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Adobe Systems Inc (NAS:ADBE)
Gross Profit
$3,525 Mil (TTM As of Nov. 2014)

Adobe Systems Inc's gross profit for the three months ended in Nov. 2014 was $912 Mil. Adobe Systems Inc's gross profit for the trailing twelve months (TTM) ended in Nov. 2014 was $3,525 Mil.

Gross Margin is calculated as gross profit divided by its revenue. Adobe Systems Inc's gross profit for the three months ended in Nov. 2014 was $912 Mil. Adobe Systems Inc's revenue for the three months ended in Nov. 2014 was $1,073 Mil. Therefore, Adobe Systems Inc's Gross Margin for the quarter that ended in Nov. 2014 was 85.01%.

Adobe Systems Inc had a gross margin of 85.01% for the quarter that ended in Nov. 2014 => Durable competitive advantage

During the past 13 years, the highest Gross Margin of Adobe Systems Inc was 94.27%. The lowest was 82.06%. And the median was 89.50%.

Warning Sign:

Adobe Systems Inc gross margin has been in long term decline. The average rate of decline per year is -1.2%.


Definition

Gross Profit is the different between the sale prices and the cost of buying or producing the goods.

Adobe Systems Inc's Gross Profit for the fiscal year that ended in Nov. 2014 is calculated as

Gross Profit (A: Nov. 2014 )=Revenue - Cost of Goods Sold
=4147.065 - 622.08
=3,525

Adobe Systems Inc's Gross Profit for the quarter that ended in Nov. 2014 is calculated as

Gross Profit (Q: Nov. 2014 )=Revenue - Cost of Goods Sold
=1073.328 - 160.943
=912

Adobe Systems Inc Gross Profit for the trailing twelve months (TTM) ended in Nov. 2014 was 851.611 (Feb. 2014 ) + 913.304 (May. 2014 ) + 847.685 (Aug. 2014 ) + 912.385 (Nov. 2014 ) = $3,525 Mil.

Gross Profit is the numerator in the calculation of Gross Margin:

Adobe Systems Inc's Gross Margin for the quarter that ended in Nov. 2014 is calculated as

Gross Margin (Q: Nov. 2014 )=Gross Profit (Q: Nov. 2014 ) / Revenue (Q: Nov. 2014 )
=(Revenue - Cost of Goods Sold) / Revenue
=912 / 1073.328
=85.01 %

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

A positive Gross Profit is only the first step for a company to make a net profit. The gross profit needs to be big enough to also cover related labor, equipment, rental, marketing/advertising, research and development and a lot of other costs in selling the products.


Explanation

Warren Buffett believes that firms with excellent long term economics tend to have consistently higher margins.

Durable competitive advantage creates a high Gross Margin because of the freedom to price in excess of cost. Companies can be categorized by their Gross Margin

1. Greater than 40% = Durable competitive advantage
2. Less than 40% = Competition eroding margins
3. Less than 20% = no sustainable competitive advantage
Consistency of Gross Margin is key

Adobe Systems Inc had a gross margin of 85.01% for the quarter that ended in Nov. 2014 => Durable competitive advantage


Related Terms

Cost of Goods Sold, Gross Margin, Revenue


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Adobe Systems Inc Annual Data

Nov05Nov06Nov07Nov08Nov09Nov10Nov11Nov12Nov13Nov14
Gross_Profit 1,8542,2832,8033,2172,6493,3963,7783,9203,4693,525

Adobe Systems Inc Quarterly Data

Aug12Nov12Feb13May13Aug13Nov13Feb14May14Aug14Nov14
Gross_Profit 9611,028851875848894852913848912
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