M+E Daily

Adobe saw continued strength in its cloud businesses during the third quarter (ended Sept. 1) and continues to invest in its Sensei artificial intelligence (AI) platform and virtual reality (VR) initiatives, according to Shantanu Narayen, its CEO and president.

“Central to our strong performance this quarter was record revenue in our Digital Media business,” he told analysts on an earnings call Sept. 19. Adobe achieved $1.27 billion in Digital Media revenue in the quarter, a 28% year-over-year increase, and exited the quarter with more than $4.87 billion of Digital Media annualized recurring revenue (ARR), he said. The net ARR increase in Q3 was $308 million, and was “driven by continued strength in our Creative Cloud and Adobe Document Cloud businesses,” he said.

Total Adobe Q3 revenue grew to $1.8 billion from $1.5 billion a year ago, while profit increased to $419.6 million from $270.8 million.

Creative Cloud revenue grew 33% from a year ago, “driven by net-new subscriptions, continued focus on customer value that fuels retention, adoption of enterprise services, and focus on high-potential segments like education,” Narayen told analysts. He noted that the video category is “exploding and we continue to drive strong growth” with Creative Cloud video solutions.

Q3 Document Cloud revenue grew 10% to $206 million and Adobe increased Document Cloud ARR to $556 million exiting the quarter, he said, adding: “We drove strong uptake of Acrobat across both” Creative Cloud and Adobe Document Cloud. Adobe Sign, meanwhile, is “helping drive Adobe Document Cloud ARR growth,” he said, noting that earlier in the month, Adobe announced Sign became Microsoft’s preferred e-signature solution across that company’s portfolio, including the 100 million monthly commercial active users of Microsoft Office 365.

Adobe Scan, meanwhile, is “at the heart of our mobile PDF creation strategy,” he said, pointing out that Scan has had more than 2.7 million downloads across the iOS and Android operating systems, “delivering revolutionary scanning and text-recognition capabilities through integration” with Adobe Document Cloud.

Adobe saw record Adobe Experience Cloud revenue of $508 million in Q3, which he said represented 26% year-over-year growth. “The breadth of Adobe Experience Cloud, which includes Adobe Marketing Cloud, Adobe Analytics Cloud and Adobe Advertising Cloud, is enabling us to address an expanding array of customer experience categories,” he said. Significant customer wins in Q3 included Adidas, HSBC and Kellogg’s, but he told analysts: “Despite this success with global enterprise customers, we were disappointed with our Experience Cloud bookings in Q3.” The company, however, remains “confident in our ability to execute against this large opportunity,” he said.

At the recent IBC Conference in Amsterdam, Adobe showcased its latest initiatives in VR, animation, motion graphics, editing, collaboration and Adobe Stock video.

The company is “driving innovation to enable authoring for emerging media” including VR and augmented reality (AR), Narayen said Sept. 19. He pointed to Adobe’s recent purchase of 360-degree and VR software from Mettle – an acquisition that he said “complements Adobe Creative Cloud’s existing 360/VR cinematic production technology.” (https://www.mesaonline.org/2017/06/21/strong-cloud-adoption-adobe-q2-company-acquires-vr-tech/) Adobe will “integrate this functionality natively into future releases” of Premiere Pro and After Effects, he said.

Adobe is also “investing deeply in Adobe Sensei to dramatically improve the accessibility, design and delivery of digital experiences,” he told analysts. Sensei “leverages Adobe’s massive volume of content and data assets as well as our deep domain expertise in the creative, document and marketing segments,” he said, adding the company is making the Sensei framework and intelligent services available to its ecosystem of partners, independent software vendors and developers “who will deliver additional magic.”