VALUATION HIGHLIGHTS

1. Digital Media constitutes 79% of the Trefis price estimate for Adobe's stock.
2. Digital Experience constitutes 19% of the Trefis price estimate for Adobe's stock.

WHAT HAS CHANGED?

Latest Earnings

Adobe reported Q1 2022 (ended Mar 4 2022) results with revenue at $4.2 billion, up 9% y-o-y. Diluted earnings per share were $2.66 on a GAAP basis compared to $2.61 in the same period of the previous year. Cashflows from Operations were recorded at $1.77 billion while remaining performance obligation at the end of the quarter was $13.83 billion, representing 19% y-o-y growth.

Note: Adobe's FY'21 ended on December 3, 2021. Q1 FY'22 refers to the quarter that ended on March 4, 2022.

Coronavirus and Oil Price war

The World Health Organization (WHO) declared a global health emergency at the end of January in light of the coronavirus spread. The companies are affected due to forced lockdown across countries and regions due to the coronavirus. Ease of lockdown has happened in certain regions but people are still focusing on essentials and companies on survival which may affect the company. Adobe on the other hand has delivered good results amid the pandemic as there is a shift towards digitalization.

Launch of the Adobe Experience Platform

The launch of the ability to create real-time customer profiles to deliver personalized experiences is also likely to give a fillip to the company's revenues. Notably, Adobe's ecosystem of partners (especially Microsoft and SAP by way of the open data alliance and more recently tie-up with Amazon) is likely to deepen Adobe's competitive moat further.

Lastly, the launch of the Adobe Experience Platform has given the ability to create a real-time user profile that can help target users across the different channels they use to engage with Adobe.

Considering that the company processes hundreds of trillions of transactions annually, one can only imagine the scale and efficacy of insights that can be generated and how the effectiveness is likely to get further amplified across Adobe's partner ecosystem.

• Digital Media Revenues: Digital Media (DM) is Adobe's new segment housing its creative cloud (CC) and document cloud revenue.
• Digital Experience: Over the past few years, Adobe has built a comprehensive digital marketing platform that addresses most of the needs of digital marketers. The company has scaled up the functionality and product offering of its marketing platform through organic and inorganic growth.

For additional details, select a driver above or select a division from the interactive Trefis split for Adobe at the top of the page.

BUSINESS SUMMARY

Although Adobe is commonly known for its widely distributed free Acrobat PDF Reader, the company makes money primarily by serving "creative professionals" with the software used in image manipulation, animation, web design, and the creation of interactive media content. Adobe's Photoshop, Dreamweaver, Flash, and InDesign products are some of the better known creative software suites used by graphic designers, production artists, web designers, photographers, animators, publishers, and writers.