Creative Suite subscriptions pay off as Adobe raises profit forecast
By 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.