Adobe Systems Inc.’s (ADBE) fiscal third-quarter earnings climbed 3.2%, driven by growth in its Creative Cloud and digital marketing tools, as the transition to subscription services and away from packaged software gained momentum.
“Adobe is changing how we deliver value to a broader set of customers,” Adobe Chief Executive Shantanu Narayen said on the earnings call.
Like other software companies, San Jose, Calif.-based Adobe is moving its customers to Web-based services that are paid for much like magazine subscriptions and delivered online as a cloud-computing service. Adobe’s trick is to transition its customers to the cloud without a jarring disruption to sales of its packaged software, which count for 70% of its $4.2 billion in annual sales.
After four months, Adobe has attracted more than 200,000 subscribers to its service paying an average $37 per month for the service. The company is continuing to offer a $29.99 price promotion, 40% below the full monthly price of $49.99. About 40% of Creative Cloud customers are new to Adobe, said Mr. Narayen, which shows the price promotion is “driving future paid subscribers growth.”
Product sales, which still represent the bulk of Adobe’s revenue were flat in the third quarter, while subscription revenue jumped 51%. Service and support revenue rose 12%.
Adobe experienced “continued softness in Europe,” said Mark Garrett, chief financial officer. The company generated about 27%
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