Gavekal Capital: Investors Are Happy About Adobe's Subscription Adoption

Friday, December 13, 2013

Investors Are Happy About Adobe's Subscription Adoption

Adobe is up over 10% today after releasing their financials for the fiscal 4Q after the bell yesterday. Adobe has made a strategic shift from a licensing model to a subscription model. This has angered quite a few customers but it seems that customers are making the shift nonetheless. The transition is happening faster than management originally laid out. They are on track to pass goals set for 2013 as well as for goals in 2014. The latest quarter’s sales and EPS actually came in lower than expected (due primarily to promotions and the fact they are selling fewer full versions of its highest priced desktop software) but the shift to subscriptions allows Adobe to reduce their reliance on packaged software as PC sales decline and increase their annualized recurring revenue (ARR) goals. It seems there are only blue skies ahead for Adobe in the near-term.

About Gavekal Capital

Gavekal Capital is a US registered investment advisory firm that manages the Gavekal Knowledge Leaders Strategy. Knowledge Leaders are a group of the world’s leading innovators with deep reservoirs of intangible capital. These companies often possess competitive advantages such as strong brand, proprietary knowledge or a unique distribution mechanism. Knowledge Leaders are largely service-based and advanced manufacturing businesses, often operating globally. Gavekal Capital seeks to identify the world’s leading knowledge companies through a proprietary process that analyzes corporate knowledge investments.
We offer the Gavekal Knowledge Leaders Strategy in multiple products for global investors. For more information about our product offerings please visit http://www.gavekalcapital.com.
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