Adobe

  • Adobe is a US-based multinational computer   software company. Flagship products include Photoshop image editing software,   Adobe Illustrator, Adobe Acrobat, Acrobat Reader and the Portable Document   Format (PDF).

  • For the Q2 2021, Adobe reported revenue of $3.84   billion, up 23% from a year ago and ahead of the company’s forecast of $3.72   billion. Adjusted profits were $3.03 a share, also ahead of the company’s   projection of $2.81 a share. Adobe’s results were also above expectations in   every segment. Digital Media revenue was $2.79 billion, up 25%, and four   points better than the company’s guidance. That includes creative revenue of   $2.32 billion, up 24%, and document cloud revenue of $496 million, up 30%.   Digital Experience segment revenue was $938 million, up 21%, and three points   better than the company’s target for 18% growth.

  • For the fiscal third quarter Adobe sees revenue   of $3.88 billion, slightly higher than the Street consensus forecast of $3.83   billion. Adjusted profits are expected to be $3 a share, above the Street   consensus estimate for $2.89 a share. The company sees growth in the quarter   of 21% in the digital experience segment, and 25% in digital experience.

  • The Digital Media segment's revenue grew 32% to   $2.86 billion. Within the segment, the Creative Cloud division's sales   increased to $2.38 billion up from $1.81 billion recorded in Q1 2020.   Document Cloud sales came in at $480 million, up 37% from $351 million in Q1   2020. The annualized recurring revenue, a metric that shows the value of a   subscription-based company's membership base, for the digital media group   climbed to $10.69 billion. In the Digital Experience segment, revenue stood   at $934 million up 24% on the prior year. The segment also includes   Advertising Cloud revenue.

  • Cash flows from operations were a record $1.99   billion while the company also repurchased approximately 2.1 million shares   during the quarter.

  • Adobe trades at 35X forward earnings which in our   view is probably fair given the exceptional quality of the business. The   company has significant scope for growth as enterprises continue to rapidly   transition to cloud-based solutions. The company in our view also has an   extensive moat. Acrobat software has become the standard for reading and   creating documents electronically. Because customers, such as graphic designers,   are trained early in their careers to use products like Photoshop and   Illustrator, it's nearly impossible for competitors to take meaningful market   share. High switching costs make it tough for customers to get comparable   products elsewhere or do their job without Adobe. As if switching costs   weren't enough, Adobe also benefits from the network effect. With more than   500 million copies downloaded, Acrobat has a foothold on computer desktops   everywhere. As its network effect increases, and more designers and readers   use Adobe's software, its dominant position is likely to increase. Both the   Cratos BCI Worldwide Flexible Fund and Cratos Global Managed portfolios hold   Adobe.

Adobe