Adobe hits Q2 targets while boasting record digital publishing figures

UPDATED: Adobe CEO's comments hint at customer (dis)satisfaction over jump from desktop to cloud versions of the Creative Suite.
Written by Rachel King, Contributor

Hoping to match a stellar first quarter report back in March, Adobe followed through with that plan after the bell on Tuesday.

The software giant posted a second quarter net income of $76.5 million, or 15 cents per share (statement). Non-GAAP earnings were 36 cents a share on a revenue of $1.011 billion.

Wall Street expected Adobe to report first quarter earnings of 34 cents a share on revenue of $1.01 billion.

While the big focus last quarter was the Creative Cloud software unit as a whole, Adobe is touting record figures for its Digital Publishing Suite in particular this time.

The San Jose-headquartered company also revealed on Tuesday afternoon that there have been more than 100 million digital downloads of digital content made with the Adobe Digital Publishing Suite in two years.

That includes magazines, newspapers, apps and other digital content from the likes of Hearst, Time Inc., Renault, Sotheby's and U.S. Soccer.

Pointing towards the growth of the tablet market as a key driver, Adobe added that the number of brands using the DPS for mobile marketing especially has surged by 30 percent during the last six months alone.

CEO Shantanu Narayen reflected on the digital publishing stats in prepared remarks:

Our Q2 results reflect our leadership position in Digital Media and Digital Marketing. Creative Cloud is revolutionizing the creative process, and Adobe Marketing Cloud is quickly becoming the platform of choice for the world's leading brands, advertising agencies and media companies.

While it didn't hog the spotlight this time, the Creative Cloud was still a highlight on the second quarter report.

Adobe ended the quarter with approximately 700,000 paid subscriptions, up from just under 500,000 last quarter. The Marketing Cloud revenue also grew by 25 percent to $229.6 million.


For the outlook, analysts aren't raising the forecast too much. Wall Street is expecting a third quarter revenue of $1.01 billion again with slightly higher earnings of 35 cents per share.

Adobe is taking more liberties with its outlook, aiming for revenue within the range of $975 million to $1.25 billion with non-GAAP earnings of 29 to 35 cents a share.


For fiscal 2013, Adobe is projecting an annual revenue of roughly $4.1 billion with earnings of $1.45 per share.

Company execs are also promising to continue adding more Creative Cloud subscriptions, although they have not published any exact estimates or goals yet.

UPDATED: During the quarterly conference call with analysts and investors on Tuesday, Narayen touched a bit more on the Creative Cloud, offering a glimpse at the customer feedback generated by Adobe's jump from the desktop:

Since we launched Creative Cloud, the overwhelming majority of customers buying on Adobe.com have selected Creative Cloud rather than CS6. Customer satisfaction rates are high, and the top reasons customers site for their love of Creative Cloud [include] having access to everything in the product portfolio enabling them to try new tools and build new skills, always being up-to-date with latest features and capabilities, and the affordable monthly membership fee. These benefits are compelling to our existing customer base and are helping us achieve our goal of bringing in new customers.

Our decision to discontinue perpetual licensing of new versions of our desktop products has caused concern with some customers. While we will still continue to offer CS6 on a perpetual basis, the feedback from our community is important, and we are evaluating additional options that will help them with the transition. Our goal is to over-deliver on customer expectations, which we believe will make the entire community ultimately embrace Creative Cloud.

Slides via Adobe Investor Relations

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