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Back of Napkin

Adobe Inc. ADBE

Three-pass checkedFresh as companies report

Adobe's revenue growth has accelerated three quarters running, to 13%, and the market pays sixteen times earnings for it.

In the same window the company changed how it reports its subscription base, announced a chief executive succession, and watched operating income fall.

ADBE · price with moving averages

Daily · 6MWeekly · 3Y
$160$287$415$542$670 Sep '23Apr '24Nov '24Jun '25Jan '26Aug '26 BID
EMAs82140

Source: market data.

The business

Adobe sells the tools people use to make things and the systems large companies use to move what they made. Creative Cloud is Photoshop, Illustrator, Premiere: the software a designer learned in school and will not leave, priced monthly. Document Cloud is Acrobat and the portable document format itself, which Adobe invented and everyone uses. Experience Cloud sells campaign, analytics and content management to marketing departments.

Roughly 96% of revenue is subscription, invoiced ahead. The moat is muscle memory and file format. A studio does not switch layout software because a cheaper one appeared, it switches when the people it hires no longer know the old one, and that takes a generation.

Inside the complete Back of Napkin

  1. 01The business
  2. 02The numbers
  3. 03Management
  4. 04How it fails or surprises you
  5. 05The shape of the payoff
  6. 06Closing thoughts
  7. 07Methodology

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