M&E Connections

Strong Cloud Services Adoption, Retention Gives Adobe a Q1 Boost

Strong Creative Cloud and Document Cloud adoption and retention drove Adobe’s digital media revenue, boosting its overall results for the first quarter (ended March 3), according to the company.

Adobe shares were 5.6% higher at $129.20 in morning trading March 17, after the company reported revenue for the quarter grew to $1.68 billion from $1.38 billion in the same quarter a year ago, while profit jumped to $398.45 million (80 cents a share) from $254.31 million (50 cents a share).

The results were better than analysts had expected, Pivotal Research Group analyst Brian Wieser said in a research note March 17. “Notably, the quarter’s revenue beat vs. expectations was partially supported by the inclusion” of $10 million of media trading activity at TubeMogul that the company had not anticipated it would record as revenue,” he said.

Adobe bought video ad company TubeMogul last year.

Adobe is “hard at work integrating TubeMogul with our current Adobe Media Optimizer solution,” Adobe CEO and president Shantanu Narayen said on a March 16 earnings call. “As a combined advertising solution, we will enable Adobe’s customers to optimize their video, search and display advertising investments across desktop, mobile, streaming devices and TV,” he said.

Adobe Creative revenue grew 29% in the first quarter, to a record $942 million, but Document Cloud revenue dipped to $196 million from $199 million.

“Acrobat units across Creative Cloud and Adobe Document Cloud combined again grew double-digits year-over-year,” Narayen told analysts on the call. “This achievement was driven by new customer acquisition with our subscription model and the funnel of users created by the broad use of PDF and the proliferation Adobe Reader across mobile devices,” he said.

Adobe Marketing Cloud, meanwhile, achieved record revenue of $477 million, which he pointed out was 26% higher than a year ago.

“Deep intelligence, fueled by trillions of data transactions, are the foundation of our Digital Marketing business,” he told analysts. Adobe Marketing Cloud “continues to lead the category and be the most comprehensive offering for global brands, government agencies and institutions that need to deliver personal, consistent and relevant experiences to their audiences everywhere and every time they connect with them,” he said, adding that the company “managed more than 100 trillion data transactions on behalf of our customers over the past year across our Adobe Marketing Cloud solutions.”

The company will hold its largest Adobe Summit ever March 19-23 in Las Vegas, with more than 12,000 attendees expected, including more than 1,000 of its global partners, including executives from companies including T-Mobile and Facebook, he also said. Adobe will provide an update there on its strategic partnership with Microsoft, he told analysts.

Adobe is “continuing to aggressively invest” in the Adobe Cloud Platform and Adobe Sensei, its unified artificial intelligence (AI) and machine learning framework and intelligent services, he went on to say. “Our trillions of content and data assets, along with our deep category expertise in the markets we serve, give Adobe Sensei a unique ability to help customers tackle complex experience challenges,” he told analysts, adding: “We plan to unveil new Adobe Sensei capabilities at Adobe Summit. We will also provide an update on our adobe.io capabilities for partners,” independent software vendors and developers, who “can utilize our open platform to develop their own applications.”