Will Adobe Systems Incorporated (NASDAQ:ADBE) Digital Transformation Pay Off?

Adobe Systems Incorporated (NASDAQ:ADBE) was on a digital transformation path from 2009 up to 2014, which resulted in the company reporting poor earning during this period. However, the past two fiscal years have seen Adobe reporting positive results, which have been replicated in the first three quarters of 2017.

Adobe recently reported its third quarter results for fiscal 2017, which beat expectations as evidenced by its quarterly revenues and earnings per share. The positive results indicate that the company’s transformation to providing cloud-based services is finally paying off.

The company launched various cloud services including its creative cloud service, its marketing cloud and its document cloud services. These services were launched in the period from 2012 to 2014, but revenues did not turnaround until fiscal 2015.

The company’s performance over fiscal 2017 has been excellent even as earnings have surpassed initial estimates and the company expects to surpass all initial expectations in its full-year results. It is important to note that Adobe is a massive company, which in many cases means that its size cannot allow it to book double-digit growth, but the company has achieved this over the last two years.

The company recently collaborated with Microsoft Corporation (NASDAQ:MSFT) to offer joint marketing and advertising services to their clients. Although Microsoft is Adobe’s competitor, the collaboration is set to benefit Adobe clients by leveraging the capabilities of Adobe Experience Cloud, Microsoft Azure, and Microsoft Dynamics.

Adobe is well positioned through its cloud services to compete with companies such as Salesforce.com, inc. (NYSE:CRM), which offers customer relationship management software as a service to its clients. The Adobe experience cloud competes directly with Salesforce CRM and it is growing at an impressive rate since it was launched.

Therefore, it seems that Adobe’s digital transformation into a cloud services provider is paying off as evidenced by the company’s recent results. The question remains whether Adobe is a good long-term investment for both growth and dividend investors.

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