Photograph by Kris Tripplaar — Sipa USA/AP

Its move to subscriptions is paying off.

By Lucinda Shen
March 18, 2016

Shares of Adobe Systems surged 5% in morning trading Friday after the company beat analyst expectations and nearly tripled digital revenue for the first quarter, saying that tough macro economic conditions had done nothing to dampen demand.

San Jose, Calif.-based Adobe reported earnings of 66 cents per share. Revenue rose to $1.38 billion for 25% year-over-year growth. Analysts were expeccting 61 cents per share and revenue of $1.34 billion for the quarter ending March 4.

Sales of digital media, which include products such as Adobe’s Creative Cloud, stood out as a particular bright spot, growing 33% to $932 million.

Since the tech firm, known for its Adobe Creative Suite and Photoshop, transitioned into a subscription-based service, the company’s ARR, or annualized recurring revenue, has come into focus. That metric grew to $3.13 billion in the first quarter. The company is also working to increase its customer base in a $17 billion addressable market, adding that it is selling products for which more people are recognizing a need.

 

“The solutions that we are providing I think are playing to what is a very key need in the marketplace which is everybody is dealing with digital transformation, everybody is trying to bring their businesses online,” CEO Shantanu Narayen during a call with analysts Thursday. He said tough economic conditions, such as low oil prices and high market volatility, seemed to have no effect on Adobe’s demand.

“So if there is macro economic conditions that are impacting other peoples businesses, we haven’t seen that yet,” he said.

The company raised is forecast on targeted revenue from $5.7 billion to $5.8 billion for the full year.

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