Assessment of Adobe and Pegasystems in the Enterprise Software Sphere
Adobe (ADBE) and Pegasystems (PEGA) stand as prominent players in the realm of enterprise software. Each organisation is instrumental in facilitating digital transformation through its respective cloud-enabled solutions.
While Adobe prioritises the delivery of customised digital experiences backed by artificial intelligence, Pegasystems focuses on empowering enterprises with AI-driven decision-making and workflow automation platforms. In light of current market dynamics, which entity holds the competitive advantage?
Adobe has observed a surge in demand for its AI-enhanced offerings, specifically the Creative Cloud Pro and Acrobat, in addition to its innovative products like Firefly and the Acrobat AI Assistant.
The third quarter of fiscal 2025 witnessed a notable 25% annual growth in the monthly active users of both Acrobat and Express within the Business Professionals and Consumers segments.
Effective monetisation strategies for Acrobat offerings, including the AI assistant and Acrobat Studio, have propelled this growth.
Furthermore, the Creative Professionals sector is thriving, spurred by heightened interest in AI applications within Photoshop, Premiere Pro, and Illustrator, all integral components of the new Creative Cloud Pro package.
The integration of Firefly and third-party models within Creative Cloud Applications has catalysed the adoption of generative AI (Gen AI).
Moreover, the marketing vertical is experiencing robust demand for the Adobe Experience Platform (AEP) and its associated applications, highlighted by the introduction of models through collaborations with Google Gemini Flash 2.5, Veo, Imagen, OpenAI, Black Forest Labs, Runway, Pika, Ideogram, and others.
Adobe’s performance marketing products, including Workfront, Frame, AEM Assets, and Firefly Services, now collectively contribute over $1 billion in Annual Recurring Revenue (ARR), exhibiting a year-over-year growth exceeding 25%.
A recent Adobe deal illustrated a compelling 60% year-over-year increase, signifying a strengthened enterprise footprint.
The organisation now projects fiscal 2025 revenues to fall between $23.65 billion and $23.7 billion, a substantial increase from the prior fiscal year’s $21.51 billion. This revision surpasses earlier estimates, which ranged from $23.5 billion to $23.6 billion.
The Zacks Consensus Estimate currently forecasts revenues at $23.67 billion for fiscal 2025, reflecting a 10.1% increase compared to the previous year’s results.
Pegasystems is similarly capitalising on rising demand for its AI-integrated, cloud-centric solutions. As organisations hasten their digital modernisation efforts, Pegasystems’ platform is gaining momentum, positioning the company for securing sustainable growth in a market poised to exceed $150 billion by 2029.
The company’s transition to a subscription-based business model has proven pivotal. Annual Contract Value (ACV), which surged by 14% year over year at constant currency during the third quarter of 2025, is anticipated to remain robust, driven by ongoing digital transformation initiatives and the strong uptake of the Pega GenAI Blueprint along with its case-based pricing mechanism.
The Pega Blueprint—a generative AI-driven workflow design agent—accelerates the application development timeline significantly, reducing it from months to mere weeks.
Pegasystems is enhancing its capabilities to utilise agentic AI for the ingestion, analysis, and conversion of diverse legacy system assets, encompassing videos, documentation, user interface screens, technical files, and source code into modern applications at an accelerated pace.
The introduction of “Powered by Blueprint” enables selected partners to customise the Blueprint tool by embedding their best practices and branding, thereby enriching Pegasystems’ ecosystem.
The company has notably expanded its enterprise clientele across critical sectors, including financial services, insurance, telecommunications, healthcare, manufacturing, and the public sector.
Nonetheless, intense rivalry from Microsoft and Oracle within the business process management space poses a significant challenge.
The Zacks Consensus Estimate for Adobe’s fiscal 2025 earnings stands at $20.77 per share, indicating a commendable increase of 12.76% over the previous year’s reported figure.
Conversely, the earnings consensus for Pegasystems has seen a 5.1% rise to $2.08 per share over the last two months, projecting remarkable growth of 37.8% from 2024.
Over the past 12 months, the performance of Adobe shares has recorded a decline of 38.2%, contrasting sharply with Pegasystems’ 14.9% appreciation. Both entities appear to be overvalued, as indicated by their respective Value Scores of D and C.
In terms of forward 12-month price-to-sales ratios, Adobe’s stock trades at 5.15X, slightly above Pegasystems’ 5.08X.
In summary, Adobe’s commitment to enhancing the monetisation of its AI tools presents a favourable viewpoint for investors, despite its inflated valuation. Conversely, the competitive landscape introduces a level of risk concerning Pegasystems’ stock in the short term.
At present, Adobe holds a Zacks Rank #2 (Buy), positioning it as a more compelling choice relative to Pegasystems, which maintains a Zacks Rank #3 (Hold). The complete list of today’s Zacks #1 Rank (Strong Buy) stocks can be accessed for further insights.
Source link: Finance.yahoo.com.
