August 11, 2020 Adobe BUY Company Update : Design Software

DM² adds a new-old friend

Adobe, IBM and Red Hat have recently announced “a strategic partnership to help accelerate digital transformation and strengthen real-time data security for enterprises, with a focus on Jay Vleeschhouwer regulated industries”, such as financial services and healthcare [email protected] (the public sector could be an additional such industry, especially 646-442-4251 to the extent that the partnership would include Document Cloud, in addition to CX). Stock Symbol NASDAQ: ADBE Subsequent to the press release, Adobe and IBM hosted a joint Current Price $435.23 webcast, which provided some additional insights, including that 12 mos. Target Price $427.00 the partnership was likely to “broaden over time”, possibly to Market Cap $135,246.7 mln encompass other Adobe products in addition to AEM (Adobe Shares O/S 485.0 mln Experience Manager), the current centerpiece of the partnership (two such candidates we’d presume might be Adobe Campaign Avg Daily Vol. (3 mos.) 2,548,399 shs. and/or Commerce). In addition to the external selling and 52-Week Price Low/High $255.13 - $470.61 deliverables, IBM “will begin adopting P/B 20.6x and its enterprise applications to transform its own global Price/ FCF 0.1x marketing” (this was already part of Adobe’s 2Q20 new business). Fiscal Year End Nov During the joint webcast (hosted by IBM’s general manager, ROE 36% global strategic partnerships; IBM’s global lead for the Adobe EPS partnership; and, Adobe’s director of AEM strategy and engineering), IBM noted a “long history of collaboration” with FY 20E FY 21E FY 22E Adobe, in part even predating the DX business itself. Adobe

Q1 (Feb) $2.27A $2.48E $2.77E has been working with IBM services/iX (interactive experience Q2 (May) 2.45A 2.30E 2.84E services) consultancy since 2015 (as announced at Summit that Q3 (Aug) 2.41E 2.63E 2.91E year), and have “collaborated and co-delivered dozens of joint Q4 (Nov) 2.66E 2.76E 3.06E wins globally in a co-sell model”. The relationship has now evolved across “ $9.79E $10.17E $11.57E additional sectors of IBM’s global organization including their IBM cloud offering and powered by Red Hat Open Shift”. Or, P/E 44.5x 42.8x 37.6x as IBM commented, IBM is “significantly scaling [our] go-to-market Price/Sales 10.6x 9.4x 8.6x and delivery capabilities…”

500 AEM is one of the most important brands within the Adobe Digital

450 Experience (DX) portfolio. We calculate that AEM revenues were more than $450 million in FY19; we’re estimating as much as 400 $530 million in FY20 (for perspective, in FY11, Adobe’s first 350 full year with the product following an acquisition, revenues were about $100 million). DX generally, including AEM, entails, 300 by Adobe standards, a considerable amount of services: DX 250 services account for a mid-teens percent of total DX revenues, 200 i.e., now over $400 million a year, and more than 80% of Adobe’s Oct-19 Dec-19 Feb-20 Apr-20 Jun-20 Aug-20 total services revenue - which, it has consistently stated, Adobe Adobe does not wish to grow disproportionately, for obvious margin reasons, thereby leaving room and need for partners, such as IBM, Accenture, Deloitte, and Capgemini.

17 State Street, 3rd Floor, New York, NY 10004 • 212.509.9500 • www.griffinsecurities.com Please Review Disclosures on Page 13 of This Report Adobe August 11, 2020

It’s premature to say how much extra revenue this relationship might yield, but its objectives were defined well (and, besides, all else being equal, Adobe would want to find ways of compensating for the strategic de-emphasis of the Advertising Cloud business, as described on the 2Q20 conference call). For further detailed background on (re-architected) AEM specifically and on Adobe’s DX portfolio and roadmap more broadly, see too our April 15th, 2020 report, “On the views from the Summit”.

The expanded partnership will initially entail: “deployment flexibility with hybrid cloud” (AEM 6.5 will be delivered on Red Hat Open Shift. AEM is of course delivered too on Azure and AWS); “Adobe enabled for financial services” (Adobe will be the “strategic partner providing CX solutions for the IBM Cloud for Financial Services”, a core market for IBM, and a longtime important market for Acrobat/Document Cloud); and, “Adobe and IBM Services” (“IBM iX, the business design arm of IBM Services, will extend their offerings across all of Adobe's core enterprise applications”, including Creative Cloud, Experience Cloud, and Document Cloud).

