Dive Brief:
- Adobe’s freemium offerings for creators reached more than 100 million monthly active users last quarter, up more than 70% from a year earlier, the software maker announced Thursday.
- The company’s strategy is to draw traffic to its products and prove their value, ultimately with the goal of converting users into paid customers. Freemium is a business model that gives users free access to products or features while charging for more advanced features, according to Investopedia.
- “That engagement is what is starting to translate into ARR [annual recurring revenue],” Anil Chakravarthy, Adobe’s president of customer experience orchestration and incoming CEO, said during an earnings call for its fiscal third quarter ended Aug. 28.
Dive Insight:
Adobe has been expanding its freemium strategy throughout the year. In the second quarter, the company said it was prepared to expand the model more aggressively after seeing early success with friction-free experiences designed to bring more users into its products.
On Thursday’s earnings call, executives indicated the strategy is showing up in Adobe’s user metrics.
Recurring revenue from Adobe’s Firefly product was running 40% higher at the end of the quarter than three months earlier.
Adobe reported fiscal third-quarter revenue of $6.76 billion, up 13% from a year earlier. The company raised its full-year revenue and earnings outlook.
The results came as Adobe prepares for a leadership transition. Chakravarthy is set to become president and CEO on Dec. 1, succeeding Shantanu Narayen, who will become executive chair.
Adobe is also searching for a new CFO after Dan Durn announced his departure earlier this year. Steve Day, a senior vice president of corporate finance, is serving as interim CFO.
