According to a RnRMarketResearch.com report published last year, the digital marketing software market is projected to grow 17% annually over five years to reach $56.613.2 billion by 2019. The growth in the industry is attributed to the increasing availability of SaaS-based, cost-effective and easy-to-deploy products that are helping drive adoption of the tools in Small and Medium Businesses.
Adobe's (NASDAQ:ADBE) second quarter revenues grew 20% over the year to $1.39 billion, falling marginally short of the market's projections of $1.404 billion. This was the ninth successive quarter where Adobe reported revenue growth. EPS of $0.71 was ahead of the Street's estimated $0.68 per share for the quarter.
By segment, revenues from the Digital Media segment grew 26% over the year to $0.94 billion, which included a 37% growth in Creative business revenues to $0.76 billion. There was a continued increase in the Creative Cloud and Document Cloud adoption which helped drive Adobe's annualized recurring revenue in the digital media businesses to $3.41 billion. Marketing cloud revenues increased 18% to $0.39 billion. Print and publishing revenues came in at $0.04 billion.
For the quarter, subscription revenues grew 40% over the year to $1.08 billion and services and support revenues grew 4% to $0.12 billion. Product revenues fell 28% over the year to $0.2 billion.
For the current quarter, Adobe expects to earn revenues of $1.42 billion-$1.47 billion with an EPS of $0.69-$0.75. The market was looking for revenues of $1.47 billion with an EPS of $0.71.
Adobe's Cloud Marketing Push
Adobe continues to enhance its marketing cloud offering. Recently, Adobe released new advertising capabilities for its Adobe Media Optimizer. The enhancements include the complete integration of Adobe's Dynamic Creative Optimization (DCO) across Adobe Marketing Cloud to deliver personalization so that advertisers can leverage granular audience segments. It now supports video ads and is able to leverage the growing mobile audience through integration with Adobe Analytics and Mobile Core Services SDK. The service is now able to deliver a complete view of the process from app installation to usage behavior to conversions so that data can be analyzed for higher conversions. Additional enhancements include improved reporting capabilities and the ability to deliver localized offerings.
Last quarter, Adobe also announced its first integration between Adobe Sign and Adobe Marketing Cloud to help eliminate the need for manual, paper-based process for enrollment, onboarding and servicing. Adobe Sign, which was earlier known as the Document Cloud eSign service, has now been integrated with Adobe Experience Manager Forms, which is a key component of Adobe Marketing Cloud. The integration will allow organizations to go digital for all paper forms including credit card applications, government benefit forms, or even medical forms. To strengthen the service, Adobe tied up with Box and Microsoft OneDrive so that customers can now find it easier to access and work on PDF files from anywhere.
Besides product enhancement, Adobe also is growing its Marketing cloud service through acquisitions. Last month, Adobe announced the acquisition of audience-engagement firm Livefyre for an undisclosed sum. Livefyre's platform allows brands and publishers with access to user generated content that can be streamed real-time right to their sites, ads, emails, TV, digital billboards and apps. Adobe plans to integrate Livefyre's tools into its Adobe Experience Manager so that its customers will be able to collect, curate and publish user-generated content from major social networks into their own marketing channels. The integration will help drive user engagement and conversion as the service will be able to successfully leverage social media capabilities as well. Livefyre customers include names like CNN, Coca-Cola Company, Cox Media Group, Dow Jones Wall Street Journal, Hallmark, and Huff Post Live. Livefyre's valuation is not known, but Adobe was an investor in the company, and Livefyre had raised $63 million in venture funding prior to the acquisition.
Its stock is trading at $92.20 with a market capitalization of $46.12 billion. It has fallen from the 52-week high of $100.56 it had peaked to in May this year. But the stock has recovered from the 52-week low of $71.27 it had fallen to back in February this year.