# Adobe Achieves Record Revenue



## Canon Rumors Guy (Jun 21, 2017)

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<em>Adobe Creative Revenue Exceeds $1 Billion in Q2</em></p>
<p>SAN JOSE, Calif.–(<a href="http://www.businesswire.com/" target="_blank" rel="noopener noreferrer">BUSINESS WIRE</a>)–Adobe (Nasdaq:ADBE) today reported financial results for its second quarter fiscal year 2017 ended June 2, 2017.</p>
<p><strong>Financial Highlights</strong></p>
<ul>
<li class="bwlistitemmargb">Adobe achieved record quarterly revenue of $1.77 billion in its second quarter of fiscal year 2017.</li>
<li class="bwlistitemmargb">Diluted earnings per share was $0.75 on a GAAP-basis, and $1.02 on a non-GAAP basis.</li>
<li class="bwlistitemmargb">Digital Media segment revenue was $1.21 billion, with Creative revenue growing to a record $1.01 billion.</li>
<li class="bwlistitemmargb">Strong Creative Cloud and Document Cloud adoption and retention drove Digital Media Annualized Recurring Revenue (“ARR”) to $4.56 billion exiting the quarter, a quarter-over-quarter increase of $312 million.</li>
<li class="bwlistitemmargb">Adobe Experience Cloud achieved record revenue of $495 million, which represents 29 percent year-over-year growth.</li>
<li class="bwlistitemmargb">Operating income grew 46 percent and net income grew 53 percent year-over-year on a GAAP-basis; operating income grew 42 percent and net income grew 43 percent year-over-year on a non-GAAP basis.</li>
<li class="bwlistitemmargb">Cash flow from operations was $645 million, and deferred revenue grew to approximately $2.07 billion.</li>
<li class="bwlistitemmargb">The company repurchased approximately 2 million shares during the quarter, returning $266 million of cash to stockholders.</li>
</ul>
<p>A reconciliation between GAAP and non-GAAP results is provided at the end of this press release and on Adobe’s website.</p>
<p><!--more--></p>
<p><strong>Executive Quotes</strong><b>

</b>“Digital transformation continues to be the burning agenda for creative professionals, enterprises, governments and educational institutions,” said Shantanu Narayen, president and CEO, Adobe. “Adobe is the go-to company for creating world-class digital customer journeys from design to delivery to measurement and monetization.”</p>
<p>“Adobe continues to execute well, with another quarter of record revenue and operating profit in Q2,” said Mark Garrett, executive vice president and CFO, Adobe. “We’re excited about the strong business momentum we have as we enter the second half of fiscal 2017 and remain confident in our ability to drive strong revenue and earnings growth in the future.”</p>
<p><strong>Adobe to Webcast Earnings Conference Call</strong><b>

</b>Adobe will webcast its second quarter fiscal year 2017 earnings conference call today at 2:00 p.m. Pacific Time from its investor relations website: <a href="http://cts.businesswire.com/ct/CT?id=smartlink&url=http%3A%2F%2Fwww.adobe.com%2FADBE&esheet=51577863&newsitemid=20170620006436&lan=en-US&anchor=www.adobe.com%2FADBE&index=1&md5=f5fd43d7f45f2da854c35f75cb5d3628" rel="nofollow">www.adobe.com/ADBE</a>. Earnings documents, including Adobe management’s prepared conference call remarks with slides, financial targets and an investor datasheet are posted to Adobe’s investor relations website in advance of the conference call for reference. A reconciliation between GAAP and non-GAAP earnings results and financial targets is also provided on the website.</p>
<p><strong>Forward-Looking Statements Disclosure</strong><b>

