Adobe Earnings Will Be All About Creative Cloud and Cloud Services

NEW YORK (TheStreet) -- Adobe Systems (ADBE) will report second-quarter earnings results Tuesday after the closing bell. Once known for its popular Acrobat (PDF) document reader and Photoshop graphic software, the San Jose, CA.-based tech giant has tied its future on the success of the cloud -- particularly its Creative Cloud and Cloud Services, which are growing at rapid rates.

Adobe's cloud services has become the company's top priority. Not only does Adobe expect to end fiscal year 2015 with almost $3 billion annual recurring segment revenue, growing at a rate of 20% annually, the company is targeting some six million paid Creative Cloud subscriptions by the end of fiscal 2015. This is an aggressive goal, requiring Adobe to generate almost 50,000 paid subscribers per week for the entire fiscal year.

That's precisely what the company has done, including signing on 517,000 Creative Cloud subscribers in the first quarter -- an almost 30% increase year over year, bringing its total to almost 4 million. Adobe was projecting a sequential subscriber decline since the first quarter is typically one of its weakest quarters.

All told, Adobe's cloud ambitions has turned it into a diversified cloud marketing specialist, possession enhanced digital media and digital marketing capabilities. Investors have benefited from Adobe's transformation, which Adobe has achieved through a series of acquisitions and through a change in how its customers buy/access its software and services.

For instance, the days of boxed software are gone. Software subscriptions and license delivered via the cloud is now Adobe's new business model. The result has been a boon for the company and its shareholders.

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