In this post, I am looking at Adobe’s Q2 top line performance compared to Q2 2018 and Q2 2017. Disclaimer: I have Adobe in my personal portfolio. The data was retrieved from Adobe’s official quarterly reports. Before we go further, it’s important to look at what the segments entail
- Digital Media:
- Document Cloud
- Digital Experience (Experience Cloud)
Overall, revenue YoY growth in 2019 increased compared to that in 2017. Revenue growth in both years stood at mid 20s. However, gross profit and particularly, operating income slipped.
In terms of segment revenue YoY growth, product and services improved in 2019, compared to 2018. While subscription revenue YoY growth slightly decreased in 2019, compared to that in 2018, the figures in both years are still higher than those of Product and Services.
Subscription and Services saw their Gross Margin slightly slip across the last 3 Q2s, both outperformed by Product. It’s obvious that Subscription and Product are significantly more profitable than Services.
With regard to segment revenue as % of Total Revenue, all three segments look pretty consistent over the past 3 Q2s.
When YoY revenue growth is looked at, Publishing and Digital Experience impressed, compared to Digital Media
However, Digital Media and Publishing are more profitable to Adobe than Digital Experience
If we simply look at YoY revenue growth from subscriptions in these segments, Digital Experience significantly improved in 2019 compared to 2018 while Publishing stagnated in 2019.
At a lower level, inside Digital Media, while Document Cloud revenue grew pretty much at the same pace in 2019 as in 2018, Creative Cloud revenue growth slowed in 2019.
In terms of ARR, Adobe looks to be in good shape. I didn’t do a YoY analysis since they showed numbers in different currency rates