Stellar quarter for Adobe as Experience Cloud closes in on $1bn

Adobe has delivered outstanding Q2 results, with revenue growing across all three of its core cloud offerings: Creative, Document and Experience. CEO Shantanu Narayan outlined a number of key customer wins - including Netflix, Microsoft and Wells Fargo - and beat analyst expectations across the board. 

The company's Experience Cloud, which is proving popular with enterprises investing in digital tools to improve customer personalization, is now also nearing $1 billion in revenue per quarter. Shantanu said: 

Adobe had another outstanding quarter as the shift to a digital-first world continues to accelerate. From students to creative professionals to small businesses to the world's largest global enterprises, digital is transforming how we work, learn and play.

Adobe's mission to change the world through digital experiences has never been more relevant. Our strategy to unleash creativity for all, accelerate document productivity and power digital businesses is working.

The top line figures are:

• Adobe achieved quarterly revenue of $3.84 billion in Q2, which represents 23 percent year-over-year growth. 

• Creative Cloud revenue grew to $2.34 billion, representing 24 percent year-over-year growth. 

• Document Cloud revenue was $469 million, representing 30 percent year-over-year growth

• Experience Cloud revenue was $938 million, representing 21 percent year-over-year growth. 

Adobe's share price was up almost 3% at close of play on Friday. 

A story of three clouds

Adobe's three core cloud offerings are closely aligned to the investments in digital tools we've seen from organizations during the COVID-19 pandemic, which is likely what is spurring the company's impressive growth. The need to collaborate digitally (document), engage creatively and build experiences that matter to customers and employees is standing Adobe in good stead. Execution will obviously still be key over the long-term, but it is in a good position to take advantage of market trends. 

Whilst the three distinct clouds have their independent draws and appeal for buyers, it is also true that they complement each other as organizations seek to not only operate digitally, but also engage digitally. On Creative Cloud, Shantanu said: 

Over the last year, we have seen the critical role creativity has played in the world. Creative Cloud is empowering everyone, from the most demanding professional, to the high school student, to the next generation of social media creators, to tell their stories. Adobe is the leader in core creative categories such as imaging, design, video and illustration, and we are expanding our leadership in exciting new media types, including screen design and prototyping, 3D and AR.

In a world that requires anyone to be able to create from anywhere, we are building products and services for every surface and platform. Our vibrant creative communities continue to be a tremendous source of inspiration and our goal remains to provide access to a larger and increasingly diverse set of creators and design teams, furthering our strategy of unleashing creativity for all. 

Customer wins this quarter for the Creative Cloud include ByteDance, Netflix, Microsoft and Unity. 

Commenting on the success of Adobe's Document Cloud, Shantanu said: 

In this digital-first business environment, seamless document workflows across every device and platform are more important than ever for the modern workforce to collaborate and be productive. Document Cloud is accelerating document productivity by powering the paper-to-digital transformation and enabling all document actions including editing, sharing, scanning and signing to be frictionless across web, desktop and mobile applications.

He added that in Q2 Adobe drove "30 million visits to frictionless PDF pages" and saw 110 million mobile downloads of Adobe Scan, which has 1 billion scans to date. Customer wins for Adobe Document Cloud include ADP, AstraZeneca, GlaxoSmithKline, Toyota and Wells Fargo. 

But it is the Experience Cloud that is likely of particular interest to diginomica readers. We saw numerous examples of how customers are using Experience Manager during Adobe's recent Summit, including Colgate-Palmolive and AstraZeneca. 

According to Adobe' recent Digital Economy Index, e-commerce spending is projected to be $4.2 trillion globally this year, and reach $1 trillion in the U.S. alone in 2022. Shantanu said that across both B2C and B2B, companies around the globe are investing in digital to deliver personalized and engaging customer experiences.

Shantanu said: 

Experience Cloud is the most comprehensive solution for content and commerce, data insights and audiences, customer journeys and marketing workflow. With unified customer profiles and an open and extensible architecture, Adobe Experience Platform is the clear platform of choice for enterprises to deliver real-time personalization at scale, powering more than 17 trillion audience segment evaluations every day.

Highlights of product announcements include, Adobe Journey Optimizer, which helps marketers optimize the customer journey across outbound and inbound customer touchpoints; Adobe Customer Journey Analytics, which enables brands to integrate and standardize their online and offline data and is years ahead of any competitive offering; the next generation of Adobe's Real-time Customer Data Platform to help brands optimize their acquisition and engagement strategies in a first-party data world; a preview of a pioneering marketing system of record, built on Workfront technology, designed to manage complex marketing workflows for greater efficiency and agility; and new intelligent commerce capabilities and a strategic partnership with FedEx that will allow every small and medium business to offer expedited shipping capabilities as part of their commerce platform.

Shantanu added that Adobe's recent acquisition of Workfront is forming "so many parts" of the company's large transformational deals and is forming the basis for a lot of the workflow that Adobe is doing across each of its solutions. 

My take

As noted above, Adobe is in a strong position to take advantage of the market trends we are seeing as a result of the COVID-19 pandemic. My only concern at this stage is how well the message is coming across about how the three clouds complement each other - from creation to workflow to engagement - rather than sitting in isolation. But the results speak for themselves and Adobe is on the up.