This season’s holiday shopping data comes from an unlikely source …
Cyber ââMonday recently made the wrong kind of story. Sales fell for the first time.
Thanks to high-quality data, however, we know it’s not worth panicking. Overall, holiday sales continue the trend of breaking earlier records. The fact that only Black Friday and Cyber ââMonday are down – when overall sales for the season are expected to increase – is a testament to the supply chain constraints businesses face.
These problems will eventually be resolved. The numbers show us that the American consumer is stronger than ever.
Most importantly, this powerful data doesn’t come from big retailers, from giants like Alphabet’s Amazon or Google, or from consulting firm McKinsey …
It comes from Adobe (ADBE).
It’s true. The company we all know for its Reader and Photoshop software is now the go-to source for holiday retail purchasing data.
Along with its popular PDF and photo editing software, Adobe sells Creative Cloud, which offers a suite of premium products for professional creators. This is what most people know and love about the titan of Silicon Valley.
But Adobe has quietly extended its niche …
Adobe also provides services for businesses who want to better understand their customers. Among these “digital experience” services is an e-commerce analytics data model … and many believe it is even better than Google’s popular “enhanced e-commerce” service.
Adobe released data on this year’s holiday season as part of an awareness and marketing campaign, showing the capabilities of its analytics team.
The digital experience segment was a natural next step for the business. Adobe has transformed its own business over the past decade. Specifically, it adopted a Software as a Service (SaaS) business model … which made it easier than ever to onboard new customers and sell them new types of products.
Like the Canadian e-commerce giant Shopify (SHOP), Adobe is among the early adopters of the SaaS revolution …
With Salesforce (CRM) and Intuit (INTU), Adobe has proven to the world that the SaaS model is better and more profitable than selling single, expensive software licenses. Instead, SaaS companies can generate recurring revenue by selling subscriptions.
Salesforce and Intuit have proven that the SaaS model can work for businesses. Adobe has chosen to pioneer it for consumers, especially with its Creative Cloud.
But the business-to-business opportunity was still waiting behind the scenes. It was an opportunity Adobe just couldn’t ignore. And all it had to do was embrace its existing SaaS infrastructure to focus more on data and analytics for corporate clients.
This was long before SaaS took over the tech markets. It was seen as a competitive advantage, not a necessity. As a result, Adobe has gained some first-come benefits.
The company has tripled its digital experience business over the past 10 years. Its historical activity has also tripled since 2015.
The software world has since followed in Adobe’s footsteps … Non-SaaS options are widely considered obsolete. With the popularization of the cloud and few barriers to entry, software vendors now have no more excuses than offering a SaaS option to their customers.
Adobe’s business transformation has taken its stock from around $ 27 in 2011 to around $ 575 today, a gain of over 2,000% … enough to turn every $ 5,000 into more than 100,000 $.
But you wouldn’t know by looking at the reported metrics.
In 2011, Adobe had a return on assets of 9% (âROAâ). In 2020, it was only 12%. The published figures suggest that the move to SaaS has barely had an impact on Adobe’s business.
Take a look at the ROA as reported since Adobe embarked on its SaaS adventure …
This is precisely why our Altimetry team uses uniform accounting … to smooth out the distortions of traditional accounting methods.
With uniform accounting, we can see why SaaS has led to massive gains for investors …
Adobe has made dozens of acquisitions over the past decade. This inflated his balance sheet as published with Goodwill, keeping the ROA low.
In reality, these acquisitions have been transformational, helping Adobe to become a dominant leader in the high tech world. Take a look at the real numbers from Adobe …
SaaS has opened up a world of possibilities for Adobe. Customer acquisition has become easier than ever … subscription revenues are stable and predictable … and as Adobe’s customer base grew and profitability improved, long-time investors observed that the action turned into 20 baggers.
The last few years have shown that good SaaS companies can benefit investors enormously. Adobe is just moonlight in this larger trend.
Editor’s Note: Adobe is a more than $ 270 billion company … So the reality is that by now public investors have probably missed most of its biggest upside move. That’s why at Altimetry, Joel also looks for the undiscovered gems – âmicro-capitalizedâ companies that go public with a value of less than $ 1 billion and have the potential to generate huge returns. In a brand new presentation, JoÃ«l and his team share all the details … Learn more here.
REACH NEW HEIGHTS AND HELP LIMIT THE SPREAD OF CORONAVIRUS
Today’s business contributes to the fight against COVID-19 …
As the pandemic persists, the world has acquired many other tools to help curb the spread of the coronavirus. One of the most important is the ability to test positive cases. Today’s company provides these tests …
Quest Diagnostics (DGX) is a $ 21 billion medical diagnostics company. This “World Dominator” of lab results serves one in three American adults and half of doctors and hospitals in the United States … And right now, it’s helping diagnose COVID patients. In the last quarter, revenue of $ 2.77 billion was roughly flat year-over-year, while diluted earnings per share fell 2.8%. However, Quest also raised its outlook for the full year. The company now expects higher-than-expected COVID tests and continued strength in its baseline performance.
DGX shares are soaringâ¦ up 44% from last year, including dividends. They have just reached a new historical record. As Quest helps fight the pandemic – and its normal testing activities reflect this recovery – this trend is expected to continue …