Adobe Makes $547 Million from Subscriptions with 2.81 Million Subscribers to Creative Cloud

We’ve written a bit about Adobe’s transition from a one-time software license model to a subscription-only revenue model. While there have been some glitches

We’ve written a bit about Adobe’s transition from a one-time software license model to a subscription-only revenue model. While there have been some glitches with pricing psychology, it looks like the model is succeeding in transitioning customers and holding annual revenues steady.Seeking Alpha reports that Adobe has garnered $547 million in subscription revenue so far, 54.4% of total revenues. One-time software license sales make up 34.7% of total revenues at $349 million, while services garner $109 million or 10.8%. Total revenues are $1.005 billion, slightly below the expected $1.02 billion, but well within Adobe’s usual annual range of $975 million to $1.25 billion.But most interestingly, Adobe has increased subscription revenue by 83% year-over-year, while one-time sales have decreased by 40%, indicating that the new model is being adopted by consumers and the transition may be successful.Furthermore, in the third quarter, Adobe has added 502,000 Creative Cloud subscribers, giving them 2.81 million total subscribers.Of course, the real test will be the company’s retention rates. Seeking Alpha reported that Adobe “derived 63% of its third quarter revenue from recurring sources, compared to 52% last quarter” but there was no publication of an actual retention rate. While B2C companies usually get retention rates in the 60%, we expect that Adobe will hit the 80% or 90% given the necessity of its software to many consumers and working professionals.

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