S&P Revises Outlook on Adobe Systems (ADBE) to Positive; Ratings Affirmed

Standard & Poor's Ratings Services said it revised its rating outlook on Adobe Systems Inc. (Nasdaq: ADBE) to positive from stable and affirmed its 'A-' corporate credit rating on the company.

At the same time, we affirmed our ratings on the company's senior unsecured debt.

"The outlook revision reflects our view that we could raise our corporate credit rating on Adobe one notch to 'A' over the next 12-24 months if the company can continue its current growth trajectory in revenue and EBITDA and achieve adjusted EBITDA margins in the high-30% area while maintaining adjusted leverage below 1.5x," said Standard & Poor's credit analyst Kenneth Fleming.

The 'A-' rating reflects the company's strong market position, good operating performance, and growing profit margins, partly offset by its somewhat narrow product focus relative to other software providers.

The outlook is positive reflecting Adobe's successful transition to a more predictable subscription pricing model. We expect Adobe Systems Inc. to maintain its market position, with accelerating growth in EBITDA and FOCF over the next two years.

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