Adobe's Q1 solid, Q2 outlook light, Creative Cloud subs surge

Adobe delivered a solid first quarter as Creative Cloud subscriptions neared the 4 million mark, but the second quarter outlook was a bit short of expectations.

The company, which is becoming a marketing cloud powerhouse, reported first quarter earnings of 17 cents a share on revenue of $1.11 billion. Non-GAAP earnings for the quarter was 44 cents a share.

Wall Street was looking for earnings of 39 cents a share on revenue of $1.1 billion.

In addition, Adobe delivered digital annualized recurring revenue to $2.09 billion. Adobe Marketing Cloud revenue was $311 million.

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The catch was that Adobe's outlook for the second quarter was a bit lower than expected.

Here's a look.

Wall Street was looking for non-GAAP second quarter earnings of 48 cents a share on revenue of $1.176 billion.

What's unclear is whether Adobe is low-balling expectations.

In prepared remarks, CEO Shantanu Narayen said:

We continue to successfully migrate the Creative Suite installed base, as well as bring new customers into the community. In Q1, Individual and Team adoption grew by 517 thousand to over 3.9 million subscriptions. This represents 28% year-over-year growth in net new subscriptions. Creative Annualized Recurring Revenue, or ARR, grew to $1.79 billion exiting Q1.

Adobe said that 58 percent of its first quarter revenue derived from the Americas with 28 percent in Europe Middle East and Africa and 14 percent in Asia. Demand was stable across all regions. The company ended the quarter with 12,698 employees.