Adobe (NASDAQ: ADBE) was featured in this week’s Simply Wall St Journal that discussed its positioning as one of the stocks that is “set to benefit from the tectonic shift to ‘all things digital.’” The piece discusses the complementary products and strong brand that Adobe has built over its nearly 40 years since inception, taking a look into how this integrated ecosystem has helped Adobe develop a competitive advantage and how its business model generates strong profitability. The piece describes the company’s business model as “enviable” with a strong advantage, particularly with its Creative Cloud offering that generates consistent revenue through subscriptions. Adobe’s software-as-a-service (“Saas”) business construct is deemed a prime example of favorable operating economics, where the software can be sold in unlimited amounts, often generating recurring income, while the cost of revenue generation is typically very low. The publication reads, “The company’s gross margins have been around 85% for the last five years and net profit margins have expanded to a very respectable 40%, from 6.1% back in 2015. As the company’s revenue has increased 21% per year since 2015 and the portion of it which is recurring revenue has increased from 67% in 2015 to over 90% in 2020, much of the revenue received can flow through to the bottom line as profit.”
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About Adobe Inc.
Adobe, an American multinational computer software company, is changing the world through digital experiences. Incorporated in Delaware and headquartered in San Jose, California, Adobe has historically focused upon the creation of multimedia and creativity software products, with a more recent foray toward digital marketing software. The company is best known for its Adobe Flash web software ecosystem, Photoshop image-editing software, Adobe Illustrator vector-graphics editor, Acrobat Reader, the Portable Document Format, and Adobe Creative Suite, as well as its successor Adobe Creative Cloud. For more information about the company, visit www.Adobe.com
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