Q1 revenue at Adobe squeaked past the $1bn mark to £1.01bn and although it was down on the year ago figure of $1.04bn, it exceeding Adobe’s own estimates of $950m to $1bn. The market rewarded it with a 5%-6% increase in the share price in after hours trading.
Higher costs from its move to subscriptions and promotion of subscription based Creative Cloud and Marketing Cloud had a dramatic impact on earnings for the period to March 2013, with net income plummeting to $65.1m from $185.2m. On the positive side there is clear momentum behind Creative Cloud – it has 479,000 subscribers, up 153,000 over the year ago period – and management now regards it as “quickly becoming mainsteam”. Meanwhile Marketing Cloud delivered a 20% yoy increase in revenue (to $215.4m). With Adobe looking to these products for future growth, on-going momentum is a positive sign, and the company is large enough to absorb the impact from the move to subscriptions.
On a less positive note for Adobe, it also announced that its CTO Kevin Lynch, who has been in the role since 2008, is to leave the company. He will be moving to Apple. Rather curiously, reports quote Abode saying it will not be appointing a new CTO. We’’ll have to see how that plays out in a cloud and subscription environment that demands a constant stream of rapid product development.