With 89% of revenue coming from subscriptions, it lets the company easily monitor what is happening to the top line, so it can manage costs appropriately. The company's financials are solid and allow a measured response to a downturn if needed. The business leaders Narayen has talked with are prioritizing the safety and well being of customers and employees, but they noted that digital transformation efforts have an even stronger case than before. In the most recent earnings call in mid-March, CEO Shantanu Narayen shared some insights into how the company will fare in response to COVID-19: "We expect some enterprises will delay bookings, postponed services implementation and reduce expenses." He went on to say its business is set up for the long term with three massive market opportunities. The company has plenty of optionality for long-term growth, but investors may be worried about how it will fare in the year ahead.
Lastly, it's working to make its creative products more accessible to non-career creatives, which it calls "consumers and communicators." Mobile-only apps, template-driven content design, and lower-priced subscriptions like the $9.99 photography plan are efforts to appeal to this customer set, which make up more than half the addressable market for its creative cloud products. Image source: Adobe's November 2019 Financial Analyst meeting slides. Armed with these customer insights, Adobe's development teams have delivered an amazing 24 new products over the last two calendar years, helping to drive this segment's 22% revenue growth last year.Īdobe has an impressive new product development track record. Adobe also bought TubeMogul in 2017, a video-advertising platform for $561 million. Between acquisitions and 10 years of building out this product suite, this segment has significant momentum which will enable it to grow in this massive $84 billion market.įor its Digital Media products, Adobe is solidifying its industry-leading position by engaging with its community of users to shape the product roadmap. Adobe is investing heavily in this segment with two massive acquisitions in 2018: Marketo, a marketing cloud platform purchased for $4.7 billion and Magento, an e-commerce platform, at a price of $1.6 billion. The Digital Experience product suite has been helping businesses undergo this kind of digital transformation for the last decade. Brands need to stand out and create memorable experiences online to attract and retain customers. In our digitally connected world, consumers have more choices than ever before, and switching costs are often low. Adobe's cloud software is helping the digital transformation of enterprises.
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