During Adobe Max 2019, Adobe and IBM had announced the following: “Adobe and IBM iX, the business design arm of IBM Services, are announcing that they are extending their current partnership by introducing IBM iX’s first Design Systems as a Service offering using Adobe XD, Adobe’s experience design platform”; the DSaaS includes “design system setup”; a “modular construction kit” (“developed by IBM iX and built with Adobe XD”); and a dedicated design and development support team. The IBM and Microsoft (MSFT, $203.38, Buy) partnerships are similar in the sense that each entails co-selling, with the Microsoft relationship perhaps being “broader” vis-à-vis the goal of selling Azure implementations.

In a blog post statement during Max that well coincides with our DM² concept, “with the introduction of the new Design Systems as a Service, Adobe and IBM iX will ultimately unite distributed marketing and design teams with a shared set of principles and guidelines, removing ambiguity and providing a single source of truth for creative assets globally. Additionally, the partnership allows customers to plug into other applications across Adobe Experience Cloud to quickly activate creative assets across all marketing channels and customer touchpoints”.

DM², as used above in the title, is our longtime designation for the confluence or integrations of Digital Media and what was once Digital Marketing (now DX): these connections have been, and remain in our view, a unique competitive differentiator for Adobe.

Griffin Securities Equity Research 2 Adobe August 11, 2020

Chart 1. Adobe Systems, AEM TTM revenues, FY10-FY23E

$1,000.000 $975.000 $950.000 $925.000 $900.000 $875.000 $850.000 $825.000 $800.000 $775.000 $750.000 $725.000 $700.000 $675.000 $650.000 $625.000 $600.000 $575.000 $550.000 $525.000 $500.000 $475.000 $450.000 $425.000 $400.000 $375.000 $350.000 $325.000 $300.000 $275.000 $250.000 $225.000 $200.000 $175.000 $150.000 $125.000 $100.000 $75.000 $50.000 $25.000 $0.000

Experience Manager - TTM

Source: Adobe Systems, Griffin Securities.

Chart 2. Adobe Systems, DX services revenues, FY09-2Q20

$150,000 $145,000 $140,000 Total services & support $135,000 $130,000 $125,000 Experience Cloud services $120,000 $115,000 $110,000 $105,000 $100,000 $95,000 $90,000 $85,000 $80,000 $75,000 $70,000 $65,000 $60,000 $55,000 $50,000 $45,000 $40,000 $35,000 $30,000 $25,000 $20,000 $15,000 $10,000 $5,000 $0

Source: Adobe Systems, Griffin Securities.

Griffin Securities Equity Research 3 Adobe August 11, 2020

ADOBE SYSTEMS RESEARCH LIBRARY (COMPANY REPORTS #1-#143, ET AL)

# Date Subject

1 6/3/2011 Initiation of coverage

2 6/22/2011 Review of 2Q11 results & outlook

3 7/5/2011 Review of 2Q11 10-Q new data

7/7/2011 Announced an upgrade program for customers of competing Mac-based digital video products

7/15/2011 Analysis of Adobe’s Mac-based software business

Announced acquisition of EchoSign, plus technology updates of AIR 3 beta and Flash Player 11 7/22/2011 beta

8/3/2011 Announced a public preview of , a new HTML5 web and interaction design tool

8/17/2011 Awarded an expanded contract from the U.S. Department of Defense for its “Connect” service

9/8/2011 Review of enterprise content authoring and consumer digital imaging announcements

4 9/21/2011 Review of 3Q11 results & outlook

9/26/2011 Analysis of Adobe’s consumer business and seasonal importance to 4Q revenues

5 10/6/2011 Review of annual Adobe Max conference

6 10/12/2011 Review of 3Q11 10-Q new data

11/2/2011 Acquisition of privately-held Auditude, to complement and extend digital video applications

11/8/2011 Preview of annual analyst meeting

7 11/10/2011 Review of annual analyst meeting

11/21/2011 Sequel to November 10th analyst meeting report, plus update on Adobe Labs technology updates

12/8/2011 Acquisition of Efficient Frontier

8 12/16/2011 Review of 4Q11 results & outlook

1/19/2012 Comments on transition to subscriptions model

9 1/27/2012 Review of FY11 10-K new data

2/1/2012 Review of new segments ADBE will be reporting as of 1Q12, vs. prior segments

2/21/2012 Review of Griffin-hosted call with management of Digital Marketing segment

