M+E Daily

Strong Creative Cloud and Document Cloud adoption and retention continued to drive Adobe’s digital media revenue, boosting its overall results for the second quarter (ended June 2), according to the company.

Separately, Adobe said June 21 that it bought all SkyBox technology from Mettle, a developer of 360-degree and virtual reality (VR) software. Adobe didn’t specify how much it paid for the acquisition, which it said in a news release “comes at a time when increasing numbers of creators, global brands and media and entertainment companies are embracing 360/VR and are looking for seamless, end-to-end workflows for this new, immersive medium.”

The Skybox toolset is designed exclusively for post-production in Adobe Premiere Pro CC and Adobe After Effects CC and “complements Adobe Creative Cloud’s existing 360/VR cinematic production technology,” Adobe said, adding it “will integrate SkyBox plugin functionality natively into future releases” of Premiere Pro and After Effects. Mettle co-founder Chris Bobotis is joining Adobe as part of the deal.

Adobe shares were 2.6% higher at $144.62 in morning trading June 21, after the company reported total revenue for the quarter grew to $1.8 billion from $1.4 billion in the same quarter a year ago, while profit jumped to $374.4 million from $244.1 million. Revenue in its core subscription business grew to $1.5 billion from $1.1 billion, but product revenue fell to $171.5 million from $196.5 million and services/support revenue dipped to $117 million from $118.5 million.

The results were again better than analysts including Pivotal Research Group’s Brian Wieser had expected, he said in a research note June 20. “We continue to see a mostly positive story in the business at an operating level,” he said, adding: “The business appears to be well run, its customers generally like them, their long-term strategy is consistent with views we have formed from our own industry experience and ongoing interactions with practitioners, and there are no particular reasons to say any of this changes any time soon.”

“Central to our strong performance this quarter was record revenue in our digital media business,” Adobe CEO and president Shantanu Narayen said on a June 20 earnings call with analysts. The company recorded $1.21 billion in total digital media revenue, a 29% increase from the second quarter a year ago, he said, adding Adobe exited the quarter with more than $4.56 billion of digital media annualized recurring revenue (ARR) – a net year-over-year increase of $312 million that was “driven by continued strength in our Creative Cloud and Document Cloud businesses.”

Creative Cloud revenue grew 34% from a year ago, to $1.01 billion, CFO Mark Garrett said on the call. Adobe also increased Creative ARR by $285 million in Q2 and exited the quarter with $4.04 billion of Creative ARR, he said, adding: “Driving the momentum with our Creative business was continued solid demand for Creative Cloud across all segments, including individual, team and enterprise.”

The company saw “particular strength on Adobe.com and in the education market,” while international adoption of Creative Cloud was also “notable, particularly in Germany and Japan,” Garrett said. ARR performance was also “driven by solid retention, as well as quarter-over-quarter” average revenue per user growth “across all key offerings,” he said. Document Cloud revenue, meanwhile, grew to $200 million from $188 million a year ago.

Adobe Sensei, the company’s artificial intelligence and machine learning framework, is “at the core of our ability to drive transformative change across all customer segments,” and it’s “being deployed across all Adobe solutions to solve our customers’ greatest experience challenges,” Narayen also said on the call.

At Adobe Summit in March, the company unveiled Adobe Experience Cloud, a comprehensive set of cloud services designed to give enterprises everything they need to deliver exceptional customer experiences, he also noted.

Adobe Experience Cloud includes Adobe Marketing Cloud, an integrated set of industry-leading solutions to help marketers differentiate their brands and engage their customers; Adobe Analytics Cloud; and Adobe Advertising Cloud, “the industry’s first end-to-end platform for managing advertising across traditional TV and digital formats,” he said.

“Adobe’s ad tech momentum continues to build,” he told analysts. The company has now integrated Adobe Audience Manager into Adobe Advertising Cloud, “enabling advertisers to identify high-performing segments and do automated, data-driven media planning and buying across all channels, including linear TV,” he said.

Narayen went on to say: “Interest in Adobe Experience Cloud continues to be strong and “major customer wins” in the second quarter included Best Buy, Cisco, Morgan Stanley and Verizon.