The company posted a 2% drop in GAAP gross margin, while GAAP operating income plummeted by more than 60%. It wasn't any better on non-GAAP basis -- operating income fell close to 40% and operating margin decline by roughly 12% year over year.
But here's the thing: The 12% drop in operating margin still arrive higher than Street expectations.
This tells me there's now very little Adobe's management needs to explain during the conference calls regarding the business changeover. Analysts have already plugged the new metrics into their models. It also seems that the numbers they are using in their models have created a spread between management's guidance has turned a bit too bullish.
The fact that Adobe was still able to beat the Street's non-GAAP operating margin target despite a year-over-year 12% drop is the perfect example. In the numbers that do matter, however, Adobe is blowing them out of the water. Not only was there an 11% jump in Digital Marketing revenue, but management posted almost a 20% sales jump Marketing Cloud.Likewise, Adobe was able to secure an additional 68,000 net new subscribers for its Creative Cloud service, which followed 153,000 that were added in the previous quarter. This means that the company now has a total of 700,000 paid subscribers - an impressive accomplishment considering the service has been available for only just one year. Follow @saintssense This article was written by an independent contributor, separate from TheStreet's regular news coverage.