Adobe’s current sales and long-term forecast

The supplier of specialized software Adobe Inc. (ADBE) is ready for a slight decline in sales amid geopolitical uncertainty, but in the long term, we should not expect a serious drop in revenue, management believes. Adobe continues the transition to selling software by subscription.

To date, the company implements most of its software exactly according to the SaaS scheme, which ensures the receipt of uniform and predictable income, with the possibility of expanding sales through new options. In the last reporting quarter, the supplier’s total sales increased by 17%, and thanks to the new operating system, the operating margin increased to 37%.

However, despite several good quarters, Adobe’s management slightly lowered its expectations for the coming year amid geopolitical uncertainty, which disrupted demand in several markets at once.

According to forecasts, the reduction in sales in some regions will reduce possible revenue by about $75 million. And although a slowdown in the coming quarters is almost inevitable, management is positive about Adobe’s long-term prospects.

The company’s three divisions to grow by 14-18% year-on-year in the second quarter. This can happen because of an increase in revenue per client, as the company is constantly expanding the capabilities of its software. Adobe’s major catalyst is a digital transformation in business.

Thanks to a rich and diversified portfolio of offers, the company can operate in the widest potential market and can expect a sales growth of up to $20 billion per year. The growing competition in enterprise software is a risk for the company.