M+E Connections

Adobe’s Q3 Results Driven By Strong Digital Media, Digital Experience Growth

Adobe reported strong results on Sept. 15 for its third quarter (ended Sept. 2), while also announcing it entered into a definitive merger agreement to acquire Figma, a web-first collaborative design platform, for about $20 billion.

“The combination of Adobe and Figma will usher in a new era of collaborative creativity,” Adobe said in a news release announcing the deal.

Adobe’s Q3 Digital Media revenue came in at  $3.23 billion, up 13% from a year ago as Creative revenue grew to $2.63 billion (up 11%) and Document Cloud revenue increased to $607 million (up 23%).

Digital Experience segment revenue came in at $1.12 billion, up 14% from a year ago as subscription revenue increased 14% to $981 million. Adobe’s total Q4 revenue increased 13% to  $4.43 billion.

Noting that “Adobe had another record quarter,” Shantanu Narayen, the company’s CEO and chairman, told analysts on an earnings call: “In this digital-first world, Adobe Creative Cloud, Document Cloud and Experience Cloud have become even more mission-critical to an increasingly wide range of customers —from students to creative professionals to small businesses to the world’s largest enterprises.”

Meanwhile, the company continues to see new opportunities. “Fueled by our groundbreaking technology, track record of creating and leading categories and consistently strong execution, our opportunity is larger than ever before,” according to Narayen.

“Adobe’s greatness has been rooted in defining new categories and platforms and delivering cutting-edge solutions through both organic innovation and inorganic acquisitions,” he said.

He explained: “Throughout our history, Adobe’s innovations have touched billions of lives around the globe. From revolutionizing imaging and creative expression with Photoshop, to pioneering electronic documents through PDF, to creating the digital marketing category with Adobe Experience Cloud, Adobe continues to invent and transform categories. We are in the golden age of design and we believe we have a unique opportunity to usher in a new era of collaborative creative computing.”

More on the Figma Deal

Narayen went on to tell analysts that the Figma acquisition “will help us accelerate this vision,” adding: “Figma enables designers, developers and all stakeholders to collaborate in the product design process from ideation to design to delivery. The combination of Adobe and Figma will significantly expand our reach and market opportunity while making the creative process more accessible and productive to more people.”

Under the terms of the acquisition deal, the $20 billion that Adobe agreed to pay for Figma will be half cash and half stock, subject to customary adjustments, Adobe said.

About 6 million additional restricted stock units will be granted to Figma CEO and co-founder Dylan Field and employees that will vest over four years subsequent to closing, Adobe disclosed.

“The transaction is expected to close in 2023, subject to the receipt of required regulatory clearances and approvals and the satisfaction of other closing conditions, including the approval of Figma’s stockholders,” Adobe said.

After the closing of the transaction, Field will continue to head the Figma team, reporting to David Wadhwani, president of Adobe’s Digital Media business. Until the transaction closes, each firm will continue to operate independently, Adobe said.

Strong Express ‘Momentum’

Adobe saw “strong momentum” for its Adobe Express web and mobile app in Q3, “with significant growth in new users,” Wadhwani said on the earnings call, adding: “Adobe Express is serving an expansive universe of creative professionals, communicators and knowledge workers – from students to small business owners to social influencers. It’s exciting to see the rapid innovation we’re delivering to enable millions of customers to create standout multimedia content. Adobe Express has thousands of templates, millions of stock assets and quick action functionality that make it easy to do any creative task. Millions of new users are coming to Adobe Express, driven by viral adoption and our creative marketing campaigns.”

Adobe MAX will be held in Los Angeles and streamed live, Wadhwani also said. “In addition to unveiling amazing new Creative Cloud innovations, we will hear from luminaries including renowned film directors, artists and musicians,” he noted.