Adobe’s Results Prove that Cloud is the Way Forward
Adobe Systems Inc has reported another incredible quarter that beat analyst’s expectations on both profits and revenue.
Adobe has announced that revenue from its digital media business is $1.21 billion, which is almost four billion more than what analysts were expecting. Overall, it’s revenue saw a 27 percent jump as it touched $1.77 billion during this quarter. Analysts were predicting a revenue of only $1.73 billion. Also, profit per share was $1.02 per share as against the expectation of 95 cents per share.
Adobe also raised its forecast to a growth of 23 percent as against the expectation of 22 percent.
Creative Cloud is the flagship product of Adobe and it’s also the one that’s seen one of the highest demands over the last few quarters.
According to company reports, there are over nine million members in its online community, thanks to the super popular Photoshop and Flash. In fact, it is believed that there two products helped Creative Cloud as a whole to cross the $1 billion mark during the last quarter. Since then, there has been no looking back. In this quarter, Creative Cloud and the Digitial Media Annualized Recurring Revenue accounted for $4.56 billion, as against the analysts expectations of $4.54 billion.
Undoubtedly, the share price of Adobe went up by four percent to reach a record level of $146 per share.
Much of this success can be attributed to the switch that Adobe made in 2012. Led by its CEO, Shantanu Narayen, this company switched to a cloud-based model to move many of its traditional products to the cloud. Though the CEO and the management were met with stiff resistance from investors, this strategy has paid well, as is evident from the strong results that Adobe has been churning quarter after quarter.
The company has even been making some acquisitions to strengthen its portfolio and to move deeper into cloud-based services. Late last year, it acquired a company called TubeMogul for $500 million. This is a brand advertising company that adds to Adobe’s creative products, thereby providing a richer experience and greater value for its customers.
Besides acquisitions, it has also been striking lucrative partnerships to promote its products and to continue to expand its customer base. An example of this strategy is the partnership it struck with Microsoft to sell more of its business marketing products.
All these different tactics have paid off well for the company and it sure has a happy bunch of investors today. This is evident from the meteoric rise of its shares over the last few years. A quick look shows that Adobe’s share price has risen about 350 percent over the last five years and touched new levels after the results were announced on Tuesday evening.
With such a positive outlook and a clear strategic direction, Adobe exudes a lot of confidence about its future. Investors, analysts, employees and all other stakeholders like to see such exuberance, and this is partly why we can say that the performance of the company as well as its share prices are going to go through the roof in the coming months.