2/29/2012 Comments on Photoshop Touch for iPad and Project Primetime for video

3/6/2012 Comment on Photoshop Lightroom and LeanPrint

3/12/2012 Earnings preview & Adobe Labs update

10 3/20/2012 Review of 1Q12 results & outlook

Griffin Securities Equity Research 4 Adobe August 11, 2020

11 3/26/2012 Review of Digital Marketing Summit (part 1)

3/27/2012 Review of Digital Marketing Summit (part 2)

12 3/30/2012 Review of 1Q12 10-Q new data

4/17/2012 Comment on pending CS6 launch

13 4/24/2012 Comment on CS6/Creative Cloud announcement

5/9/2012 Comments on CS6/Creative Cloud availability, and Creative Suite revenues

5/15/2012 Update on Digital Publishing Suite, "CQ", ColdFusion, and Adobe Labs

5/22/2012 Comment on new video products announcements

6/13/2012 Earnings preview & Connect 9 announcement

14 6/20/2012 Review of 2Q12 results & outlook

6/27/2012 Comments on Lightroom 4 availability on Creative Cloud

15 6/28/2012 Review of 2Q 10-Q new data

7/25/2012 Comment on Technical Communication Suite

8/9/2012 Update on Digital Publishing Suite

9/6/2012 Update on Creative Cloud & Digital Publishing Suite

10/1/2012 Review of 3Q12 10-Q new data

10/9/2012 Acrobat 11, Photoshop Elements 11

16 11/7/2012 Initiated FY14E and Creative Cloud revenue model

12/10/2012 Preview of 4Q12; Digital Publishing Suite update

17 12/14/2012 Review of 4Q12 results & outlook; revised FY13E-FY14E

12/18/2012 Adobe Labs update

18 1/23/2013 Review of FY12 10-K new data; update of Creative Cloud estimates

2/5/2013 Updated Digital Media/Digital Marketing segment revenues; Digital Publishing Suite new release

2/13/2013 LiveCycle ES4

2/21/2013 HTML5 product announcements

19 3/6/2012 Digital Marketing Summit - first read

20 3/11/2013 Review of Digital Marketing Summit; revised FY13E-FY14E; raised price objective

21 3/20/2013 Review of 1Q13 results & outlook; revised FY13E-FY14E

3/22/2013 Highlights of Digital Publishing Suite webcast

Griffin Securities Equity Research 5 Adobe August 11, 2020

22 3/29/2013 Review of 1Q13 10-Q new data

4/15/2013 NAB video products previews

5/1/2013 Update on Digital Publishing Suite

23 5/7/2013 Adobe Max conference

5/15/2013 Adobe Max "sneak peek" technology previews

24 5/17/2013 Digital Publishing Summit

25 6/172013 Preview of 2Q13 results

26 6/19/2013 Review of 2Q13 results & outlook; revised FY13E-FY14E-FY15E

27 6/28/2013 acquisition

28 7/1/2013 Review of 2Q13 10-Q new data

9/12/2013 Creative Cloud single-app promotion; Marketing Cloud, digital media, PDF Print Engine releases

