Adobe picked up where it left off at the end of 2011 (see here) and made steady progress during Q1 2012 as it continued its focus on digital media and marketing but is looking to the release of its Create Suite and Creative Cloud offerings to push performance upwards – or to “a new inflection point for revenue growth” as CEO Shantanu Narayen puts it.
Signs of the time lapse between reorganising around the two themes and delivery of results are evident in the Q1 figures, which showed net income of $185.2m on revenue of $1.045bn (vs $234.6m on $1.028bn in the year ago quarter). Reassuringly, revenue from the digitial marketing division was significantly up from $212.9m to $259.9m (now 25% of total revenue up from 21%) so there is clear progress. The digital marketing business unit and thus Adobe's overall revenue was boosted by $9.6m from the acquisition of Efficient Frontier, which closed in January 2012. The company is raising Q2 revenue targets to $1.09bn to $1.14bn on the back of the acquisition, and revenue increase of 6% to 8% for the full year, versus the previous target of 4% to 6%.
Although the new products will move the company forward in terms of its strategy and offerings, they will also bring pain as the transition from perpetual to subscription fees takes hold but like virtually all software suppliers, it is something Adobe needs to do.