Adobe is building its future Creative Software business on the cloud, and according to Q3 earnings, the company's CS division saw its cloud-based revenue increase by more than 50 percent during the quarter. Adobe Creative Cloud now has more than 1 million paying subscribers.
Not everyone is a fan of Adobe's (ADBE) move to a cloud-based subscription model for its Creative Suite division, but for the company, the new model seems to be working out quite well. Adobe announced its third quarter financial results, and it showed a more than 50 percent increase in Creative Cloud revenue. At the same time, it also noted that Creative Cloud had grown to more than 1 million subscribers.
When Adobe announced the end of Creative Suite perpetual license sales earlier in 2013, the company upset not only customers, but also partners who had built a solid business on selling Adobe point products.
At the same time, Adobe had to appease shareholders somewhat by persuading them to look ahead. After all, such a dramatic shift in business model was going to have an effect on earnings. And it did, of course. The Creative Software division represents about 55 percent of Adobe's total revenue. And it ended the packaged software titles that were raking in the majority of its revenue in favor of a cloud-based subscription model.
Adobe hasn't tried to hide the fact the move to Creative Cloud is going to affect its bottom line for a while as it builds its cloud subscriber base, but even as its detractors continue to argue against Adobe's strategy, Creative Cloud has grown considerably. During Q3, Creative Cloud revenue grew by more than 50 percent to $546 million.
Despite growing pains, Adobe Creative Cloud seems to be growing a fast clip, but how partners are faring is still up in the air. Sales of Creative Suite have dropped considerably, but Adobe is continuing to sell Creative Suite 6 to ease the transition to Creative Cloud. Not exactly a great incentive for partners or customers, considering it's the end of the line for CS and is already obsolete in terms of features.
Some partners have voiced their concerns, but others have embraced Adobe's Creative Cloud and starting building a line of business around it. Take En Pointe Technologies as a good example of a partner who is barrelling ahead with a Creative Cloud business. The company announced a month ago it was expanding its Adobe practice following the launch of Creative Cloud for teams—a launch that appeared to be Adobe's way of trying to make things easier on partners and customers.