Adobe's fourth quarter results were better than expected and the company has navigated the transition from license revenue to cloud subscriptions well.
The company reported fourth quarter earnings of 44 cents a share on revenue of $1.15 billion. Non-GAAP earnings, which exclude charges, were 61 cents a share.
Wall Street was looking for earnings of 57 cents a share on revenue of $1.1 billion.
The upshot for Adobe is that the company has navigated a transition to cloud revenue well. In the fourth quarter, Adobe was adding 10,000 Creative Cloud subscriptions a week. In the third quarter, Adobe was on an 8,000 subscription pace.
Overall, Adobe had 326,000 Creative Cloud paid subscriptions. That equates to annualized recurring revenue of $153 million. For fiscal 2012, Adobe reported earnings of $833 million on revenue of $4.4 billion.
With fiscal 2012 in the books, Adobe is set up well to sell its creative and marketing clouds. Previously, Adobe relied on upgrade cycles for the Creative Suite. The transition to the cloud isn't complete, but the evolution has been less painful than initially expected.
Nevertheless, Adobe's outlook reflects a bumpy earnings ride for fiscal 2013. As for the outlook, Adobe projected non-GAAP earnings of 26 cents a share to 32 cents a share on revenue of $950 million to $1 billion.
Wall Street was looking for earnings of 56 cents a share on revenue of $1.07 billion. For fiscal 2013, Adobe is projecting revenue of $4.1 billion compared to Wall Street estimates of $4.47 billion.
For 2013, Adobe plans to launch an enterprise version of the Creative Cloud. Adobe CFO Mark Garrett said in prepared remarks:
In 2013, we will be offering Creative Cloud to enterprise customers. In anticipation of transitioning enterprise customers to Creative Cloud, during Q4 we began moving them to Enterprise Term License Agreements, or ETLAs. Like Creative Cloud subscriptions, ETLAs are term-based, give customers access to ongoing technology updates, and will enable a smoother migration to the enterprise offering when it becomes available.