategy across core clouds
Adobe published its fourth quarter financial results on Thursday, topping Wall Street expectations amid demand for its design software. Adobe also outlined its growth plans during a virtual analyst meeting, detailing how the company plans to capture more of its estimated total addressable market.
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On the strategy side, Adobe plans to focus on growing its three core clouds -- Creative, Document and Experience.
The goals for Creative Cloud revolve around things like increasing the use of its services among creative professionals, expanding web-based creative tools, and retaining customer subscriptions via multi-system software compatibility. Adobe will also aim to make its software more accessible with tools for non-pro creators, while also bringing AI to its consumer apps and further monetizing them on mobile.
The Document Cloud strategy is focused more on businesses and workflows. Adobe said it plans to capture PDF demand with Acrobat on the web, and expand the PDF ecosystem with more document services. Adobe is also aiming to position itself as the facilitator of the paper-to-digital transformation.
Adobe's plans for Experience Cloud -- its platform focused on marketing customization, content delivery and data, analytics -- revolve around customer data and insights, content and commerce, and customer journey management.
On the technology side, Adobe plans to leverage its unified product architecture to make all of its products AI-first with Sensei. These slides outline Adobe's technology goals for each cloud:
As for the numbers, the cloud software giant reported fiscal fourth quarter profit of $2.25 billion, or $4.64 a share. Non-GAAP earnings in the quarter were $2.81 a share on revenue of $3.42 billion, up 14% from a year ago. Wall Street was looking for earnings of $2.66 a share on revenue of $3.36 billion.
Elsewhere on the balance sheet, Adobe said subscription revenue increased to $3.12 billion. The company's product revenue fell from $167 million in Q4 2019 to $127 million in the current quarter, and services and support revenue dropped to $182 million.
Revenue from Adobe's Digital Media unit overall was $2.5 billion and Digital Experience segment revenue was $877 million. Broken out, Creative Cloud revenue reached $2.08 billion in Q4, while Document Cloud was $411 million.
Meanwhile, Adobe said annualized recurring revenue in its Digital Media unit grew to $10.18 billion, a quarter-over-quarter increase of $548 million. Creative ARR grew to $8.72 billion, and Document Cloud ARR grew to $1.34 billion. Adobe said cash flows from operations were a record $1.46 billion in Q4.
For the fiscal year, Adobe's revenue was $12.87 billion with non-GAAP diluted earnings per share of $10.10.
Shares of Adobe were mostly flat in early trading Thursday.