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This article was published on March 19, 2013

At 500k paid subscribers, Adobe beats with Q1 revenue of $1.008 billion and $0.35 EPS

At 500k paid subscribers, Adobe beats with Q1 revenue of $1.008 billion and $0.35 EPS
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Today Adobe reported its first quarter 2013 financial performance, including revenue of $1.008 billion and earnings per share of $0.35 on a non-GAAP basis. Analysts had expected the company to earn $0.31 per share on revenues of $985 million.

The company exceeded those expectations, and is announcing that it has passed 500k paid subscribers to its Creative Cloud service. In regular trading, the company slipped around 1 percent. In after-hours trading, the company has risen 5 percent.

On a yearly basis, these earnings will not impress without context, as the company achieved $1.045 billion in revenue Q1 2012. The important change here is Adobe’s shift to subscriptions, which have undoubtedly impacted short-term results in favor of a steadier long-term. The company is reforming its core business model, fully cognizant that it may negatively impact its revenues over the coming few quarters.

Adobe’s subscriber network continues to grow, with the company cresting 2 million free subscribers, and 500,000 paid users. The company reported 1 million users of its Creative Cloud service in December, putting it on an aggressive growth curve.

Major changes at Adobe

Coming full circle since its fiscal Q1 2012, Adobe has had quite the year, shifting its priorities on many fronts. The company kicked things off by releasing a number of upcoming apps in public beta, showing an unusually high level of openness with early adopters.

Embracing open Web standards is a key shift for Adobe…

In late April, Adobe launched version six of its flagship Creative Suite bundle, which ushered in Creative Cloud, a subscription model that Adobe believes will gradually help steady its revenue stream between product cycles.

Creative Cloud also plays an important role in Adobe’s future efforts in the social realm, led by the company’s acquisition of Behance, a massively popular network for creatives and their portfolios.

As for Flash, Adobe reacted to its decline by launching the Web-focused Edge family, a series of apps that embrace open standards like HTML5 and CSS3. This is a key shift for the software company, which is accustomed to basing its products on internal technologies, and not areas which it has little control over. The speedier update cycles, which utilize Creative Cloud for distribution, are now absolutely essential for keeping the Edge family up-to-date with evolving Web standards.

Adobe has also made new efforts to reach consumers and prosumers, bringing apps like Photoshop Touch to Kindle devices, as well as the iPad Mini and Nexus 7.

Image credit: Thinkstock