Adobe is a powerhouse for content creators in the digital world, for businesses and creative individuals.
According to Peter Lynch, we should always buy what you know, what you own, and what you use, and Adobe fits perfectly in all of these categories. You might not even realize it, but we are in daily contact with its products through PDF-documents, Acrobat Reader, Photoshop/Lightroom edited images and Premier edited movies.

The company separates its products into two categories, Digital Media and Digital Experience. By far, my favorite and most direct contact is with Digital Media, especially Creative Cloud. This is a full suite to produce all kinds of digital or ready to print content heavily used marketing and branding.

๐Ÿ’ฐ Revenue
Adobe’s revenue keeps rising on a year basis
Nov 15 $4,79B
Nov 16 $5,85B
Nov 17 $7,30B
Nov 18 $9,03B
Nov 19 $11,17B

But does it still have room to grow? According to adobe presentation on 11 April 2019, the Total Addressable Market (TAM) by segment in 2022 is as follows
Digital Media
– Unleashing Creativity
– Creative Cloud ~$31B
– Accelerating Document Productivity
– Adobe Document Cloud ~$13B
Digital Experience
– Powering Digital Businesses
– Experience Cloud ~$84B

Totaling up to ~$128 by 2022 TAM, so yes, we have a gigantic upside to this market!

Important note that the company is a pure SaaS package, round 90% revenue consists of subscriptions with high customer loyalty.
Subscriptions – Percentage of total revenue
2017 – 84%
2018 – 88%
2019 – 89%

Also, thanks to the SaaS business model, Adobe enjoys a massive gross margin of 85%!
Comparing Adobe with MAGA, the company EBIT as risen considerably over the last 5 years thanks to its pure SaaS business model, providing excellent gross profit margins on all of their businesses!

๐ŸŽฏ Guidance
As investors, we invest in the company’s future, therefore, guidance is one of the most important metrics a company can provide us.
According to Q2 FY2020 Earnings Call
Digital Media – 16% Y/Y growth
Digital Experience – flat Y/Y

Although Digital Experience guidance is flat, and this is around 66% 2022 TAM, this is due to expense cuts on marketing during the pandemic. As we see the world coming back to normal, this segment will most likely soar.

๐Ÿ’ฒ Buybacks
The company is repurchased approximately 2.6 million shares during the quarter.
We can’t stop loving a company that performs buybacks, its the ultimate signal that it sees his business undervalued, and it’s using its own cash to buy back into the business.

๐Ÿ๏ธ Competition
It is very hard to name a direct large-cap competitor to the entire Adobe lineup. Adobe has a unique market position and a huge economic moat.
Autodesk is most likely the best runner up, it has a better lineup in 3D modeling, but stays behind all other sectors.
Shutterstock competes with Adobe Stock but lacks all the other sectors.

๐Ÿ’ธ Acquisitions
๐Ÿ›’ Adobe Acquires Magento Commerce
Magento is a platform similar to WordPress that is free to install onto your computer. This does not include web hosting, security, or extensions.
Shopify is an easy-to-use solution for e-stores where you pay a monthly fee, and itโ€™s capable of supporting both small and big businesses.

Adobe acquired Magento and moving to cloud it can now race the eCommerce platform. It differentiates from Shopify as it doesn’t provide you with all the underlying tech, meaning you can choose where to host or secure your services, and you have more control of what you develop, in exchange for complexity and further tech known-how and coding.
Its target is enterprises with their own development teams.

๐Ÿ“บ Adobe Acquires Marketo
Marketo was the market leader for B2B marketing engagement. With Adobeโ€™s acquisition of Marketo, customers benefit from the combination of Adobe Experience Cloudโ€™s analytics, personalization, and content capabilities with Marketoโ€™s lead management, account-based marketing, and revenue attribution technology, helping companies further connect marketing engagement to revenue growth.
Its focuses on
๐Ÿ‘‰ attract, engage, close, measure and prove the impact of marketing of different businesses
๐Ÿ‘‰ search engine optimizations
๐Ÿ‘‰ augment conversion rates
๐Ÿ‘‰ uses predictive intelligence to adapt your platform
๐Ÿ‘‰ personalized ads
๐Ÿ‘‰ allows targeted email campaigns

As marketing its Adobe main focus, this allows the company to further support businesses validate and augment their campaigns, making it an absolute no brainer purchase.

๐Ÿ‘‰ Continued in the first comment

Sources
Graphics by YCharts
Data from Adobe Investors page

eToro Post $ADBE (Adobe Systems Inc)