Adobe Systems is the house that desktop publishing software
built, and now it helps customers create, distribute, and manage
digital content in a variety of ways. Among the company's marquee
brands are Acrobat, Photoshop, Flash, and Dreamweaver. Adobe serves
customers such as content creators and Web application developers
with its digital media products, and marketers, advertisers,
publishers, and others with its digital marketing business. It not
only offers products in traditional software packages but some,
such as its Creative Suite (which combines many of its digital
media products), are available as cloud-based versions. Adobe
operates worldwide, but the US accounts for nearly half of
The US is Adobe's largest market, representing about 56% of sales.
The EMEA (Europe, Middle East, and Africa) region generates nearly
30% of sales and the Asia-Pacific region, led by Japan, contributes
While its legacy print and publishing segment (about 5% of sales)
has remained intact, Adobe consolidated its several other segments
into two in 2012: digital media and digital marketing. Digital
media (about two-thirds of sales) includes products such as Flash,
Photoshop, and Illustrator. Its digital marketing segment (33% of
annual sales) includes a host of tools for creating, managing, and
measuring digital advertising and marketing initiatives.
Sales and Marketing
Adobe sells directly and through distributors, resellers, systems
integrators, and retailers. In addition, it licenses its technology
to hardware manufacturers for integration into their products.
Advertising expenses for fiscal 2014, 2013, and 2012 were $87.9
million, $88.5 million, and $99.4 million, respectively.
After experiencing a dip in revenue in 2013 due to decreases in
the company's digital media and print and publishing business
segments, Adobe's revenue in 2014 increased by 2% to $4.15 billion.
The increase for was fueled by higher revenue from digital
marketing due to continued growth associated with its Adobe
Marketing Cloud (which increased 15% during 2014).
Adobe's profits declined 7% from $290 million in 2013 to $268
million in 2014 due to higher operating costs and higher provision
for income tax. Its operating cash flow, however, increased to
$1.29 billion in 2014 compared to $1.15 billion in 2013 primarily
due to deferred income tax benefits and changes in working capital
as a result of deferred revenue.
Adobe's digital media and digital marketing strategy is focused in
part on driving growth of its cloud subscription model, including
converting existing licensing customers to the service. It plans to
attract new cloud customers via more frequent product updates and
enhancements. The company is also looking to expand into new
industry verticals and geographies with its Adobe Marketing Cloud
Mergers and Acquisitions
To further expand its product offerings, in late 2014 Adobe
purchased the privately-held, stock-photography website company
Fotolia for roughly $800 million. The acquisition will allow Adobe
to obtain a market exchange with over 34 million stock images and
videos and sell them to its Creative Cloud customers on one
cloud-based software platform.
In July 2013 Adobe acquired Paris-based Neolane, which provides
cross-channel campaign management technology, for about $600
million. It is the latest in a series of purchases meant to enhance
the company's cloud-based digital marketing suite. The purchase
came on the heels of its acquisition in May of the San
Francisco-based design consulting firm Ideacodes LLC. Ideacodes
specializes in the design and user experience of smart
applications, digital products, and network communications.