</b>This press release contains forward-looking statements, including those related to the relevance of our products to our customers, business momentum, revenue, annualized recurring revenue, non-operating other expense, tax rate on a GAAP and non-GAAP basis, earnings per share on a GAAP and non-GAAP basis, and share count, all of which involve risks and uncertainties that could cause actual results to differ materially. Factors that might cause or contribute to such differences include, but are not limited to: failure to develop, market and offer products and services that meet customer requirements, introduction of new products, services and business models by competitors, fluctuations in subscription renewal rates, failure to successfully manage transitions to new business models and markets, uncertainty in economic conditions and the financial markets, complex and unpredictable sales cycles for some enterprise offerings, risks associated with cyber-attacks and information security, potential interruptions or delays in hosted services provided by us or third parties, changes in accounting principles, and failure to realize the anticipated benefits of past or future acquisitions. For a discussion of these and other risks and uncertainties, please refer to Adobe’s Annual Report on Form 10-K for our fiscal year 2016 ended Dec. 2, 2016, and Adobe’s Quarterly Reports on Form 10-Q issued in fiscal year 2017.</p>
<p>The financial information set forth in this press release reflects estimates based on information available at this time. These amounts could differ from actual reported amounts stated in Adobe’s Quarterly Report on Form 10-Q for our quarter ended June 2, 2017, which Adobe expects to file in June 2017.</p>
<p>Adobe assumes no obligation to, and does not currently intend to, update these forward-looking statements.</p>
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## Ladislav (Jun 21, 2017)

Good. So the subscription model works. Now, it is a time to put some of that money to development -> quality, optimization and innovation! I think plenty LR users would agree.


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## Hector1970 (Jun 21, 2017)

This is fantastic news for subscribers. We can soon expect Lightroom 2016 with loads of great updates.
Same for Photoshop, we will be getting amazing extra functionality for the same low subscription price. The last few updates to Photoshop have been amazing. They have fixed so many bugs that they haven't had time to add new tools. How do they even keep up with all the new lens and camera profiles I'll never know.
Adobe are driving improvements in processors and SSD drives by improving their underlying software to become more bloated with each version upgrade. They are proving the need for Moore's Law.


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## Chaitanya (Jun 21, 2017)

Seems like Ransomware(CC) model has worked for them, with work of thousands of photographers across the globe held hostage there is no option but to pay up every month.  . 

On a side note : I had called up adobe India and they have stopped selling standalone version of Lightroom altogether only Ransomware is available going forward.


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## IglooEater (Jun 21, 2017)

Chaitanya said:


> Seems like Ransomware(CC) model has worked for them, with work of thousands of photographers across the globe held hostage there is no option but to pay up every month.  .
> 
> On a side note : I had called up adobe India and they have stopped selling standalone version of Lightroom altogether only Ransomware is available going forward.



A fair enough analysis. Otoh it's also fair to mention that your photos are not held hostage as the library module still works if one unsubscribes.

It is interesting to note that Adobe appears to be making _more_ money off the subscription model, not less.


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## Chaitanya (Jun 21, 2017)

IglooEater said:


> Chaitanya said:
> 
> 
> > Seems like Ransomware(CC) model has worked for them, with work of thousands of photographers across the globe held hostage there is no option but to pay up every month.  .
> ...


Main problem is that people are used to using Lightroom(Apple aperture was also used a lot by photographers before Apple discontinued it), and in general like camera systems photographers dont like to switch to a new system and start from ground zero. Even I tried Capture One, Macphun Luminar and On1 Raw and didnt really like the UI of those softwares(organisation part more than anything else) so I reverted back to LR(standalone). This rigidity of photographers not switching systems has certainly helped Adobe in keeping market share and expand in market.


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## Maiaibing (Jun 21, 2017)

Chaitanya said:


> This rigidity of photographers not switching systems has certainly helped Adobe in keeping market share and expand in market.


Adobe made a good business move for them - not for their customers. I was burned very badly by Adobe when my pre-paid subscription suddenly did not work for months and they did nothing to help me. So I really hate their broken subscription model.

Fortunately, you still get freeware to handle your RAW files from Canon.

So its our own call; do we stay or do we go?


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## Jopa (Jun 21, 2017)

I'm glad I did not contribute to this record revenue LOL


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## Quackator (Jun 21, 2017)

Affinity photo is a great tool.

Paid in full with less than a full monthly CC ransom.


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## m8547 (Jun 21, 2017)

RawTherapee looks like a decent alternative to Lightroom. I've installed it, but I haven't really used it yet. It's disappointing that Adobe hardly seems to be doing anything to give us new features and functionality, and that with every release Lightroom seems to get a little slower. I built a nearly top-of-the-line PC for Lightroom work, and it's still slow sometimes. I only have a 6D, so I can only imagine how bad it is for people working with 50mp images.


