Adobe's rosy forecast signals creative growth

San Francisco

Adobe Inc. gave an upbeat recurring revenue forecast for fiscal 2020 that reassured investors the software maker will see steady demand for its creative applications.

A measure of fresh demand for the company's creative and document software, net new annual recurring revenue for digital media, will be US$1.55 billion next fiscal year, the San Jose, California-based company said on Monday at a financial analyst meeting. Analysts projected US$1.53 billion, according to data compiled by Bloomberg.

Adobe unveiled new software products on Monday at the company's annual Max conference in Los Angeles, including versions of Illustrator and Photoshop apps for Apple Inc.'s iPad. While many of the applications cater to creative professionals seeking more sophisticated capabilities, Adobe also is trying to expand the appeal of its photo-editing and illustration software to hobbyists.

The strategy may boost sales growth for the Creative Cloud unit. Adobe projected in September that sales growth for its smaller marketing software unit would slow down in the current period, raising pressure on the main creative business.

Profit will be US$9.75 a share in fiscal 2020, Adobe said, compared with analysts' estimates of US$9.69. Revenue will be US$13.15 billion, the company said. Analysts, on average, projected US$13.14 billion.

The company expects revenue from its Creative Cloud and Document Cloud suites to jointly grow 19 per cent in fiscal 2020, while its marketing software suite will grow 16 per cent. "Our expanding universe of customers, strong global brand, market-leading products and continued innovation position us for a stellar 2020," chief executive officer Shantanu Narayen said in a statement.

The software maker estimated that the total market for its products will grow to about US$128 billion in 2022 from US$108 billion a year ago. Most of that - US$84 billion - represents marketing and customer experience software. The creative software industry would be worth US$31 billion and the company's Document Cloud would be part of a US$13 billion market. BLOOMBERG