29 9/13/2013 Preview of 3Q13 results

30 9/18/2013 Review of 3Q13 results & outlook; revised FY13E-FY14E-FY15E

10/14/2013 Photoshop Elements 12, Premiere Elements 12

31 11/1/2013 DPS customer event update

11/6/2013 Creative Cloud video apps updates

11/14/2013 Adobe Campaign (formerly Neolane) update

32 12/10/2013 Preview of 4Q13 results

33 12/13/2013 Review of 4Q13 & revised FY14E-FY15E; raised PO to $70

34 1/22/2014 Review of FY13 10-K new data

3/6/2014 DPS & Experience Manager update

35 3/17/2014 Preview of 1Q14; initiation of FY16E

36 3/19/2014 Review of 1Q14; revised FY14E-FY15E-FY16E; raising PO

37 3/26/2014 Review of annual Digital Marketing Summit

38 4/2/2014 Review of 1Q14 10-Q new data

5/7/2014 ColdFusion update

39 5/14/2014 Marketing Cloud update

40 6/10/2014 Preview of 2Q14 results

41 6/18/2014 Review of 2Q14; revised FY14E-FY15E-FY16E; raising PO

Griffin Securities Equity Research 6 Adobe August 11, 2020

6/24/2014 Creative Cloud product updates released

42 6/30/2014 Review of 2Q14 10-Q new data

9/8/2014 Video products update

43 9/15/2014 Preview of 3Q14 results & new Creative Cloud charts

44 9/17/2014 Review of 3Q14; revised FY14E-FY15E-FY16E

45 9/29/2014 Review of 3Q14 10-Q new data

46 10/7/2014 Adobe Max conference

11/18/2014 Review of design software job openings new data

47 12/8/2014 Preview of 4Q14

48 12/12/2014 Review of 4Q14; revised FY15E-FY16E; raised PO to $90

12/1714 Digital Publishing Suite update

49 1/12/2015 Initiation of 2017 estimates

50 1/20/2015 Review of FY14 10-K new data

2/12/2015 Design software comparative cash flow analysis (2005-2017E)

51 2/17/2015 Highlights of Griffin Securities call with Adobe Digital Marketing senior management

3/4/2015 Digital Publishing Suite (DPS) next-generation

52 3/11/2015 Review of annual Digital Marketing Summit

53 3/16/2015 Preview of 1Q15 results

54 3/17/2015 Document Cloud introduction

55 3/18/2015 Review of 1Q15; revised FY15E-FY17E

56 3/30/2015 Review of 1Q15 10-Q new data

57 4/29/2015 Creative Cloud & Marketing Cloud update; Microsoft partnership

5/28/2015 "Publish", next-generation of Digital Publishing Suite (DPS)

58 6/15/2015 Preview of 2Q15 results

59 6/17/2015 Review of 2Q15 & revised FY15E-FY17E

6/23/2015 Creative Cloud "2015" release

8/4/2015 Digital Publishing Solution (update to Digital Publishing Suite)

60 9/16/2015 Preview of 3Q15 results & Creative Cloud update

61 9/18/2015 Review of 3Q15 & revised FY15E-FY17E

Griffin Securities Equity Research 7 Adobe August 11, 2020

62 9/24/2015 Review of 3Q15 10-Q new data

63 10/6/2015 Adobe Max conference (day 1)

64 10/7/2015 Revised FY15E-FY17E; initiated FY18E

65 12/8/2015 Preview of 4Q15 results & strategy update

12/28/2015 Review of design software job openings new data

66 1/19/2016 Review of FY15 10-K new data

2/23/2016 Adobe Experience Manager Mobile & ColdFusion

67 3/8/2016 Preview of 1Q16 results

68 3/18/2016 Review of 1Q16; revised FY16E-FY18E; revised PO to $116

69 3/30/2016 Review of annual Digital Marketing Summit

70 4/1/2016 Review of 1Q16 10-Q new data

Document Cloud-Digital Marketing integration; acquisition; Digital Marketing non- 5/9/2016 subscriptions revenues

5/16/2016 Review of design software job openings new data

71 6/17/2016 Preview of 2Q16 results

72 6/22/2016 Review of 2Q16; revised FY16E-FY18E

73 6/30/2016 Review of 2Q16 10-Q new data

8/8/2016 Experience Manager Mobile update

74 9/13/2016 Preview of 3Q16 results

75 9/21/2016 Review of 3Q16 results; revised FY16E-FY18E; revised PO to $118

9/21/2016 Design software comparative cash flow analysis (2006-2018E)

76 9/27/2016 Review of 3Q16 10-Q new data

9/27/2016 Microsoft-Adobe Systems cloud platform relationship

77 11/3/2016 Adobe Max & analyst meeting highlights; initiated FY19E; revised PO to $133

11/21/2016 Adobe Max analyst meeting highlights (part deux) & "sneak peeks"; TubeMogul acquisition

78 12/12/2016 Preview of 4Q16 results

79 12/16/2016 Review of 4Q16 results; revised FY17E-FY19E

Completion of TubeMogul acquisition; TV Media Management Platform (new); & 12/28/2016 Microsoft Dynamics

Griffin Securities Equity Research 8 Adobe August 11, 2020

1/4/2017 Review of design software job openings new data (#14)

80 1/10/2017 TubeMogul acquisition & guidance update

81 1/23/2017 Review of FY16 10-K new data

82 3/13/2017 Preview of 1Q17 results

83 3/17/2017 Review of 1Q17; revised FY17E-FY19E; raised PO to $147

84 3/21/2017 Digital Marketing Summit (#1) - comments on product new & MSFT relationship

