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Better than expected results for Adobe: Focus on Cloud offerings

Puneet Sikka

Better than expected results for Adobe: Focus on Cloud offerings (Part 1 of 5)

Adobe reports better than expected results

Adobe recently announced fiscal year 2014 first quarter results (1Q 2014), in which it beat the Wall Street expectations. It reported revenues of $1 billion and diluted earnings per share of 9 cents on a GAAP basis and 30 cents on a non-GAAP basis. Analysts were looking for adjusted earnings of 25 cents per share and revenues of $973 million. The better than expected results came on the back of Adobe revamping its software portfolio to the cloud, shifting away from the traditional boxed software.

The key products that Adobe sells are mentioned below.

Digital Media

This segment includes Creative Cloud offerings such as such as Adobe Photoshop, Adobe Illustrator, Adobe Dreamweaver, and Adobe InDesign, as well as Document Services businesses, built around Acrobat family of products.

Digital Marketing

The main products under this segment are Adobe Analytics, Adobe Target, Adobe Social, Adobe Media Optimizer, Adobe Experience Manager, and Adobe Campaign.

Print & Publishing

This segment contains legacy products and services such as eLearning solutions, technical document publishing, web application development, and high-end printing.

Adobe achieved $1 billion in total revenues in this quarter, in which the Digital Media segment earned 641 million, the Digital Marketing segment earned $314 million and Print & Publishing earned $45 million. The total revenues declined slightly when compared with the same quarter last year.

Adobe plans to shift completely towards cloud offerings

Adobe (ADBE) wants to completely shift its focus toward providing cloud services to its customers. Because of this reason, the company plans to end the general availability of CS6 perpetual licensing in the second half of 2014. Shifting its offering on cloud is a necessary step for Adobe, as the whole enterprise software industry is shifting its focus toward cloud. Companies such as salesforce.com (CRM) is a pure player in cloud computing market, while companies such as Google (GOOG), SAP (SAP), and Microsoft (MSFT) have increased their cloud offerings of late.

Continue to Part 2

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