Adobe to Buy Fotolia, Reports Q4 Earnings

Adobe announced an agreement to acquire Fotolia for $800 million and reported fourth-quarter revenues of $1.073 billion.

Cloud spending

Adobe announced that it has entered into a definitive agreement to acquire Fotolia, a marketplace for royalty-free photos, images, graphics and HD video, for approximately $800 million in cash.

Officials at San Jose, Calif.-based Adobe said Fotolia will be integrated into Adobe Creative Cloud, providing current and future Creative Cloud members with the ability to access and purchase over 34 million images and videos to help simplify and accelerate the design process. Adobe also plans to continue to operate Fotolia as a stand-alone stock service, accessible to anyone.

"The acquisition of Fotolia will reinforce Creative Cloud's role as the pre-eminent destination for creatives," said David Wadhwani, senior vice president of Digital Media at Adobe, in a statement. "Creative Cloud is becoming the go-to marketplace for the creative community to access images, videos, fonts and creative talent, through critical creative services like Fotolia and our new Creative Talent Search capabilities."

Adobe Creative Cloud has more than 3.45 million members and features leading desktop tools, an array of complementary mobile apps, training content, creative assets and services, and ready access to a dynamic community. Adobe said the value of Creative Cloud is continually increasing through product updates and new capabilities such as Creative Talent Search. Following the completion of the Fotolia acquisition, Adobe expects to integrate the delivery and purchase of stock assets into Creative Cloud.

"Becoming part of the Adobe family is a dream come true for the Fotolia team and will accelerate our vision to become the best place for artists to build a business and the ultimate destination for designers to find stunning creative work," said Oleg Tscheltzoff, founder and CEO of Fotolia, in a statement.

Founded in 2004, with offices in New York, Paris and Berlin, privately held Fotolia is owned by Kohlberg Kravis Roberts & Co. L.P., TA Associates and management. Fotolia currently operates in 23 countries and has Websites in 14 languages.

Adobe also announced fourth-quarter earnings, showing revenue of $1.073 billion for the quarter and $4.147 billion for the year. The company added 644,000 net new Creative Cloud subscriptions in the quarter, and for the year, Creative Cloud subscriptions grew by more than 2 million to 3.454 million. In addition, Adobe grew net new Digital Media ARR by more than $1 billion during the year.

"Adobe had an outstanding 2014. Creative Cloud adoption outpaced expectations and the acquisition of Fotolia will add a vibrant marketplace for our customers,” said Shantanu Narayen, Adobe president and CEO, in a statement. “Adobe Marketing Cloud, the leader in the explosive digital marketing category, continued to drive strong bookings at the world's biggest brands, agencies and media companies.”

Adobe Marketing Cloud revenue was $330 million, with record bookings in the quarter. For the year, Adobe Marketing Cloud achieved a record $1.170 billion in annual revenue, with record annual bookings above the company's target of 30 percent.

"2014 was a pivotal year for Adobe as we completed our business model transition," said Mark Garrett, Adobe executive vice president and chief financial officer. "In 2015 we expect revenue and earnings to grow sequentially every quarter during the year."