Adobe Systems Incorporated at a Glance

Uppers

  • Innovative software company that creates excellent products
  • Commitment to diversity, environmentalism and corporate ethics

Downers

  • High turnover, especially after acquisitions
  • Can be difficult to get recognition or earn promotions

The Bottom Line

  • Adobe is a creative software company that has ridden the wave of digital media over the last several decades. It's growing, evolving and always in the process of creating the next new thing.

About Adobe Systems Incorporated

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 sales.

Geographic Reach

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 about 15%.

Operations

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.
 
Financial Performance

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.

Strategy

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 offering.

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.



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Adobe Systems Incorporated

345 Park Ave
San Jose, CA 95110-2704
Phone: 1 (408) 536-6000
Fax: 1 (408) 537-6000
www.adobe.com

Stats

  • Employer Type: Public
  • Stock Symbol: ADBE
  • Stock Exchange: NASDAQ
  • President and CEO: Shantanu Narayen
  • President and CEO: Shantanu Narayen
  • Co-Chairman: John E. Warnock

Major Office Locations

  • San Jose, CA

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