Founded in 1982, Adobe Inc (NASDAQ: ADBE) made its name from the creation of the portable document format, or PDF.
PDF is nearly ubiquitous for those who access and read computer documents.
Just like the popularity of the document format, Adobe has also grown leaps and bounds to become a behemoth in the software industry, offering a vast array of applications and services.
Adobe is now a US$300 billion company.
Despite its size, Adobe continues to post impressive growth figures.
In its most recent quarterly report, Adobe reported revenues of US$3.8 billion, posting a year on year growth of 23%.
The company’s three core product lines are Creative Cloud, Document Cloud and Experience Cloud.
Creative Cloud consists of desktop and mobile apps that focus on creativity and design, including Photoshop, Illustrator, and Premiere Pro.
Document Cloud makes it easy for people and businesses to create, edit, share, scan and sign digital documents.
Experience Cloud offers solutions for content management, data analytics and commerce through applications like Adobe Analytics, Adobe Advertising, and Adobe Commerce.
Foray into e-commerce
Adobe made its foray into e-commerce by acquiring commerce platform Magneto for US$1.7 billion in 2018.
Magneto consolidates tools such as order management and predictive intelligence in a single platform to empower its customers to deliver a unique online shopping experience.
Adobe integrated Magneto into its existing suite of commerce-related products, forming Adobe Commerce in 2019, which was merged under the Experience Cloud umbrella of services.
The move boosted Experience Cloud’s capabilities as an end-to-end commerce solution.
Customers can now use the myriad of tools within Experience Cloud to build a multi-channel commerce platform, covering all bases from customer journeys, content and commerce, to data insights.
Expanding into payments
To build on its strong ecosystem of commerce offerings, Adobe recently announced that it would add payment services to Adobe Commerce in November 2021.
Adobe’s latest offering provides a comprehensive payments solution.
Merchants will have access to a unified dashboard that will provide a holistic view of their business, generate reports and analytics, and get dispute notifications without the need for exporting data to a secondary system.
Extensive order and payment information allow better tracking, reducing discrepancies through better reconciliation.
The new service will be powered by PayPal’s (NASDAQ: PYPL) Commerce Platform, meaning merchants will be able to take advantage of the payment giant’s assortment of global currencies and flexible payment options, including buy now, pay later.
Adobe is entering the payments market at an opportune moment.
The COVID-19 pandemic has accelerated digitalization around the world, including the adoption of online shopping and digital payments in-store.
Globally, the digital payments market was valued at US$58.3 billion in 2020 and is forecast to grow at a compound annual growth rate (CAGR) of 19.4% between 2021 and 2028.
Adobe’s latest move also puts it in direct competition with e-commerce company Shopify (NYSE: SHOP).
Shopify’s platform comprises 6,600 apps that businesses can use to customise their own e-commerce channels, including Shopify Payments.
Shopify Payments allows merchants to easily set up payment processing methods without the need for setting up with a third-party payment provider.
With payments services finally coming to Adobe’s suite of products, the software giant now has a compelling value proposition that will help it compete for both small-to-medium business and enterprise customers.
Get Smart: A record set of earnings
Adobe’s business continues to hit new highs.
In its latest quarterly earnings report for the quarter ended 3 September 2021, the software company reported revenue of US$3.9 billion – a record figure.
The result represented a year on year growth of 22%.
The company also shared plans to partner with retail giant Walmart (NYSE: WMT) to integrate omni-channel fulfilment technologies.
With greater demand than ever for digital tools and services, Adobe’s growth prospects are rosy as it continues to expand its line of products to meet client needs.
Looking for more dividend stock ideas? Then you’ll want to know about these 5 strong SGX companies. We’ve prepared everything you need to know in a FREE special report: “Dividend Stocks That Can Pay You For Life”. Click here to download now.
Disclosure: Herman Ng does not own shares in any of the companies mentioned.