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## Khalai (Jun 21, 2017)

m8547 said:


> RawTherapee looks like a decent alternative to Lightroom. I've installed it, but I haven't really used it yet. It's disappointing that Adobe hardly seems to be doing anything to give us new features and functionality, and that with every release Lightroom seems to get a little slower. I built a nearly top-of-the-line PC for Lightroom work, and it's still slow sometimes. I only have a 6D, so I can only imagine how bad it is for people working with 50mp images.



I feel the pain. i7-5820K @ 4.2 GHz, 32 GB RAM and PCIe SSD for Lightroom. And I still sometimes experience latencies, lags and sluggish response. What the hell Adobe?


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## LDS (Jun 21, 2017)

Chaitanya said:


> It is interesting to note that Adobe appears to be making_more_ money off the subscription model, not less.



Why are you surprised? That's exactly why companies are switching to the subscription model. You have a steady cash flow, instead of peaks around a new version, slow sales when waiting for it, and fluctuations between depending on many factors (i.e. quality of a release, new features, etc.) - now you're paying regardless of what you get. And if you stop paying, you can't work any longer.

IMHO we are seeing more and more people "forced" to abandon older versions (which are getting older and older) and migrating to CC. When this migration is complete, revenues will stabilize. There's been also some piracy reduction, I guess.

Think as if a photographer you could force people to subscribe, and pay regardless of the photo you deliver them each month/year...


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## gmon750 (Jun 21, 2017)

The result of the subscription model shows that consumers have embraced it and it is here to stay. The days of purchased software is coming to an end.

I too was against it at first, but now I'm a believer in it. Those running on emotions of an era long gone can stay in their little bubble while the world moves on.

I just wish that Adobe would get with the program and improved the god-awful performance issues on Lightroom. Even on my new 5K quad-core i7 iMac with 64GB RAM and 1TB SSD clocked at 2.5GB/s still struggles at times to keep up. It's inexcusable really. Pixelmator at $40 screams on my iMac.

It's unfortunate that LR/PS are the only game in town. It will really take a market disruption for Adobe to wake up and realize that it needs to pay attention and address the shortcomings of it's software.


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## cayenne (Jun 21, 2017)

gmon750 said:


> The result of the subscription model shows that consumers have embraced it and it is here to stay. The days of purchased software is coming to an end.
> 
> I too was against it at first, but now I'm a believer in it. Those running on emotions of an era long gone can stay in their little bubble while the world moves on.
> 
> ...



You can still get Lightroom 6 standalone here:
https://commerce.adobe.com/anyware/checkout/?clientId=adobe_com&countryCode=US&languageCode=en&marketSegment=COM&items%5B0%5D%5BofferId%5D=2FC5373F330D461A88A53B374D87F5BB&items%5B0%5D%5Bcs%5D=0

I'm finding more and more, that I can use Affinity Photo in place of Photoshop....bought and paid for, no subscription.

I'll keep using my CS6 suite as long as I can, but I'm still not on the **rental** model for software.

cayenne


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## Click (Jun 21, 2017)

Jopa said:


> I'm glad I did not contribute to this record revenue LOL



+1


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## SteveM (Jun 21, 2017)

I need to produce a high standard of output to meet client needs. I use Adobe (CS6) and Capture One. As a Raw Converter Capture One is a very viable competitor to Adobe. However, Capture One was not built for extensive retouching, that has been the domain of Photoshop for a very long time, and it clearly does it extremely well. 
My attention was drawn to Affinity Photo recently so I had a brief play with it. My initial impression, and I say initial as I haven't had a lot of time to devote to it, was that it's retouching ability is surprisingly very very good. I would not personally use Affinity as a Raw Converter as there appear to be no highlight clipping warnings shown or rgb values on points selected.
My point: there is a viable alternative rising; Capture One for most of my photography needs, and where some retouching is needed Affinity Photo may be the answer, though I need to evaluate that a lot more yet.


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## jeffa4444 (Jun 21, 2017)

Apple sold its devotees down the line when it abandoned Aperture. It knew Adobe would capitalise and hell adobe were a launch app. for the touch bar. 
Lightroom CC. works as does the incredibly complex Photoshop CC. Lightroom on my blisteringly fast MacBook Pro struggles with files from my 5DS at times so much so I heavily cull shots before import so when I batch process it doesn't stutter. 
Like others I think Adobe Lightroom CC / Photoshop CC has become bloated and is in need of serious revision but when you have a virtual monopoly its not a priority so its put up or shut up.


