In 2016, Adobe reported 22% growth in revenues to $5.85 billion. While the performance metrics reported growth across two of its major business lines (i.e., Creative Cloud and Marketing Cloud), its legacy business continues to suffer. According to our estimates, Adobe’s annualized recurring revenues are expected to exceed $4.9 billion for its digital media business, which includes creative and document cloud products. Its Marketing cloud expected to clock in another year of double-digit growth in 2017, in the mid-twenties.

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Adobe’s Guidance For 2017

Adobe guided that the revenue for FY2017 will be $7.09 billion, while GAAP EPS and Non-GAAP EPS is expected to be $2.85 and $3.75, respectively. It expects digital media revenues and digital media ARR to grow by 20% and 25%, respectively. Furthermore, Adobe expects revenues from its digital marketing cloud to grow by over 25% for the year 2017 and average subscription value bookings to increase by 30%. It also expects that the GAAP and non-GAAP tax rate will be around 21%.

Growth At Creative Cloud To Continue In 2017

The Creative Cloud division makes up 50% of Adobe’s estimated value. The key drivers for this division are the average revenue per subscriber and total creative software market. While Creative Cloud contributed nearly 53.4% to Adobe’s revenue in 2016, the total addressable base for Adobe’s creative products stood at 18.6 million, according to our estimates.

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