How Much Revenue Can Creative Cloud Add To Adobe’s Topline By 2018?
Adobe (NASDAQ:ADBE) successfully transformed its business model from being a perpetual licensing vendor to a cloud-based Software-as-a-Service (SaaS) subscription service over the past few years. As this transformation gained momentum, the number of subscribers for its Creative Cloud (CC) grew, while Average Revenue Per Subscriber (ARPS) declined due to the introduction of the de-itemized suite. Recently, the company has launched new products such as Lightroom for Apple TV and Adobe Spark for visual stories that complement and supplement its Creative Cloud (CC) division. Due to these launches, Adobe’s total addressable market (TAM) for CC has gone up to 25 million creative content producers. As a result, we expect that the company can double its subscriber base over the next three years. This would result in 75% increase in CC topline for the company. Our estimates for 2018 revenues are as follows:
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