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Adobe's Marketo Buyout Agreement Boosts Marketing Initiatives

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In a bid to bolster presence in the global cloud market, Adobe Systems IncorporatedADBE has signed a definitive agreement to acquire Marketo from Vista Equity Partners Management for $4.75 billion.

San Mateo, CA-based Marketo is a provider of marketing tools via its cloud based business-to-business (B2B) engagement platform which help the companies add new customers and drive business growth.

The latest acquisition is likely to enhance Adobe's cloud offerings to its B2B and business-to-customer (B2C) clients. Moreover, it will strengthen Adobe Experience Cloud's services further.

All these initiatives will aid the company in attracting customers to its platform by delivering better marketing experience. This bodes well for Adobe's expanding customer base which will continue to drive its top-line growth.

Coming to the price performance, shares of Adobe have returned 52% on a year-to-date basis, outperforming the industry 's rally of 27.9%.

Deal Rationale

In this data-driven world, customer data and customer experience play a significant role in shaping growth trajectory of the companies.

Consequently, services which are an amalgamation of cloud services and analytics, content and marketing applications are high in demand for expanding customer engagement of the businesses.

A report from MarketsandMarkets suggests that global customer engagement solutions market is expected to hit $23.2 billion by 2023 at a CAGR of 10.5% between 2018 and 2023.

We believe by combining Marketo's marketing technologies and tools with Adobe Experience Cloud, the B2B and B2C clients of Adobe will be able to achieve customer loyalty. This will help the company in gaining traction in the marketing space.

Further, Marketo's marketing community comprising 500 partners and 65,000 members are well poised to boost Adobe's marketing initiatives.

Adobe Systems Incorporated Revenue (TTM)

Adobe Systems Incorporated Revenue (TTM) | Adobe Systems Incorporated Quote

Strengthening Competition

The latest move of Adobe will aid expand in the growing cloud based customer engagement solutions market.

Moreover, it is likely to help Adobe in competing against the likes of Salesforce.com CRM and Oracle ORCL . While Salesforce is a dominant player in the customer relationship management software space, Oracle owns one of the largest enterprise-grade database.

Per MarketsandMarkets data, cloud enterprise market is expected to reach $34.42 billion by 2022 at a CAGR of 28.6% between 2017 and 2022.

Notably, Adobe is well poised to reap benefits from this rapidly expanding market with its growing focus on B2B and B2C customers' experience on the back of its strategic partnerships and acquisitions.

Apart from the latest deal, the company recently completed the buyout of e-commerce content management system ("CMS") software provider Magento Commerce. This will improve Adobe's competitive position in the e-commerce marketing market and cater to the need of companies across varies industries.

Further, the company extended partnership with Microsoft MSFT to improvise data sharing between Adobe Experience Manager and Microsoft's CRM tool namely Dynamics 365.

Consequently, Adobe will continue to gain traction in the cloud and marketing space driven by the abovementioned endeavors.

Currently, Adobe carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank stocks (Strong Buy) here.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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