Adobe may have missed street expectations for Q3 revenue but it was with good reason because the shift to subscriptions is happening faster than expected. Subscriptions for the Creative Cloud are now running at over 1m and exhibiting very high growth rates (up 47% since Q2 - see here) but this is a double edge sword as it is taking its toll on top and bottom lines. Q4 forecasts are below analyst expectations, again due to the rapid shift to subscriptions.
As far as the numbers are concerned revenue dropped 8% from $1.08bn to $995m (including $6m from its Neolane acquisition –see here) while net profit fell 59% from $201m to $83m. However, the market reacted to the bigger picture so the share price rose c5% in after-hours trading. Adobe still has most of the subscription transition struggle to come but it is clear there is a voracious appetite among the customer base for the new model and cloud provision.