Creative Cloud Subscriber Base Grows to 3.45 Million
The latest addition to Adobe's Creative Cloud product mix is Fotolia, the royalty-free microstock photo and video library based in New York City. Adobe is spending about $800 million in cash to acquire the company and plans to integrate Fotolia's marketplace into its Creative Cloud offerings once the deal closes. Adobe will continue to support Fotolia as a standalone offering, the company said, and Fotolia CEO Oleg Tscheltzoff is expected to lead the business at Adobe.
News of the Fotolia announcement came as Adobe reported its fiscal 2014 financial results, revealing that subscriptions and other sources of recurring revenue account for a swiftly growing percentage of the company's overall revenue. The company said 66 percent of its revenue in the fourth quarter was recurring revenue, compared to 44 percent in the same period one year ago.
Creative Cloud subscriptions reached 3.45 million at the end of the fiscal year, ahead of the target of 3.3 million subscribers the company set in June. New Creative Cloud subscriptions are roughly an even mix of complete suite subscribers vs. single-app subscribers, company officials said.
Founded in 2004, Fotolia operates in 23 countries and has websites in 14 languages, Adobe said. The company is privately held by Kohlberg Kravis Roberts & Co., TA Associates, and management. The deal is expected to close in the second half of Adobe's first quarter — in other words, by the end of February.
Responding to a question about Fotolia's market position relative to rapidly growing competitors—specifically Shutterstock — Adobe President and CEO Shantanu Narayen declined to comment on Fotolia's growth history, but said the market for royalty free content libraries is very attractive. "We view it as a multi-billion-dollar market," he said. "Other players are growing very rapidly. We're not providing historical information on Fotolia today, but we have high aspirations for growth in that market."
According to research by Moody's Investors Service, Fotolia was valued at $455 million in June 2012, and revenue was $87 million in the fiscal year ending that December.