Own Adobe Stock? You Are Making a Ton of Money Today

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Sorry I’m late to this, I wanted to write about it yesterday when it happened, but didn’t get a chance to. JD had some coverage, but I wanted to talk a bit about the numbers from Adobe. If you don’t know what I’m talking about, Adobe blew past analysts estimates for earnings (and even profits) for the third quarter and now the stock is up almost 12% today. So lets dig into the numbers.

Adobe had revenue of $602.2 million, which was at the very high end of what Adobe and analysts had estimated. So here’s how it breaks down.

  • Creative Solutions – $328.1 million (54.5%)
  • Knowledge Worker Solutions – $154.1 million (25.5%)
  • Enterprise and Developer Solutions – $49.4 million (up from 42.8) (8%)
  • Mobile and Device Solutions – $9.1 million (1.5%)
  • Other – $61.5 (10.2%)

This is what always gets me. Obviously I am a big fan of Adobe, but I deal primarily with the Enterprise and Developer solutions, so these calls are always a wakeup call for me. Why? Because they only account for 8% of revenue in the company. Adobe is still a company that revolves around their tools. Studio and Creative Suite account for a whopping 54.5% of the revenue, so no one is betting the farm on Flex 2 over at Adobe, the big money remains rooted in the tools.

Now does this mean that Flex 2 isn’t important within the company or that enterprise is being ignored? Absolutely not, and revenue from that segment grew at a nice pace from last quarter. But it is still a very small slice of the pie, and the core of the company is still based around the tools and their strategy continues to revolve around that revenue stream.

A couple of interesting tidbits, they finally used Breeze for this conference call. I also noticed that they gave investors and analysts an invitation to attend MAX for one day. I wonder which day and who takes them up on that.

[tags]Adobe, ADBE, Wall Street[/tags]

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  • http://blogs.adobe.com/mikepotter/ Mike Potter

    What I found interesting was the number of people talking about LiveCycle… There was record revenue for LiveCycle, and it was mentioned many times on the earnings call as being an important part of our future growth.

    Just another reason why developers should get excited about LiveCycle software.

    Mike

  • http://blog.digitalbackcountry.com Ryan Stewart

    That’s a very good point Mike. If you watch the conference call you hear a TON about LiveCycle. I’d go so far as to say that it was the most mentioned product in the call (disregarding the Q & A – the analysts just care about Creative Suite :) ).

  • http://www.simb.net Simeon

    For me this makes it all that much more clear why they bought Macromedia (sorry merged). The were sitting in their big conference room 2 years ago and looking at the numbers. I hear a conversation that goes soemthing like this. “I think we should be able to make some more money. So lets see… we already dominate the market for our creative tools and that is where most of our money comes from. So we cant get real big growth there. Which of our divisions is profitable, but not making as much as we would like? Enterprise Development you say? hmmmm…. Well how can we improve that. Whats that you say? Our enterprise services are built on the J2EE platform. Ok, well lets make some more of those. WAIT! How long to develop more? That wont do… Ok, I have an idea. Lets buy some more of those! Yeah who can we buy….”

    And the rest we can say we know as history. :) With the next round of server products to be completed in around the next 18 months, they are poised to see extremem growth in that sector of thier business. With Jran, FDS, Flash Media Server, Breeze, LiveCycle and ColdFusion to tie them all togehter. I expect we will see amazing things from Adobe.

    So if you missed out on this big stock jump. its not to late to buy, there is more to come!

    Zealot Out.

  • http://weblogs.macromedia.com/jd John Dowdell

    One other angle, besides revenue, is growth… creative tools has had the longest growth period and so is the largest segment today, but enterprise & mobile are seeing the most rapid growth now, and will likely be very significant contributors in the future. The company is investing in these areas.

    (I think creative tools also includes consumer tools, like Adobe Elements… there are a lot more regular folks than creative professionals or developers, so this is also an important area for future growth.)

    I like watching how tech involves, but I’m glad there are business professionals at Adobe who watch over these angles, so that the future is more attainable.

  • nz

    They didn’t mention much about initial Flex 2 sales figures etc, wonder if its coz sales have been slow going so far?

  • http://blog.digitalbackcountry.com Ryan Stewart

    JD, I think the numbers that will be interesting to watch are the ones after CS3. The drop in revenue in the Creative Solutions area is largely due to it being late in the release cycle. I’m not sure you can entirely corrolate the two, but if growth in the Creative Solutions outshines the Enterprise growth because of CS3, that will be a good thing to take note of.

    Campbell, you’re right. While they wouldn’t break out Flex 2 numbers in a call like this, I would have thought we would hear something about them.

  • Mark

    I think the sales of flex builder have been very disappointing for Adobe. I think Flex builder will grow over time, but if it were doing well, the numbers would have been mentioned repeatedly. I sure hope Flex Builder catches on, it sure deserves it.

    Mark

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  • David

    Flex 2 has been released, what, 3 months now? Given the short timeframe, and the fact that many companies just aren’t ready to deploy a RIA, I would have been surprised to see impressive Flex 2 figures.

    David

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