Digital Media and Document Cloud Services are Adobe’s Strong Revenue Generation Centers

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Adobe has announced its Q2 2020 revenue results. In the second quarter of fiscal year 2020 ending 29 May, the world’s leading digital media and most respected customer experience management company, Adobe has earned a quarterly revenue of $3.13 billion, out of which digital media made up for a lion share ($2.23 billion). Creative and Document Cloud segment continued to play their part as Adobe’s most preferred solutions, even as Digital Experience and Advertising Cloud have a good run in a very competitive territory.

At its current rate, Adobe should generate close to $15 billion revenue by the end of March 2021- a phenomenal growth considering how much digitization is actually needed to transform and adapt to the new “normal” in a risky pandemic era. Marketo, Magento and its Advertising Cloud are its biggest revenue generation machinery– with Remote Sales Automation demands taking over the traditional SaaS marketplaces, Adobe would have a field day at delivering optimistic results built on quality, service, and customer experiences.

Adobe’s Q4 2019 revenue was $2.99 billion.

Amid COVID-19, Adobe has shown balanced optimism in keeping its machinery well-oiled and smooth, even as marketing technology and adtech firms show signs of duress due to slowdown and loss of cash flow in the market. Committed to building a world-class digital economy for customers, partners, vendors and employees, Adobe is at the leading edge of bringing the world to experience what “truly digital” really feels like — physically and emotionally.

Adobe’s President and CEO Shantanu Narayen said-

 “The tectonic shift towards ‘all things digital’ across all customer segments globally will serve as a tailwind to our growth initiatives as we emerge from this crisis.”

How is Adobe Advertising Cloud Impacted During the  COVID-19?

As per the Q2 2020 results, Adobe Advertising Cloud had to readjust* the expectations significantly under the current macro-economic conditions. It has already retracted its forecasted revenue goals for Adobe Advertising Cloud, which was shared in December 2019.

According to CFO John Murphy, the COVID-19 failed to deter or derail Adobe’s business model as it is seeing expanding profitability even in these challenging conditions.

John Murphy said, “We drove record Digital Media net new ARR for Q2, highlighting how mission-critical creative and document solutions are in engaging remotely.”

At the time of this announcement, Dan Neiweem, co-founder and principal at Avionos said,

“We expect to see an increase in Adobe’s online collaborative and productivity tools such as Adobe Sign and Creative Cloud as COVID-19 has forced companies to do more online. The majority of Adobe’s business is within their Document Cloud and Creative Cloud, which will help maintain, if not grow, their overall revenue and earnings in the short term. In the Experience Cloud business unit, we expect to see a greater impact to revenue as customers push off larger projects and initiatives to the latter half of 2020 or into 2021.”

Dan added, “Additionally, we expect Adobe to lower their expected earnings guidance for the year as economic conditions arise – for example, with universities announcing lower attendance in the 2020-2021 school year, this will reduce Creative Cloud and other licensing needs. We do expect to see Adobe rebound quickly as companies embrace the digital economy as a core strategy moving forward. We expect to see that rebound to initially focus on their Magento and Marketo acquisitions in their Experience Cloud and continued acceleration in Adobe Sign.”

Avionos is an Adobe Gold Partner and designs and implements digital commerce and marketing solutions.

*The macroeconomic environment and this strategic shift impacted Advertising Cloud targeted revenue in Q2 by approximately $50 million.

[To share your insights on marketing, sales and ad tech trends, forecasts and tech developments- please write to us at sghosh@martechseries.com]

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