Will A Social Angle To Creative Cloud Help Drive Cloud Subscriptions For Adobe?
Adobe (NASDAQ:ADBE) has acquired online portfolio website Behance to promote community features on its Creative Cloud. Behance is a leading online platform for discovering and showcasing creative work. Customers can post projects and receive responses for designs and other creative work while designers can use it to display and acquire leads for paid creative assignments. Behance was founded in 2006 and has about a million members. Adobe states that Creative Cloud members will soon gain access to basic Behance capabilities such as portfolio creation while paid Creative Cloud members will have access to extra capabilities offered by Behance ProSite.
The company reported record Q4 revenue of $1.15 billion, beating its guidance of $1.07-$1.12 billion and taking its annual revenue to $4.4 billion. Adobe has seen significant growth in its Creative Cloud and Marketing Cloud initiatives. It claims that it has nearly 1 million free subscribers for Creative Cloud along with 326K paid subscribers. At an average selling price of $750 per subscription, this leads to an annual recurring revenue of $153 million. [1]
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How Will The Social Aspect Help Adobe Creative Cloud
Adobe Marketing Cloud’s Q4 revenues grew 32% on a yearly basis to $220.4 million. The only significant drop in revenue was reported in the LiveCycle and Connect business, which reported $70 million in Q4, down from $103 million last year. The company has seen a faster-than-expected adoption of subscription licenses and will focus on increasing its end-user subscriptions while rolling out enterprise term licenses in 2013. An indication of the popularity of Creative Cloud was that it added 10,000 new subscribers each week in Q4 2012, up from 8,000 last quarter.
Adding Behance to Creative Cloud will accelerate efforts to enable a more open and collaborative creative community, and this is likely to help Adobe sell more Creative Cloud licenses. Adobe is one of the leading developers of creative software and it is safe to assume that a lot of creative content creation takes place on Adobe’s software and integrating a marketplace like Behance is likely to drive Creative Cloud subscription. The biggest advantage of this integration is that the users can create content as well as seek feedback, showcase their content and distribute it across devices from a single platform, making the workflow much simpler and therefore driving up consumption.
We currently have a $33 Trefis price estimate for Adobe, which stands just below its market price. Creative Software accounts for nearly 50% of its total value.
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Notes:- Adobe & Behance, blogs.adobe.com, Dec 2012 [↩]