This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Adobe Shines as Cloud Model Delivers

NEW YORK (TheStreet) -- Adobe Systems(ADBE - Get Report) was the biggest gaining stock in the S&P 500 Wednesday as the company demonstrated that its strategy of shifting to the cloud with a subscription pricing model is working better than planned.

Shares were surging more than 6% to $51.22 after the company reported a sequential increase of 331,000 in paid Creative Cloud subscriptions to more than 1 million during its fiscal third-quarter, boosting subscription revenue by 73% to $299.4 million from a year ago.

CEO Shantanu Narayen said that the company's transition to the Creative Cloud subscription model from the traditional perpetual licensing business model was happening faster than expected. "Our customers are overwhelmingly choosing subscriptions," he said in a statement. The company expects Creative Cloud subscriptions to hit 4 million by the end of 2015. The Creative Cloud was launched in May 2012.

The new cloud-based subscription model has been luring in a flood of price-sensitive customers who might have otherwise opted for cheaper or free alternatives to Adobe's software. The maker of creative-suite products such as Photoshop and InDesign is now offering a monthly pricing model that allows new users to access the Creative Cloud for as low as $50 a month compared with the previous, more prohibitive four-digit pricing for a perpetual license. The fee is even lower for existing users and students.

Must Read: iPhone Slowdown. What iPhone Slowdown?

Norman Young, a technology analyst at Morningstar, said that while some customers might balk at paying monthly fees for software they'd originally purchased years ago, Adobe's subscription pricing model will improve its competitive position.

"The model offers Adobe a more predictable recurring revenue stream, an increase in the addressable market, increased customer stickiness, and more manageable upgrade cycles," Young said in a report.

Investors were shrugging off the company's lower-than-expected fiscal-third quarter earnings per share and total revenue figures.

-- Written by Andrea Tse in New York

>To contact the writer of this article, click here: Andrea Tse.>

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free
ADBE $94.22 0.00%
AAPL $93.74 0.00%
FB $117.58 0.00%
GOOG $693.01 0.00%
TSLA $240.76 0.00%


Chart of I:DJI
DOW 17,773.64 -57.12 -0.32%
S&P 500 2,065.30 -10.51 -0.51%
NASDAQ 4,775.3580 -29.9330 -0.62%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs