Switch to:
Adobe Systems Inc (NAS:ADBE)
Gross Margin
85.50% (As of May. 2014)

Gross Margin is calculated as gross profit divided by its revenue. Adobe Systems Inc's gross profit for the three months ended in May. 2014 was $913 Mil. Adobe Systems Inc's revenue for the three months ended in May. 2014 was $1,068 Mil. Therefore, Adobe Systems Inc's Gross Margin for the quarter that ended in May. 2014 was 85.50%.

ADBE' s 10-Year Gross Margin Range
Min: 82.06   Max: 94.27
Current: 85.54

82.06
94.27

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 89.61%.

ADBE's Gross Marginis ranked lower than
100% of the Companies
in the Global Software - Application industry.

( Industry Median: vs. ADBE: 85.54 )

Adobe Systems Inc had a gross margin of 85.50% for the quarter that ended in May. 2014 => Durable competitive advantage

The 3-Year average Growth Rate of Gross Margin for Adobe Systems Inc was -0.80% per year.


Definition

Gross Margin is the percentage of Gross Profit out of sales or Revenue.

Adobe Systems Inc's Gross Margin for the fiscal year that ended in Nov. 2013 is calculated as

Gross Margin (A: Nov. 2013 )=Gross Profit (A: Nov. 2013 ) / Revenue (A: Nov. 2013 )
=3468.7 / 4055.24
=(Revenue - Cost of Goods Sold) / Revenue
=(4055.24 - 586.557) / 4055.24
=85.54 %

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

Gross Margin (Q: May. 2014 )=Gross Profit (Q: May. 2014 ) / Revenue (Q: May. 2014 )
=913.3 / 1068.208
=(Revenue - Cost of Goods Sold) / Revenue
=(1068.208 - 154.904) / 1068.208
=85.50 %

* 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 85.50% for the quarter that ended in May. 2014 => Durable competitive advantage


Be Aware

If a company loses its competitive advantages, usually its gross margin declines well before its sales declines. Watching Gross Margin and Operating Margin closely helps avoid value trap situations.


Related Terms

Operating Margin, Cost of Goods Sold, Gross Profit, 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

Nov04Nov05Nov06Nov07Nov08Nov09Nov10Nov11Nov12Nov13
Gross Margin 93.7494.2788.6488.7789.8789.9389.3889.6189.0185.54

Adobe Systems Inc Quarterly Data

Feb12May12Aug12Nov12Feb13May13Aug13Nov13Feb14May14
Gross Margin 89.6488.3688.9389.1684.4586.6185.2285.8485.1585.50
Get WordPress Plugins for easy affiliate links on Stock Tickers and Guru Names | Earn affiliate commissions by embedding GuruFocus Charts
GuruFocus Affiliate Program: Earn up to $400 per referral. ( Learn More)
Free 7-day Trial
FEEDBACK
Email Hide