Adobe has been one of the best software stocks to buy in recent years. Its price has gone 6X over the last 5 years. Its revenues went from around $4.7 billion in 2015 to about $11 billion in 2019. Net income, on the other hand, jumped from $630 million to $2.9 billion during the same period. All this while, the company’s debt-to-equity ratio has remained at around 0.2-0.4. Adobe’s return on equity has touched 30%.
Adobe is a candidate for one of the top software stocks to buy in 2020. In June, Adobe reported strong Q22020 earnings. Revenues were up 14% year-on-year to $3.13 billion. The digital media segment revenue was up 18% year-on-year at $2.23 billion while the net new annual recurring revenue for the segment was $443 million. The digital experience segment revenue was up 5% year-on-year to $826 million. Net income jumped significantly, from $633 in Q22019 to $1.1 billion in Q22020. This represents a growth of 74% year-on-year.
Adobe CEO Shantanu Narayen said, “In Q2 we saw historic highs in Adobe.com traffic across both Creative Cloud and Document Cloud. Demand for our professional video products was particularly high with strong engagement for Adobe Premiere Pro and After Effects. We continue to see steady growth from social content creators using Premiere Rush, which saw a 75% increase in monthly active users quarter over quarter.” The pandemic-driven behavioral changes are making Adobe one of the best software stocks for 2020.
He further added, “The shift to remote work has driven a surge in demand for digital documents, with use of web-based PDF services up nearly 40% quarter over quarter and the number of documents shared in Acrobat increasing 50% year over year.” Adobe and DocuSign have been two software stocks to buy now in the digital document space.
Adobe stock closed at $478.48 on 20th August 2020, up by a significant 7.7% in just the past month.