85 3/27/2017 Digital Marketing Summit (#2) - comments on strategy & technology

86 3/29/2017 Review of 1Q17 10-Q new data

87 6/5/2017 The Adobe Picture Book (#1); initiating FY20E; revised PO to $155

88 6/21/2017 Review of 2Q17; revised FY17E-FY20E; revised PO to $165

89 6/28/2017 Review of 2Q17 10-Q new data

8/10/2017 Apple-Amazon-Facebook ("Appazonbook") & design software

8/23/2017 Review of design software job openings new data (#15)

9/11/2017 Adobe-Microsoft product integrations

90 9/12/2017 Preview of 3Q17 results

91 9/20/2017 Review of 3Q17 results; revised FY17E-FY20E

9/25/2017 Design software comparative cash flow analysis (2010-2020E)

92 9/27/2017 Review of 3Q17 10-Q new data

93 10/16/2017 The Adobe Picture Book (#2)

94 10/18/2017 Adobe Max 2017 product announcements & pricing

95 10/19/2017 Adobe Max 2017 analyst meeting & revised FY18E-FY20E raised PO to $192

96 10/23/2017 Adobe Max "sneak peeks"

97 12/11/2017 Preview of 4Q17 results

98 12/15/2017 Review of 4Q17 results; revised FY18E-FY20E; raised PO to 4210

12/19/2017 Design software comparative cash flow analysis (2010-2020E)

12/27/2017 Review of design software job openings new data (#16)

12/27/2017 Stock-based compensation comparative analysis

99 1/22/2018 Taxation update; CFO retirement; revised FY18E-FY20E; raised PO to $226

Griffin Securities Equity Research 9 Adobe August 11, 2020

100 1/22/2018 Review of FY17 10-K new data

2/13/2018 Digital Marketing-Digital Media new features & integrations

3/5/2018 Cloud-y picture book #3 (Adobe, Amazon, Oracle, Microsoft, Salesforce, SAP)

101 3/13/2018 Preview of 1Q18 results

102 3/16/2018 Review of 1Q18 results; revised FY18E-FY20E; raised PO to $242

3/19/2018 Stock-based compensation comparative analysis (#2)

103 3/27/2018 Adobe-Microsoft partnership update (China; data models)

104 3/28/2018 Digital Marketing Summit - comments on strategy & technology

105 4/2/2018 Review of 1Q18 10-Q new data

4/23/2018 Review of design software job openings new data (#16.5)

5/17/2018 Review of design software job openings new data (#16.6)

5/31/2018 Cloud-y picture book #4 (Adobe, Amazon, Oracle, Microsoft, Salesforce, SAP)

106 5/21/2018 acquisition

107 6/21/2018 Review of 2Q18; revised FY18E-FY20E; raised PO to $278

108 6/28/2018 Review of 2Q18 10-Q new data

7/2/2018 Stock-based compensation comparative analysis (#3)

7/9/2018 Review of design software job openings new data (#16.7)

109 8/21/2018 Initiation of 2021 estimates; revised FY18E-FY20E

8/29/2018 Cloud-y picture book #5 (Adobe, Amazon, Oracle, Microsoft, Salesforce, SAP)

8/29/2018 Design software comparative cash flow analysis (2006-2021E)

110 9/6/2018 Preview of 3Q18 results

111 9/14/2018 Review of 3Q18; revised FY18E-FY21E; raised PO to $296

112 9/21/2018 acquisition

9/24/2018 Review of design software job openings new data (#16.8)

9/25/2018 Microsoft-Adobe alliance update

113 9/27/2018 Review of 3Q18 10-Q new data

114 10/3/2018 Acrobat/Document Cloud update

115 10/9/2018 Subscriptions cost of revenue analysis

Griffin Securities Equity Research 10 Adobe August 11, 2020

116 10/15/2018 Adobe Max 2018 & FY19 preliminary guidance

117 10/16/2018 Adobe Max 2018 analyst meeting

118 10/22/2018 Adobe Max 2018 "sneak peeks"

10/31/2018 Review of design software job openings new data (#16.9)

11/29/2018 Cloud-y picture book #6 (Adobe, Amazon, Oracle, Microsoft, Salesforce, SAP)

119 12/14/2018 Review of 4Q18; revised FY19E-FY21E

12/19/2018 Review of design software job openings new data (#17)

12/26/2018 Stock-based compensation comparative analysis (#4)

1/24/2019 Review of design software job openings new data (#17.1)

120 1/25/2019 Review of FY18 10-K new data

121 1/27/2019 Subscriptions cost of revenue analysis (#2)

