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December 20, 2018

Adobe share price drops off through Q4, despite strong year and an even brighter 2019

By MarketLine

After a share price all time high of $275.49 during October 2018, Adobe has had a rocky end to the year, but the company will come back fighting in 2019. After its recent $4.75bn acquisition of Marketo, the Adobe share price has dropped by over 20% on December 17 close from October 1.

Annual revenue rose 24% to $9.03bn in 2018, representing $5.20 earnings per share. The company’s largest segment was Creative, with revenues of $5.34bn for the year, a huge 28% growth on 2017, with $1.45bn coming from Q4 alone.

Fourth quarter revenues reached record-breaking levels for the company, reaching $2.46bn, powered by this year’s Black Friday and Cyber Monday. Chairman, President and CEO Shantanu Narayen claimed that both days were two of the company’s biggest ever selling days in the company’s history.

Purchase of Marketo will boost company in 2019 despite slump in Adobe share price

In Q4, Adobe acquired B2B marketing giant Marketo, for a total of $4.75bn. Shocking industry competitors such as Salesforce, Oracle and IBM, the move allows Adobe to stretch into digital commerce and be a serious competitor in B2B marketing.

The foray into B2B marketing will give the company a foothold in a market estimated to be worth $71bn by 2021. Revenue from Marketo will improve Adobe’s financials through 2019 as the impact of the acquisition and initial apprehension from investors is overcome.

The move will give Adobe yet another highly competitive product to add to their portfolio, strengthening the selling power of their salespeople.

Adobe continues to lead market, meaning late 2018 share price fall will be temporary

Adobe continues to use advances in technology to their advantage, including partnerships with the likes of Microsoft and Dropbox. The company’s Document Cloud division therefore earned $259m in Q4, with over $800m for the year.

With the growing use of cloud technology, Adobe will benefit greatly from any further advances in the industry as their software is generally regarded as the global standard for document viewing.

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