J Stern comments on Adobe’s Q1 results
Christopher Rossbach, Chief Investment Officer of J. Stern & Co., a private investment office in London and Zurich investing the assets of families, trusts and charities, comments on Adobe’s Q1 results.
“Adobe has been a core position in our portfolios since 2015 and one of the best performers. We invested in it because it has industry leading positions, significant prospects for growth, and high profitability in its digital media and digital marketing businesses. This quarter just ended continued to underscore the strength of its business.
“For its first quarter of 2018, Adobe has reported revenue growth of 24% and operating income growth of 43%. Its digital media business grew 28%, and now has Annual Recurring Revenue of more than $5.7 billion as more businesses globally use its suite of software applications to design and deliver digital content and experiences. Adobe’s recurring revenues provides great visibility and stability for its business model.
“When we invested we also foresaw that Adobe had a real opportunity to capture another large revenue stream through its digital marketing business, which helps companies to analyse and manage their online business. The strong franchise of its digital media business helps the sales cycle and we saw another quarter of double digit growth.
“For us, as long-term investors, we look for companies that have strong competitive positions and can compound over long periods of time. Adobe’s strong quarter strengthens our conviction that its two businesses can generate sustainable double-digit revenue growth, with even greater profit growth.
“Adobe is at all-time highs but we think its shares represent compelling long-term value from here.”
The comments subsequently appeared in an article by Reuters which can be found here.