Stock of the Week: Adobe

Unencumbered dominance.

Andrew Willis 4 April, 2022 | 5:57AM
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Andrew Willis: How many apps can open a text document on your phone as smoothly as a PDF can? Not many. And despite dominating the portable document space across all devices since the 90s, only now are we seeing a business model at Adobe (ADBE) that really attacks an addressable market in the hundreds of billions…

And it involves subscriptions… As consumers, we have so many of them that they’ve become the norm. Gone are the days of one-time purchases for products you can keep. It doesn’t seem like the best news for software buyers – but it’s great for Adobe.

Finally, the PDF document evolves into a billion-dollar business. In the last year alone, revenue for Document Cloud is up 17%, with solid demand from everyone – individuals, small businesses and enterprise customers. Senior equity analyst Dan Romanoff says the rise of smartphones and tablets, coupled with a more mobile workforce have made the file format that is usable on any screen more relevant than ever.

And we haven’t even discussed the potential with the rest of the Creative Cloud suite, from Photoshop to Illustrator and InDesign, which makes up 50% of revenue. Adobe’s unique products are now vastly more affordable because of a monthly subscription model that also helps maintain software updates. Perhaps not the worst situation for software buyers either…

For Morningstar, I’m Andrew Willis.

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Adobe Inc406.76 USD1.92Rating

About Author

Andrew Willis

Andrew Willis  is Senior Editor at Morningstar.ca. Follow him on Twitter @AndrewWillisCDN.

 

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