Will Q4 Earnings Send Adobe (ADBE) Stock to New Highs?

Adobe ADBE will report its fourth quarter fiscal 2019 financial performance after the closing bell on Thursday, December 12. The tech giant has seen its shares climb over 36% in 2019 and has outperformed the broader software market’s 24.3% run.

ADBE stock currently trades about 1.6% below its 52-week high of $313.11 per share and a robust quarterly report can potentially help ADBE stock break out to new highs.

The company has found its software as a service model to be popular with businesses especially as more enterprises move over to cloud computing. Let’s take a closer look at what has pushed ADBE stock to where it is today and how the company might report its third quarter performance.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Adobe Acquisitions ” data-reactid=”14″>Adobe Acquisitions

In recent years, the company has been expanding into new areas and creating an enterprise marketing software suite, mostly through acquisitions. Since the start of 2017, Adobe has spent nearly $7 billion on just three cornerstone acquisitions in this enterprise software push.

In 2017, Adobe acquired the video advertising platform, TubeMogul, for $560 million. TubeMogul allows brands and marketers to buy advertisements across desktop, mobile, streaming, and linear TV. The TubeMogul acquisition strengthened Adobe’s marketing cloud and brought in new customers who were using TubeMogul but weren’t as familiar with Adobe’s other capabilities.

In 2018, Adobe purchased Magento, which is an e-commerce hosting platform, for $1.64 billion. Magento helps businesses sell goods and services to consumers and other businesses through order management, payment solutions, and analytics.

Adobe went on to purchase Marketo, which provides business-to-business marketing software. Marketo’s services enable marketers to capture, store, and leverage client data for email marketing, digital advertising, personalized advertising, and customer analytics.

These three acquisitions effectively extend Adobe’s reach into more markets and also further diversified its services portfolio. The purchases also gave Adobe the option to cross sell its new products to existing customers and bundle its services to enhance the value of its marketing software.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Outlook ” data-reactid=”20″>Outlook

Adobe has identified a large opportunity in the marketing space that can be addressed with a bundle of products sold as a single subscription. Adobe CEO, Shantanu Narayen recently spoke on the firm’s confidence in this opportunity on an earnings call where he said “we do think there will be unique capabilities that we’ll provide all the way from the moment you see your first ad through where you’re transacting and purchasing a product.”

Adobe is trying to become a one-stop shop for marketing software, which can help the company establish itself in the market. Enterprise customers will likely favor doing business with Adobe rather than dealing with many outsourced vendors. Adobe’s ability to bundle these services helps the company offer the services at lower prices.

Adobe’s string of acquisitions pits it against Salesforce CRM. Many companies around the world already store their customer data in Salesforce’s software, which makes Salesforce a prominent competitor in marketing software.

Despite Salesforce’s lead in CRM, Adobe produced $2.4 billion in marketing revenue in fiscal 2018 revenue, which outpaced Salesforce’s $1.9 billion of marketing revenue.

Adobe stock has also outperformed Salesforce over the past five years.

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