Cloud Stocks: Adobe Acquires To Address Growing Market Opportunity

Photo Credit: midiman/Flickr.com

Adobe (NASDAQ: ADBE) recently reported its quarterly results that outpaced market expectations. The company continues to drive acquisitions and product innovations to address a $147 billion total addressable market opportunity.

Adobe’s Financials

Adobe’s fourth-quarter revenues grew 14% to $3.42 billion, ahead of the market’s estimates by 1.91%. Adjusted EPS of $2.81 also beat analyst estimates of $2.25.

By segment, revenue from the Digital Media segment grew 20% to $2.50 billion with Creative revenue growing to $2.08 billion, and Document Cloud growing to $411 million. Revenue from the Digital Experience segment was $877 million.

Digital Media Annualized Recurring Revenue (ARR) grew to $10.18 billion exiting the quarter, a q-o-q increase of $548 million. Creative ARR grew to $8.72 billion, and Document Cloud ARR grew to $1.46 billion.

Adobe ended the fiscal year 2020 with a record annual revenue of $12.87 billion, up 15% and non GAAP EPS was $10.10. Digital Media segment revenue was $9.32 billion, with Creative and Document Cloud at $7.74 billion and $1.50 billion, respectively. Digital Experience segment ended the year with $3.40 billion driven by 17% growth in subscription bookings.

Adobe expects to end the first quarter with revenues of $3.04 billion with non GAAP EPS of $2.23. The market was looking for revenues of $3.51 billion with an EPS of $2.60.

For the year 2021, Adobe expects revenues of $15.15 billion and non GAAP EPS of $11.20. Revenue from Digital Media is expected to grow 19%, Digital Experience is expected to grow 19%, and Digital Experience subscription is expected to grow 22%.

Adobe’s Workfront Acquisition

During the quarter, Adobe announced the acquisition of Utah-based Workfront for an estimated $1.5 billion. Workfront is a leading work management platform for marketers that has over 3,000 customers with over million users. Workfront has extensive integration capabilities that allow it to meet the different needs of companies of all sizes. It has been a longstanding partner with Adobe and has a strong product synergies, a growing base of over 1,000 shared customers, and APIs that enable a seamless connection to Adobe Creative Cloud and Adobe Experience Cloud.

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