Adobe’s Document Cloud performance in 3Q16
So far in this series, we’ve discussed Adobe’s (ADBE) performance in fiscal 3Q16. We also looked at Adobe’s increased Creative Cloud subscriptions, which enabled the company’s Digital Media segment to report a 29% revenue growth in fiscal 3Q16. Document Cloud (or DC) also contributed to Digital Media’s record revenue growth.
Document Cloud reported $188 million in revenues for fiscal 3Q16, while its ARR (annualized recurring revenue) grew to $442 million in 3Q16. According to Adobe, Document Cloud’s growth in 3Q16 “represents the highest sequential quarterly growth this year.”
Adobe launched Document Cloud in March 2015. It includes Acrobat DC, Adobe eSign services, and web and mobile apps for document management across devices. It’s a comprehensive portfolio of digital document solutions that streamline business processes. Adobe eSign’s partners include Workday (WDAY), SAP Ariba (SAP), Microsoft (MSFT), and Salesforce (CRM).
Adobe’s strategy of sticking to subscription revenues
Document Cloud, a subscription offering, enables users to sign documents on the cloud. During Adobe’s fiscal 3Q16 earnings conference call, management stated that “combined with Acrobat adoption reflected in Creative Cloud, Document Cloud continues to be an important growth business for Adobe.”
Since the company is well on its way to a subscription model, increased traction of Document Cloud will boost the company’s revenues. Subscription revenue made up for 80% of Adobe’s overall revenues in fiscal 3Q16, compared with 68% in 3Q15. In the earnings call, Adobe added that “over 90% of Acrobat customers chose the subscription offering.”
Adobe’s statement that its “focus has shifted more towards annual subscription value” clearly indicates that rather than offering multiple solutions, Adobe is keen on growing its subscription revenues. Considering the consistent double-digit growth, Adobe’s strategy seems to be working.