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## Tangent (Jun 21, 2017)

This revenue does not necessarily imply more innovation in the core PS and LR tools. Wouldn't be surprised if Adobe sees this product subscription revenue flow as a cash cow, and development funds will be prioritized elsewhere. Just speculation on my part.


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## Cochese (Jun 21, 2017)

Hector1970 said:


> This is fantastic news for subscribers. We can soon expect Lightroom 2016 with loads of great updates.
> Same for Photoshop, we will be getting amazing extra functionality for the same low subscription price. The last few updates to Photoshop have been amazing. They have fixed so many bugs that they haven't had time to add new tools. How do they even keep up with all the new lens and camera profiles I'll never know.
> Adobe are driving improvements in processors and SSD drives by improving their underlying software to become more bloated with each version upgrade. They are proving the need for Moore's Law.



Yeah man, I can't even barely contain myself what with getting new versions of Photoshop and lightroom roughly every year for ~1/10 the cost I'd have paid out of pocket back in the day. Damn man, it's so terrible. 

I'd prefer more frequent updates with actual content, but the current suite of features in Photoshop and Lightroom are pretty comprehensive. I'd be fine with them focusing solely on speeding things up. I'm fine paying ~$100 per year for software that would have cost nearly $900.


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## Batman6794 (Jun 22, 2017)

SteveM said:


> I need to produce a high standard of output to meet client needs. I use Adobe (CS6) and Capture One. As a Raw Converter Capture One is a very viable competitor to Adobe.



Couldn't agree more. I am absolutely one of those photographers that doesn't want to change workflow, and I'm also one that DOESN'T like to spend money, so I resisted trying it. 

I was convinced to download the free 30 day trial and edit a couple of images in each program and compare results.

15 minutes of playing with my first image in Capture One and I already had something I was happier with than I had been from a half hour of massaging the same image in lightroom, and most of the 15 minutes of Capture One was figuring out where the tool I was looking for was located! Biggest call-out was how much more detail I could coax out of a picture before reaching objectionable noise levels. I slightly prefer the color handling as well, though the difference is quit slight. 

I was both exhilarated at how much better my photography was about to get and disappointed that I would have to spend some money. 

Its not all roses, the interface for Capture One is not as easy to navigate, and lightroom is much easier for attaching keywords to photos, but my main interest is image quality, and I get higher quality in less time with Capture One than I ever did with lightroom.


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## mclaren777 (Jun 22, 2017)

Jopa said:


> I'm glad I did not contribute to this record revenue LOL



If you were smart, you would subscribe to CC and buy some Adobe stock.

You would probably break even, or possibly even come out ahead depending on how much stock you buy.


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## rfdesigner (Jun 22, 2017)

mclaren777 said:


> Jopa said:
> 
> 
> > I'm glad I did not contribute to this record revenue LOL
> ...



I spy bubble (well not quite, bubbles usually demand borrowed money to inflate)

Point is the growth we're seeing will fall back just as quickly if PS/LR does not update/innovate as it did pre-CC... and that's the story users are reporting.

As it is I have no compunction to use CC.


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## Wizardly (Jun 23, 2017)

rfdesigner said:


> mclaren777 said:
> 
> 
> > Jopa said:
> ...



Yeah I take this to mean that Adobe is leaving space open under their price point for a competitor to undercut them with a viable alternative. It probably won't be long before Petapixel is inundated with "why I left Adobe" clickbait.


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## LonelyBoy (Jul 19, 2017)

Ladislav said:


> Good. So the subscription model works. Now, it is a time to put some of that money to development -> quality, optimization and innovation! I think plenty LR users would agree.



It works for making money. It's not clear that "Adobe makes record revenue from captive audience" translates into anything but "Adobe realizes they have captive paying endless fees and can just sit tight, because people have made it clear they're not going anywhere".

With standalone software packages, companies have to improve it enough to convince you to upgrade if they want more revenue. With subscription, they just keep getting paid no matter what until people are pissed enough to switch. The latter is a lower bar to meet.

Next time I have just a few to process, I'll be trying the Luminar beta, because I'm getting ready to jump ship even though I have the standalone.


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