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Adobe Passes 2.3 Million Paid Creative Cloud Subscribers

New CC Offerings to Debut Tomorrow at NYC Customer Event

Adobe netted 464,000 new paying subscribers to its Creative Cloud service in the second fiscal quarter of 2014, with total paid subscriptions climbing to 2,308,000 by May 30. That's well in keeping with the company's expectations — back in March, it said it was expecting another 400,000 subscribers to sign on in the quarter — and the company has increased its long-standing prediction from 3 million to 3.3 million Creative Cloud subscribers by the end of the fiscal year in November.

During a conference call with investors and analysts today, Adobe President and CEO Shantanu Narayen said that new desktop applications, mobile apps, and other services will be announced tomorrow as part of an expansion of Creative Cloud aimed at "hobbyists and consumers," which he described as a significant opportunity. "This is our biggest update since CS6," he said, noting that the products will be announced at an Adobe customer event in New York City that will be webcast on Adobe.com at 1 p.m. tomorrow.

Source: adobe.com [PDF]

The company's push to sign up subscribers has been controversial in some quarters but largely successful, with subscriptions now accounting for a majority of the company's revenue. Adobe said today that 53 percent of its revenue in the quarter was "recurring revenue" from subscription plans for Creative Cloud as well as from Adobe's Marketing Cloud offering.

Adobe's overall revenue in the quarter was $1.07 billion, up slightly from a reported $1.01 billion in the same quarter last year, and revenue from digital media products grew to $691.6 million from $670 million in the year-ago period. EVP and CFO Mark Garrett acknowledged that a number of Adobe customers hurried to add seats of CS6 during the second quarter, the last period in which they were widely available, but said their allegiance to perpetual licensing is expected to be temporary. "We believe these customers will migrate to Creative Cloud over time," he said.

13 Comments

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  • ProEditor

    Unfortunately for Adobe, the # that walked away from Adobe is even larger when they came out with the terrible subscription model.

  • Mike Smith

    I for one, will use my CS6 licenses (3X) until they become un-useable, then switch to something other than Adobe.

  • player_l

    Pray tell, whenever someone that used to own (now an anachronistic concept) an adobe product in a bulk license becomes a “suscriber”, does he get a suscription for every machine he owns? If so, there is no wonder the numbers reflet this money grab as “largely successful”.
    I guess the reality of multicore processing and gpu-accelerated tasks have finally driven the competition (especially open source) out of the game.
    Congratulations on making great software that outpaces the others. It is a shame thet the work of so many great developers have to be squandered due to the greed of their employers.

    • Anonymous

      It is a shame that we don’t have good open-source alternatives, especially for a Swiss Army knife like After Effects. Lightworks may be a decent option if you don’t like Avid or FCPX.

      To answer your question, Adobe consistently refers to those numbers as “paid subscriptions,” so I don’t think multiple machines in an enterprise agreement count as “subscribers,” but I could be wrong. Adobe also releases annualized revenue figures that indicate each subscriber is worth about $518 on a yearly basis — that’s $1.2 billion in annualized revenue divided by 2.3 million CC subscriptions — or about $43 a month on average. Officials have said that “revenue per user” is somewhere in the low $30s, owing in part to the $10 Photoshop plan, but that does not include enterprise term licensing agreements, which would bring the average up somewhat by being more expensive but fewer in number. The data sheet linked below the chart above really tells the story of the last 30 months at Adobe.

      • Mattycakes

        Earlier this year we received notification that Adobe would be halting volume sales as of May 29 for CS6. Meaning that as our users age out of their hardware and get new systems we will have to install CC editions. Even though the payment is in volume, and significantly less than the single user price for CC, each install has a unique login and presumably is counted as an individual subscriber further munging the usefulness of the above chart.

  • PhillyPhilip Philly

    I don’t care for renting the software much, but the programs are outstanding, We have 6 seats now and have switched from Avid and Final Cut X because they pale in comparison.

    • Anonymous

      Avis is the better editor, and it doesn’t fill your system drive with junk.

  • Anonymous

    This chart is meaningless without a line showing the number of customers Adobe had prior to the Creative Cloud fiasco. I expect this would require a drastic stretch of the vertical scale and Adobe’s problem would become clear for all to see. Despite CC effectively doubling the cost of using their software your report shows their year-over-year revenue hardly budged.

    • Anonymous

      Yes, Adobe’s total revenue was actually down in fiscal 2013 compared to fiscal 2012, but the transition to subscriptions means Adobe takes in less money from any given customer over the short term and more money over the long term. You probably won’t start to see upside from subscriptions reflected in total revenues until fiscal 2015. And the steep upward trajectory of that subscribers chart suggests a lot of upside for Adobe before hitting a natural ceiling based on market demand. Not that Wall Street is a perfect indicator of a company’s prospects, but I just looked it up and Adobe is currently trading at $72.58, which is its highest share price ever, based on investor reaction to these figures. I don’t think Adobe handled the transition well from a customer standpoint, but I don’t think their executives are at all unhappy with the results.

      • ProEditor

        Give it time. Many of those subscribers are at a discounted subscription price. When the discounts expire and the subscription $ raise then look for the 2nd mass exodous of customers from Adobe. (The first being the announcement of the subscription model).

    • Bryant Frazer

      Yes, Adobe’s total revenue was actually down in fiscal 2013 compared to fiscal 2012, but the transition to subscriptions means Adobe takes in less money from any given customer over the short term and more money over the long term. You probably won’t start to see upside from subscriptions reflected in total revenues until fiscal 2015. And the steep upward trajectory of that subscribers chart suggests a _lot_ of upside for Adobe before hitting a natural ceiling based on market demand. Not that Wall Street is a perfect indicator of a company’s prospects, but I just looked it up and Adobe is currently trading at $72.58, which is its highest share price ever, based on investor reaction to these figures. I don’t think Adobe handled the transition well from a customer standpoint, but I don’t think their executives are at all unhappy with the results.

  • Nick Brown

    Good bye old friend I hope you don’t forget me.
    As an Adobe Certified Expert in PP I will expand my editing skills and learn a new system. I will happily keep using CS6 until I switch to a 4K workflow in a year or so. Adobe gets no more of my money unless they change marketing plans. As a user since 4.2, Adobe made about $300 a year from my update purchases. Now they want $600 a year for a subscription. This caused me to start thinking about AVID but they just switched to a subscription plan so now I am deliberating FCP Vegas Edius Davinci Resolve? It is a shame that I find myself parting with an old friend, one I helped nurse through the bad times. I stayed loyal helping Adobe trouble shoot many problems over the years. There were long days when PP had such bad behavior that it was unbearable. Now that Adobe has a usable system built on the backs of loyal editors, they are walking away no thank you no kiss no departing words. At 2014 NAB I was busy shopping for other editing systems. I walked by Adobe’s area several times and couldn’t help noticing it’s half empty seats where the year before adobe’s area was standing room only. I didn’t feel any remorse because I will be moving on some day but I will say thank you to Adobe for helping me build my systems integration skills while keeping those earlier bug filled systems running.

  • Anonymous

    This is just people treading water until something better comes along. A subscription model actually encourages people to abandon a product. If you pay for something outright, you are more likely to try to wring out every cent from it as a sunk cost. If you subscribe to something every month brings another bill no sunk costs to be recovered.