Subscription Model Pays Off for Adobe's Creative Suite
Adobe’s move toward a subscription-based model appears to be paying off, as it seems 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 member 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.
According to Reuters
, Adobe added 153,000 net paid subscriptions. By the end of the year, Adobe expected to hit 1.25 million paid subscriptions. The company’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 an upfront one-time payment. Adobe has managed to raise its full-year adjusted earnings forecast to $1.45 per share, up from $1.40 per share, all off the success of Creative Cloud. Analysts had predicted about $1.41 per share with Adobe now forecasting full-year revenue of about $4.1 billion.
The financial news come in relatively close to the news of 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 extinction of Flash on modern mobile platforms. Lynch will be joining Apple as a president of technology, reporting to Senior Vice President, Bob Mansfield.