Adobe - Surpasses $11B in Annual Revenue

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Adobe Inc., formerly called Adobe Systems Incorporated, is a software company that offers a line of products and services used by 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.

The Company's Creative Cloud addresses the needs of creative professionals. It's creative products are used to create printed and online information people see, read and interact with every day, including video, animation, mobile and advertising content.

Adobe - Company Highlights

Startup Name Adobe Inc.
Headquarters San Jose, California, U.S
Industries Software
Founders John Warnock, Charles Geschke
Founded December 1982
CEO Shantanu Narayen
Areas served Worldwide
Website www.adobe.com

Adobe - About and How it works?
Adobe - Logo and it's Meaning
Adobe - Founder and History
Adobe - Mission
Adobe - Products
Adobe - Business Model
Adobe - Funding and Investors
Adobe - Investments
Adobe - Competitors
Adobe - Challenges Faced
Adobe - Growth and Revenue
Adobe - Future Plans

Adobe - About and How it works?

Adobe Inc., formerly (1982–2018) Adobe Systems Incorporated, American developer of printing, publishing, and graphics software. Adobe was instrumental in the creation of the desktop publishing industry through the introduction of its PostScript printer language. Its headquarters are located in San Jose, California.

Adobe is focused upon the creation of multimedia and creativity software products, with a more recent foray towards digital marketing software. Adobe is best known for its Adobe Flash web software ecosystem, Photoshop image editing software, Adobe Illustrator vector graphics editor, Acrobat Reader, the Portable Document Format (PDF), and Adobe Creative Suite, as well as its successor Adobe Creative Cloud.

Adobe - Logo and it's Meaning

The Adobe logo was designed by Marva Warnock, a graphic designer and wife of one of the company’s founders, John Warnock.

Adobe's Logo Evolution
Adobe's Logo Evolution

The current Adobe Systems logo features the alphabet “A” portrayed in white on a red background. The emblem is based on the original logo which displayed the company name “Adobe Systems Incorporated” on a bluish-gray background.

Adobe - Founder and History

The company was founded in 1982 by John Warnock and Charles Geschke.

John Warnock and Charles Geschke, Founders of Adobe
John Warnock and Charles Geschke, Founders of Adobe

While employed at Xerox Corporation’s Palo Alto (California) Research Center (PARC), the two computer scientists had developed a programming language specially designed to describe the precise position, shape, and size of objects on a computer-generated page. This page description language, later known as PostScript, described such objects as letters and graphics in mathematical terms, without reference to any specific computer or printer. Any device capable of interpreting the language would be able to generate a representation of the page at any resolution the device supported. When Xerox declined to bring the technology to market, Warnock and Geschke formed their own company to do so, naming it after a creek near their homes.

The name of the company, Adobe, comes from Adobe Creek in Los Altos, California, which ran behind Warnock's house. That creek is so named because of the type of clay found there, which alludes to the creative nature of the company's software. Adobe's corporate logo features a stylized "A" and was designed by Marva Warnock, a graphic designer who is also John Warnock's wife.

Adobe - Mission

Adobe mission statement is “to move the Web forward while also giving Web designers and developers the best tools and services in the world.” This statement shows that Adobe is all about transformation and development of the technological niche through its software.


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Adobe - Products

The Adobe software list is a giant one that covers every creative need. Whether you're a graphic designer, web designer, photographer, illustrator, marketing professional or working in the TV and movie industry, it contains most of the tools your profession considers industry standard.

  • Adobe Photoshop
  • Adobe Illustrator
  • Adobe After Effects
  • Adobe XD
  • Adobe InDesign CC
  • Adobe Lightroom
  • Adobe Premiere Pro
  • Adobe Spark.
  • Adobe Rush
  • Adobe Dimension
  • Adobe Dreamweaver

Adobe - Business Model

Customer Segments

Adobe has a segmented market business model, with slight differences between customer segments. The company targets its offerings at individuals, small/medium businesses, and enterprises that wish to use digital media and marketing services for varying purposes.

Value Proposition

Adobe offers three primary value propositions: accessibility, innovation, and brand/status.

The company creates accessibility by offering a wide variety of options. Customers can access its software from any device, including computers, tablets, smartphones, and televisions.

The company has embraced innovation from the very beginning. For a long time, its PostScript was the only page description language available for multiple-computer environments, such as corporate office networks.

The company has established a strong brand as a result of its success. It is one of the largest software firms in the world, generating $4.8 billion in revenues in 2015, and bills itself as the global leader in digital marketing and media solutions. It processes more than forty trillion data transactions a year through its software-as-a-service products. Lastly, it has won many honors, including placement on the “100 Best Corporate Citizens” list by CR Magazine (2015) and the FTSE4Good Index (2015).

Channels

Adobe’s main channels are its website and direct sales force. It also acquires customers through retailers, distributors, software developers, system integrators, independent software vendors, value-added resellers, and original equipment manufacturers (OEMs). The company promotes its offering through its social media pages, online advertising, attendance of trade shows and conferences, and event sponsorships.

