Adobe 's business - view from customers

First time poster, long time reader! ***Adobe*** **looks like a great value pick right now, so I'm starting there.** [I've just published ](https://open.substack.com/pub/durableinvesting/p/adobestockanalysis-unbreakable-or-on-the-brink?r=8iygzz&utm_campaign=post&utm_medium=web)[my first post](https://open.substack.com/pub/durableinvesting/p/adobestockanalysis-unbreakable-or-on-the-brink?r=8iygzz&utm_campaign=post&utm_medium=web) on SS, analysing the business from the views of those in the industry. It's been insightful & given me conviction. I'd love to get feedback from disciplined investors? Here's the **TLDR**: * $ADBE at a forward O/E **Yield of nearly 9%** at the time of writing, the Digital Media business just needs to survive at these levels to give investors a real chance of outperforming * I’ve worked with users closely and found Adobe's Suite entirely **embedded in workflows**. Unless marketing goes extinct, Adobe licenses are mostly non-optional. * The brand has HUGE salience & stickiness but not always love... just check out the subreddit r/FuckAdobe * Ad agencies (IPA survey) say timelines have dropped (**70%)** due to AI, but asset requirements have multiplied **5x**. Headcounts have already fallen (-14.3% YoY: IPA) * **Yet:** Adobe’s ETLA retention remains at **94%-96%** and revenue growth continues * A Midweight designer told me: “You won’t find enterprises using only non-Adobe tools, they can’t deal with .ai & .indd formats… **way too risky**” * Agency Pro: 'clients are integrated into the Adobe ecosystem, so switching isn't worth it… **it just creates a time bomb** before a client send you something incompatible.' * Management might cut creative headcount to juice margins, but are unlikely to **risk operational supply-chain failure to save an $80/m software subscription**. * “The single most important decision in evaluating a business is **pricing power”(** Buffett) Gross margins are still exceptional and growing – approaching **90%** * **It means competitors are heavily incentivised** to try to take share from Adobe’s highly profitable products though, but have an uphill battle to do so. I'd appreciate feedback from investors, especially those who disagree with the thesis. Part 2 will focus on the bear case and key risks.