Q4 Results: Cloud Giants Adobe And Oracle Talk Marketing Suites

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AdobeQ1

Adobe's fiscal Q1 (Oct to Dec 2013) delivered healthy demand for its six-product-strong Marketing Cloud suite, which includes Media Optimizer, Social, Analytics, Target, Experience Manager and the newest entrant to the pack, Campaign.

"When we look at prospects for Marketing Cloud, we are optimistic," CEO Shantanu Narayen said during Tuesday's earnings call. Customers licensing Marketing Cloud products in Q1 include GMC, Kohl's and NBCUniversal.

Adobe breaks its "Digital Marketing" line of business segment into two revenue streams, Marketing Cloud being one and LiveCycle and Web-conferencing solution Adobe Connect being the other. It has seen a decline in revenue on the latter two parts of the segment.

Adobe has noted similar shifts on the creative side of the house, namely due to the transition from Creative Suite products to Creative Cloud pricing and subscription models.

LiveCycle and Connect generated only $47 million in Q1, which was a decrease from the $52 million recorded in Q1 of last year. Adobe attributed this to the company's migration of LiveCycle customers to Adobe Experience Manager. "As a result, we expect LiveCycle revenue will continue to decline while Connect revenue will remain relatively flat."

Revenues for the digital marketing segment were $267 million, down from the previous quarter's $316 million. On a year-over-year basis, Marketing Cloud revenues were up from $215 million. As with consumer-focused verticals, the sequential dip is par for the course in enterprise software cycles. "In the enterprise business, you have a seasonally week Q1 typically after a strong Q4. Adobe Campaign was off to a strong start, so we continue to be very excited about prospects for Marketing Cloud."

Total revenues in the fiscal first quarter reached $1 billion – the same as last year's Q1 – and "at the high end of our targeted range," CFO Mark Garrett said on the call. More than half that total revenue number was attributed to Creative and Marketing Cloud suites.

Adobe also outlined some details around its integration path, most notably on the induction of Neolane into the Marketing Cloud fold through the Campaign product. Also, Adobe in January integrated Campaign with Experience Manager, which makes for a "single digital asset-management repository" for marketers to tap both anonymous, third-party data as well as identified, first-party data.

According to Narayen, "The publishing industry wants a single digital asset repository and workflow to create content once and repurpose across Web, video, mobile and other channels. We have a number of retail customers looking to accelerate their time to market." By providing design capabilities through Creative Cloud rather than relying on traditional product databases, Adobe hopes to accelerate customer campaigns.

This trend of end customers beginning to adopt or, at least, think more broadly about using both Creative and Marketing Cloud products is most prevalent in video, with creation and delivery of ad insertions done through a single system like Adobe Primetime, Narayen said. He elaborated on a campaign that ran during the Winter Olympics last month when NBCUniversal used Primetime to create, manage and deliver targeted ad insertions to viewers on desktop and mobile.

When asked by analysts how Marketing Cloud products are selling (full suite vs. point solution), Narayen said that a vast amount of revenue comes from solutions as opposed to individual point products, which is a really positive indicator for the company. Over the past year, Adobe has worked to move 20-30 products into five solutions that got expanded when Neolane was brought into the portfolio as product No. 6.

Digital marketing, he noted, "is probably the most explosive enterprise software category. We are the leaders. We differentiate by integrating content delivery into our solutions. As competition increases, it's raising awareness of the category. If you look at analyst reports, we’re the leader in platform and individual solutions."

Oracle Reports Too

Adobe "marketing cloud" rival Oracle also reported its fiscal third-quarter financials Tuesday.

Amid much discussion of strength in the company's cloud products,  Oracle president Mark Hurd gave a shout to the company's aggressive acquisitions in ad tech and marketing tech.  

“We bought a leading B2B marketing automation company in Eloqua, we supplemented that with a leading B2C company in Responsys and we’ve announced our intention to acquire BlueKai,” he said. “We believe we have a leadership position in marketing automation … and we’re on the attack in sales automation.”

Total revenue for the third quarter was up 4% at $9.3 billion, compared to the same period last year.

Judith Aquino contributed.

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