Adobe -- still the dominant leader in the multimedia software market -- has been working to transform its business from the traditional "software sold in a box" to an online/cloud subscription-based model. So far the transition has gone well.
On Tuesday, the company will report results for its second quarter, and investors will be watching closely to see if the company can continue its momentum after a strong start to the year. The stock, trading at around $43, is up 25% so far this year.
Given the early struggles that Microsoft (MSFT) experienced with its Office 360 subscription, analysts had doubts that Adobe would make its transition as well as it has.Microsoft was looking for a cloud-based subscription model to save on distribution costs and make it easier for users to update their software. Likewise, Adobe saw this conversion as inevitable. The only question was how long the transition would take. Not only have customers responded favorably to the subscription model, but management's acrobatic moves have brought new life to Adobe's Creative Suite franchise, which added 153,000 Creative Cloud service customers in the first quarter.
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