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A Closer Look at Adobe’s Latest

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Financial performance

Adobe’s (ADBE) revenue rose at a four-year CAGR (compound annual growth rate) of 16% to $7.3 billion in fiscal 2017, which ended on November 30, 2017. Its net income increased at a four-year CAGR of 33% to $2.2 billion.

Its revenue rose 24% to $6.6 billion in the first nine months of fiscal 2018, which ended on August 31, 2018. Subscriptions accounted for 87% of this revenue. Products, services, and support generated the rest. The Digital Media, Digital Experience, and Publishing segments drove the company’s revenue growth. Their combined net income rose 60% to $2.5 billion.
ADBE REV

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Looking at the projections

Adobe’s revenue projections for fiscal 2018, fiscal 2019, and fiscal 2020 are $9 billion, $10.7 billion, and $12.4 billion, respectively. Its net income forecasts for these years are $3.4 billion, $3.8 billion, and $4.6 billion, respectively. The stock has “strong buy,” “buy,” and “hold” recommendations from nine, ten, and nine analysts, respectively. The company’s PE forecasts for fiscal 2018, fiscal 2019, and fiscal 2020 are 34.9x, 30.4x, and 25.4x, respectively.

Adobe versus the indexes

At the end of last week, Adobe had beaten the NASDAQ Composite Index and the S&P 500 Application Software Index in the last three months, in the last year, and year-to-date. The stock closed at a 14% discount to its 52-week high and a 61% premium to its 52-week low at the end of the week.

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September developments

In September, Adobe announced its plans to acquire Marketo to drive its cloud platform. Marketo is a leading cloud platform for business-to-business marketing engagement. Adobe also introduced a new virtual analyst into Adobe Analytics for enhanced AI and machine-learning solutions. Adobe, Microsoft (MSFT), and SAP (SAP) have joined forces in working toward their AI initiatives.

Some significant October events

Adobe announced this month that Adobe Acrobat DC would now offer touch-enabled editing in tablets and PDF signatures across various devices. The company also integrated the Magento Commerce Cloud into the Adobe Experience Cloud for a better shopping experience.

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