Adobe saved by subscriptions

Adobe has reported a higher-than-expected profit for its Creative Cloud, which is a subscription based software model.

Adobe has been shifting to its web-based subscription service Creative Cloud from a licensing model since last year and there appears to be a lot of take up.

The company said it added 221,000 paid Creative Cloud subscribers in the latest quarter, taking the total to 700,000.

Adobe expects to add even more Creative Cloud paid subscribers in the current quarter than in the second quarter.

Adobe took a big risk when it said that upgrades for Creative Cloud, which includes Photoshop, Illustrator and Flash, would be available only through online subscriptions and abandon licences completely.

While this means lower revenue in the short term as fees are collected monthly, it does mean a better long term outlook.

Adobe has predicted revenue of $975 million to $1.03 billion while Wall Street had thought the company would be lucky to make $1.01 billion.

It was not all good news for Adobe. Net income fell to $76.5 million from $223.9 million a year earlier.  If Adobe has not moved to the subscription model things would have been very bleak indeed.