Kevin Bostic
Adobe's move toward a subscription-based model appears to be paying off, as the Photoshop and Acrobat maker has raised its full-year adjusted earnings forecast, reporting first-quarter results that surpassed Wall Street estimates.
Adobe's Creative Cloud, which launched last year with Creative Suite 6, allows members to subscribe to Creative Suite applications such as Photoshop, Illustrator, and Dreamweaver. Subscribers can access the content they create across a variety of devices, including iPhones and iPads. Adobe says its Creative Cloud subscriber tally now exceeds 500,000 paid individual members, with more than two million free and trial memberships.
In the first quarter, according to Reuters, Adobe added 153,000 net paid subscriptions. By the end of the year, Adobe expects to hit 1.25 million paid subscriptions.
Adobe's subscription revenue has more than doubled to $224.3 million. The move to subscriptions results in lower short-term revenue, since fees are collected on a monthly basis instead of in an upfront one-time payment.
Off the success of Creative Cloud, Adobe raised its full-year adjusted earnings forecast to $1.45 per share, up from $1.40 per share. Analysts had predicted about $1.41 per share. Adobe now forecasts full-year revenue of about $4.1 billion.
The positive financial news came on the same day that Adobe confirmed CTO Kevin Lynch's departure. Lynch will be moving to Apple, a company Lynch has previously clashed with over its refusal to include support for Adobe's Flash standard on the popular iOS platform, a stance that led to the virtual extinction of Flash on modern mobile platforms. Lynch will be joining Apple as a vice president of technology, reporting to senior vice president Bob Mansfield.
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34 Comments
It's interesting. As much as Lynch deserves to be panned for Flash, you can't ignore this success.
No kidding. It's well worth the price. My studio has upgraded every iteration, and even with volume discounts the cloud is much cheaper - also in the long run. And it's easier to manage.
It's still only cheaper if you, as a company, are used to upgrading with évery new version. Most companies don't work like that (sometimes unfortunately)… a lot of companies upgrade every other version, and for those companies a subscription of 40-50-60 bucks a month is simply not paying itself back. And most companies also simply don't nééd the latest and greatest.
Plus, what if Adobe at one point in the future decides to discontinue a piece of software? You'll lose all hopes of ever running that piece of software on your computer. If you bought the piece of software you can run it as long as you want to (provided you keep a computer around that can run the software). :)
You think $50. a month is cheaper? It's very good for corporate clients, but not at all good for artists or freelancers who may not have consistent money flow. Actually this whole cloud thing, and the exorbitant pricing on upgrades, really has me very grumpy about Adobe. It's like they've joined Avid in the realm of gougers.
[quote name="vincentagniello" url="/t/156565/creative-suite-subscriptions-pay-off-as-adobe-raises-profit-forecast#post_2297298"]You think $50. a month is cheaper? It's very good for corporate clients, but not at all good for artists or freelancers who may not have consistent money flow. Actually this whole cloud thing, and the exorbitant pricing on upgrades, really has me very grumpy about Adobe. It's like they've joined Avid in the realm of gougers. [/quote] It seems to me this is excellent for those that don't a consistent money flow. You don't have to invest $600 up front. You can do just $50 per month, or if you're a student just $30 per month. That's not even a night of drinking per month for a college student. On top of that they they also have the one-month option for $75 (not sure if there is a education version of that). If you have one job you can easily fold that $75 into your fee but trying to fold $600 into your fee or hoping your get more work down the road before you need to update again is much more risky.