Adobe Inc.

Adobe’s licensing model and market position give it excellent pricing power. Virtually all Creative Cloud and Document Cloud products are delivered as subscriptions, providing recurring revenue. High margins (approximately 89% gross profit margin in Q2 2024) reflect the ability to charge premium prices for industry-leading tools.

Management regularly increases prices modestly, and corporate/enterprise customers have limited alternatives. This has enabled sustained operating margins and cash flow. We see few threats to these margins – competitors cannot easily undercut Adobe without sacrificing functionality or quality – so pricing power is strong and likely to remain so.