If COVID-19 had showed up years before Adobe found the cloud and forced customers into an online subscription model, fortunes at the reassuringly expensive maker of software for creative types might have been very different right about now.
As it was, Adobe last night rolled out revenues of $3.13bn [PDF], up 14 per cent year-on-year for its Q2 ended 29 May - its first full quarter under the shadow of the global pandemic. This was short of analysts' top-line forecast of $3.16bn and led to a dip in share price of 4.7 per cent. It was also way off Adobe's typical quarterly rises of 20 per cent plus.
The response to the virus from governments across the world was to order citizens to stay indoors, and though this dented Adobe's business with enterprises, the web-based consumption of its wares meant it fared better than many technology companies.
Shantanu Narayen, president and CEO, claimed Adobe "saw historic highs in adobe.com traffic across both Creative Cloud and Document Cloud".
"The shift to remote work has driven a surge in demand for digital documents, with use of web-based PDF services up nearly 40 per cent quarter-on-quarter, and the number of documents shared in Acrobat increasing 50 per cent year-on-year," he told analysts on a conference call.
Adobe Sign, the cloud-based electronic signature service, jumped 175 per cent since the start of the firm's fiscal year; mobile usage of Acrobat Reader was up 43 per cent on a year ago; and use of Adobe Scan was up 66 per cent.
The Digital Media division grew 18 per cent to $2.23bn: within this, Creative Cloud came in at $1.87bn, up 17 per cent; and Document Cloud grew 22 per cent to $360m. Annualised revenue rate was $7.93bn for Creative and $1.24bn for Document.
On the same analyst call, CFO John Murphy said Creative demand came from all geographies and included: "[S]ingle app adoption by individuals, adoption of our professional video products, including single-app Premiere Pro subscriptions as engagement from communicators and YouTubers increased significantly, strength in migrating students and trial users to paid subscriptions, significant unit growth for paid mobile subscriptions and continued focus on targeted campaigns using insights from our data driven operating model."
What an experience
The Digital Experience division reported revenue of $826m, up 5 per cent. The more modest swelling of the top line here was due to a pause in purchasing by some customers, large and small. Subscription revenue was $707m, up 8 per cent but professional services was down 8 per cent.
"We saw an anticipated delay in enterprise bookings and consulting services implementations as companies prioritised employee and financial wellbeing," said Narayen. "The extreme economic challenges that enterprise customers in certain verticals experienced, as well as weakness in our commercial segment that targets small and medium-sized businesses, also adversely impacted bookings."
Adobe said its took the decision in Q2 to "cease pursuing transaction-based Advertising Cloud deals. And this, along with the impact already felt due to the impact of COVID-19, meant it saw a $50m shortfall relative to its targets. The company turned over $360m of Advertising Cloud sales in fiscal '19, and expects $200m this year.
"In light of the macroeconomic environment and the strategic shifts for Advertising Cloud, we are withdrawing the annual fiscal 2020 target," said CFO Murphy.
In the middle of a pandemic, Adobe reported a 35.4 per cent year-on-year hike in net profit to $1.016bn. ®