Back to top

Image: Bigstock

Microsoft Collaborates with Adobe to Gain CRM Dominance

Read MoreHide Full Article

Reportedly, Microsoft Corp (MSFT - Free Report) and Adobe Systems (ADBE - Free Report) have joined forces to boost their respective marketing and sales software products. The move is expected to help both the companies position themselves better against their competitors, salesforce.com (CRM - Free Report) and Oracle (ORCL - Free Report) , in their respective segments.

The two companies will collaborate to design a shared data format between Adobe’s Experience Cloud (marketing software suite) and Microsoft Dynamics (sales software). This will allow a seamless integration of the two software systems.  

However, the collaboration failed to cheer investors. While shares of Microsoft were up just 0.09% on the bourses, Adobe’s stock lost 0.55%.

We note that, shares of Microsoft have outperformed the broader S&P 500 index over the last one year. While the stock returned 20.5%, the index posted a gain of only 15.3%.



Adobe has also outperformed the broader S&P 500 index over the last one year. While the stock increased a decent 36.6%, the index gained only 15.3%.

What Does this Mean for Microsoft?

Microsoft has had been pushing into the software systems for sales professionals space with its Dynamics CRM.

As of the last reported quarter, the company’s Productivity & Business Processes segment (which includes the Office and Dynamics CRM businesses) witnessed revenue growth of 10.9% on a sequential basis and 10.3% on a year-over-year basis.

Dynamics and cloud services revenues jumped 7% (9% CC). Management noted that more than 80% of new Dynamics enterprise customers are choosing Dynamics 365. Dynamics 365 paid seats more than doubled in the reported quarter.

With this collaboration, Microsoft will be better positioned to lock horns with its competitors – salesforce and Oracle – both of which offer marketing and sales software that will help the company further boost its top line.  

What Does this Mean for Adobe?

 

Adobe had signed a deal with Microsoft last fall to utilize the latter’s Azure cloud platform. The current collaboration is just an extension of that partnership.

Notably, the company acquired Omnitrue Inc in 2009 for $1.8 billion to extend its presence in the business-to-business marketing software space. As of last year, Adobe’s software that helps companies run advertising campaigns and digital marketing comprised nearly $1.2 billion in revenues out of the total $4.6 billion.

As of the last reported quarter, the company posted better-than-expected earnings backed by strong Creative Cloud annualized recurring revenues, continued growth of Adobe Document Cloud subscriptions and strong bookings for Adobe Marketing Cloud.

With this collaboration, we expect the company to gain better traction in the business-to-business marketing software space which augurs well for it in the long run.

Zacks Rank

At present, Microsoft carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Will You Make a Fortune on the Shift to Electric Cars?

Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.

With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.

It's not the one you think.

See This Ticker Free >>

Published in