Tags: Adobe | Systems | marketing | ADBE

Adobe Systems Sees Avenues Toward Growth in Marketing

By Greg Brown   |   Friday, 24 Aug 2012 11:09 AM

Adobe Systems (ADBE) has long been the dominant player in the creative software space, selling its hefty programs (at hefty prices) to web designers and print media professionals to use in their work. Now it sees an avenue toward growth in demand for digital media marketing beyond simply publishing world demand.

Adobe Systems makes software and services used by creative professionals, marketers, knowledge workers, application developers, enterprises and consumers for creating, managing, delivering, measuring, optimizing and engaging with compelling content and experiences across multiple operating systems, devices and media, according to a recent filing from ADBE management.

Adobe has focused on what it calls two strategic growth areas, digital media and digital marketing.

“To capitalize on the potential in these two market areas, we made several significant changes in key areas of our business during the past year. We have made investments to increase the deployment of some of our products through new SaaS models, and to augment how we license our software to include a new subscription model for our creative products,” management explained.

“We believe these business model changes will allow us to target new users, as well as increase the amount of recurring revenue we generate as a percent of our total revenue—creating the potential for our business to be more predictable.”

Adobe Systems has a market cap of $16.47 billion in a sector, software, where the average company size is $12.71 billion. Its trailing 12-month P/E ratio is 21.47 and its five-year projected price-to-earnings-growth (PEG) ratio is 2.15, compared to 1.70 for the sector.

Its projected earnings per share growth for the coming year is 9.5 percent, compared to a sector average of 13.98 percent.

Organic


Analysts are positive on ADBE, with buy or outperform calls from UBS, Deutsche Bank, Stifel Nicolaus, and Smith Barney.

“We have been encouraged by recent healthy gains in sales of products such as Acrobat and Creative Suite, and in subscriptions. However, we are concerned about growth in certain regions, including Europe and Japan,” Standard & Poor’s Equity Research analysts wrote Aug. 1.

“We view favorably ADBE's move to release mid-cycle versions of Creative Suite, which incorporate more frequent updates amid rapid technological change. We look for somewhat smaller strategic acquisitions ahead as ADBE seeks faster sales growth. Nonetheless, we expect much of ADBE's future growth to be organic.”

Adobe Systems next reports on Sept. 19.

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