Customer Relationships

Adobe’s customer relationship is primarily of a personal assistance nature. It assists customers in the following ways:

Consulting Services – The company maintains a professional services team that designs and implements solutions for clients. It also utilizes partners such as system integrators, resellers, digital agencies, and solution partners to provide advisory services.

Customer Success Account Management – The company provides Customer Success Managers for its largest customers. The managers work with them individually to address unique needs.

Technical Support – The company offers enterprise support and maintenance services to subscription product and perpetual license customers. Specific offerings include technical support and product upgrades and enhancements. It also offers short term options such as fee-based incident support.

Training Services – The company offers a comprehensive selection of training services, including classroom and virtual course programs delivered by its training professionals and partners

Key Partners

Adobe maintains the Adobe Partner Connection Program, which includes the following sub-programs:

Reseller Program – Includes members who distribute and sell Adobe's digital media products and solutions.

Training Provider Program - Includes members who provide commercial instructor-led training on Adobe products.

Technology Partner Program - Includes members whose products and services extend, enhance, and support Adobe solutions.

Adobe Solution Partner Program - Includes members who deliver end-to-end digital marketing solutions and services that drive successful online initiatives.

Key Resources

Adobe’s main resources are its human resources. These include engineering employees who design and develop its software products, sales/marketing staff who promote them, training/consulting staff who provide instructional/advisory services, and customer service staff who offer support.


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Adobe - Funding and Investors

Adobe has raised a total of $2.5M in funding over 1 round. This was a Venture - Series Unknown round raised on Oct 1, 1984. Adobe is funded by Apple as well.

Adobe - Investments

Adobe Systems has made 19 investments. Their most recent investment was on May 25, 2017, when Demandbase raised $65M.

Date Stage Amount Organization Name
May 25, 2017 Series H $65M Demandbase
Jul 15, 2015 Series G $30M Demandbase
Feb 19, 2015 Series D $32M Livefyre
Nov 4, 2014 Series F $35M Gigya
Oct 13, 2014 Series F $15M Demandbase
Mar 28, 2013 Series D $15M Demandbase
Jan 1, 2012 Venture Round $1M Convo
May 12, 2011 Series C $10M Demandbase
Aug 25, 2008 Series B $8M Demandbase
Jun 3, 2008 Series D $30M Veoh

Adobe - Competitors

Adobe's top competitors include SAP, Salesforce, DocuSign, Dropbox, Getty Images, Shutterstock, Apple, Microsoft, IBM and Autodesk.

Adobe - Challenges Faced

One of their most impressive moves was their transition from a licensed software company to a completely cloud-based company. This was an incredibly expensive and arduous process, and is almost impossible for a company to get right—but Adobe did it, carving out a permanent place in the changing industry. And that’s only the latest example of how Adobe has continually made difficult and forward-thinking decisions to help the company thrive.

Adobe has made a lot of tough product decisions over the past 35 years, shifted and reconfigured the business, and maintained a loyal core audience. These decisions have paid off—Adobe closed 2017 with over $7 billion in annual revenue, and they currently have a market cap of over $95 billion


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Adobe - Growth and Revenue

Adobe’s revenue grew 54.2% over 2016 to 2018 to $9 billion and is expected to increase 53% to nearly $14 billion by 2021.

Year Annual Revenue Percentage change
2020 $12.783B +16.84%
2019 $11.171B, +23.71%
2018 $9.03B +23.67%
2017 $7.302B +24.72%

(1) Digital Media Division revenue growth of $3 billion over the next two years is likely to be driven by Adobe targeting new creative professionals in the U.S. and emerging markets.

Change in Digital Media Revenues:

  • 2016 to 2018 – $2.4 billion (total percentage change of 60.5%);
  • 2018 to 2020E – $2.8 billion (total percentage change of 44.6%).

(2) Digital Experience Division revenue growth of $2 billion over the next two years is likely to be driven by Adobe offerings to create, consume and measure personalized campaigns and shoppable experiences.

Change in Digital Experience Revenues:

  • 2016 to 2018 – $0.8 billion (total percentage change of 49.8%);
  • 2018 to 2020E – $2.0 billion (total percentage change of 80.9%)

(3) Publishing Division revenue growth remained muted due to the products becoming mature. This revenue stream has shrunk 7.5% in the last 2 years, and will likely stagnate over the next two.

Adobe - Future Plans

Adobe is focusing on improving and building out its existing products. But the company is also heavily investing in and preparing for the future. Adobe wants to help customers unify their data sources and bring better, more personalized experiences to website users across the globe.

Adobe's growth strategy revolves around dramatically expanding its target market to roughly $128 billion by 2022 largely by riding the shift to digital business and experiences.

Getting to this $128 billion total addressable market has some interesting plot twists. At the company's investor meeting, Adobe CEO said the growth strategy is "to unleash creativity, accelerate document productivity and power digital businesses." Digital business and the customer experience market is expected to drive the bulk of Adobe's growth.

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About Sarika Anand

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