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Adobe Systems Inc  (NAS:ADBE) Gross Margin %: 86.49% (As of May. 2017)

Gross Margin % is calculated as gross profit divided by its revenue. Adobe Systems Inc's Gross Profit for the three months ended in May. 2017 was $1,533 Mil. Adobe Systems Inc's Revenue for the three months ended in May. 2017 was $1,772 Mil. Therefore, Adobe Systems Inc's Gross Margin % for the quarter that ended in May. 2017 was 86.49%.

Warning Sign:

Adobe Systems Inc gross margin has been in long term decline. The average rate of decline per year is -1.1%.


NAS:ADBE' s Gross Margin % Range Over the Past 10 Years
Min: 84.48   Max: 89.93
Current: 86.15

84.48
89.93

During the past 13 years, the highest Gross Margin % of Adobe Systems Inc was 89.93%. The lowest was 84.48%. And the median was 88.89%.

NAS:ADBE's Gross Margin % is ranked higher than
81% of the 1870 Companies
in the Global industry.

( Industry Median: 51.33 vs. NAS:ADBE: 86.15 )

Adobe Systems Inc had a gross margin of 86.49% for the quarter that ended in May. 2017 => Durable competitive advantage

The 5-Year average Growth Rate of Gross Margin for Adobe Systems Inc was -1.10% per year.


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's currency.

* Premium members only.

Adobe Systems Inc Annual Data

Nov07 Nov08 Nov09 Nov10 Nov11 Nov12 Nov13 Nov14 Nov15 Nov16
Gross Margin % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 89.01 85.54 85.00 84.48 86.00

Adobe Systems Inc Quarterly Data

Nov12 Feb13 May13 Aug13 Nov13 Feb14 May14 Aug14 Nov14 Feb15 May15 Aug15 Nov15 Feb16 May16 Aug16 Nov16 Feb17 May17 Aug17
Gross Margin % Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only Premium Member Only 86.15 86.54 85.89 86.49 85.72

Competitive Comparison
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap.


Calculation

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. 2016 is calculated as

Gross Margin % (A: Nov. 2016 )=Gross Profit (A: Nov. 2016 ) / Revenue (A: Nov. 2016 )
=5034.5 / 5854.43
=(Revenue - Cost of Goods Sold) / Revenue
=(5854.43 - 819.908) / 5854.43
=86.00 %

Adobe Systems Inc's Gross Margin for the quarter that ended in May. 2017 is calculated as


Gross Margin % (Q: May. 2017 )=Gross Profit (Q: May. 2017 ) / Revenue (Q: May. 2017 )
=-239.4 / 1772.19
=(Revenue - Cost of Goods Sold) / Revenue
=(1772.19 - 239.36) / 1772.19
=86.49 %

* All numbers are in millions except for per share data and ratio. All numbers are in their local exchange's 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 86.49% for the quarter that ended in May. 2017 => 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.


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