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Adobe: We locked our customers in the cloud and out poured money

Profits double after shift to software subscriptions

Reassuringly expensive software maker Adobe is laughing all the way to the bank after shunting more of its customers into the cloud - like they had any choice in the matter.

The company closed off fiscal ’15 ended 27 November with Q4 revenue of $1.31bn, up 22 per cent year-on-year, driven by a 44 per cent hike in subscriptions to $907.4m as products declined 13 per cent to $284.4m and services/ support dipped 1.7 per cent to $114.4m.

President and CEO Shantanu Narayen, said the “continued migration” to the cloud of the Creative Suite installed base, as well as new customers, pushed up its numbers to help the firm beat analysts expectations.

“Four years into our Creative Cloud journey, we have deeper insight into the needs of the Creative community, more satisfied customers and a significantly larger total addressable market,” said the self-licking exec on a conference call with financial analysts.

Digital Media annualised recurring revenues swelled to $2.99bn including an increase of $350m in the quarter. Creative ARR jumped $210m to $2.6bn, with 833k net new individual and team Creative Cloud subs added.

Adobe decided some years back it was going to convert customers into cloud believers and in 2013 dropped a clanger when it decided future version of Creative would only be web-based, making CS6 the last boxed version.

After an initial outcry among customers and channel types, things have clearly settled down.

Despite a slight rise in operating overheads, up 3.3 per cent in the quarter to $814m, operating profit more than doubled to $290.4m from $124.5m in the prior year. After tax and finance costs, net profit jumped to $222.7m from $88.13m.

For the entire financial year, revenues bounced 15 per cent to $4.79bn; subscription was up 55 per cent to $3.22bn; product declined 30.8 per cent to $1.125bn; services and support edged up 0.8 per cent to $446.4m.

Operating income for the twelve months jumped to $903m up from $412m and net earnings came in at $629.5m from $268.4m.

There’s money in them there clouds, it seems. ®

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