Key points from this report:
- SaaS is COVID-resistant: Adobe has high revenue visibility as ~91% of revenue is subscription-based, driven primarily by enterprise customers. The largest segment, Digital Media (71% of total revenue), grew +18% in Q2 FY21 and includes Creative Cloud, which is 100% subscription-based. Digital engagements/usage increased significantly across the globe, including for Acrobat (+50% y/y) and Adobe Sign (+175% y/y).
- Annualized recurring revenue remains +20%. Adobe’s ARR continues to grow +20% since its transition to a subscription revenue model in 2013. Digital media ARR currently stands at $9.17B (+23% y/y), led by Creative Cloud ARR ($7.93B) and Document cloud ARR ($1.24B). In Q2, new ARR was $443M.
- Addressable market expanding. Adobe estimates that its total addressable market (TAM) will increase to $128B by 2022, up from $108B in 2021, driven by growth in the number of users (~4.7B users) across the digital market. TAM includes the Experience Cloud ($84B), the Creative Cloud ($31B), and the Document Cloud ($13B).