2/19/2019 Review of design software job openings new data (#17.2)

122 2/11/2019 Preview of 1Q19 results

123 3/15/2019 Review of 1Q19; revised FY19E-FY21E; raised PO to $300

3/19/2019 Cloud-y picture book #7 (Adobe, Amazon, Oracle, Microsoft, Salesforce, SAP)

124 3/26/2019 Digital Marketing Summit - comments on strategy, new technology and partners

3/29/2019 Review of design software job openings new data (#17.3)

3/31/2019 Stock-based compensation comparative analysis (#5)

125 4/1/2019 Review of 1QFY19 10-Q new data

4/8/2019 Design software comparative cash flow analysis (2006-2021E)

5/9/2019 Review of design software job openings new data (#17.4)

126 6/19/2019 Review of 2Q19; revised FY19E-FY21E; raised PO to $303

6/23/2019 Cloud-y picture book #8 (Adobe, Amazon, Oracle, Microsoft, Salesforce, SAP)

127 6/26/2019 Review of 2QFY19 10-Q new data

7/12/2019 Review of design software job openings new data (#17.5)

8/13/2019 Review of design software job openings new data (#17.6)

128 8/20/2019 Initiation of FY22 estimates

129 9/18/2019 Review of 3Q19; revised FY19E-FY22E; raised PO to $317

Griffin Securities Equity Research 11 Adobe August 11, 2020

130 9/26/2019 Review of 3Q19 10-Q new data

10/2/2019 Stock-based compensation comparative analysis (#6)

10/7/2019 Review of Adobe job openings new data (#17.7)

131 11/4/2019 Quick view of Max & FY20 guidance

132 11/5/2019 Adobe Max 2019 analyst meeting

133 11/6/2019 Adobe Max 2019 "sneak peeks"

134 12/8/2019 Review of Adobe job openings new data (#17.8) & 4Q19 preview

135 12/13/2019 Review of 4Q19; revised FY20E-FY22E; raised PO to $334

136 1/21/2020 Review of FY19 10-K new data

137 2/18/2020 Review of Adobe job openings new data (#18.2)

138 3/13/2020 Review of 1Q20; revised FY20E-FY23E; maintained $234 PO

3/17/2020 Design software comparative cash flow analysis (2009-2023E)

3/25/2020 Comparative 2020E-2021E results sensitivities

139 3/26/2020 Review of 1Q20 10-Q new data; revised 3Q20E-4Q20E

4/5/2020 Review of design software job openings new data (#18.3)

140 4/15/2020 Summit 2020: comments on strategy, new products and "sneak peeks"

5/17/2020 Review of design software job openings new data (#18.4)

141 6/12/2020 Review of 2Q20; revised FY20E-FY23E; raised PO to $427

142 6/24/2020 Review of 2Q20 10-Q new data

143 7/7/2020 Review of Adobe job openings new data (#18.5)

Source: Griffin Securities. Unnumbered items indicate industry report or comment in The Software Standard industry update

Griffin Securities Equity Research 12 Adobe August 11, 2020

Disclosures

ANALYST(s) CERTIFICATION: The analyst responsible for covering the securities in this report certify that the views expressed in this research report accurately reflect their personal views about the subject Companies mentioned and its securities. The analyst responsible for covering the securities in this report certify that no part of their compensation was, is, or will be directly or indirectly related to the specific recommendation or view contained in this research report.

MEANINGS OF RATINGS: Our rating system is based upon 12 to 36 month price targets. BUY describes stocks that we expect to appreciate by more than 20%. HOLD/NEUTRAL describes stocks that we expect to change plus or minus 20%. SELL describes stocks that we expect to decline by more than 20%. SC describes stocks that Griffin Securities has Suspended Coverage of this Company and price target, if any, for this stock, because it does not currently have a sufficient basis for determining a rating or target and/or Griffin Securities is redirecting its research resources. The previous investment rating and price target, if any, are no longer in effect for this stock and should not be relied upon. NR describes stocks that are Not Rated, indicating that Griffin Securities does not cover or rate this Company.

DISTRIBUTION OF RATINGS/IB SERVICES: IB Serv./Past 12 Mos.

Rating Count Percent Count Percent

BUY [BUY] 10 83.33 0 0.00 HOLD [HOLD] 2 16.66 0 0.00 SELL [SELL] 0 0.00 0 0.00

COMPANIES MENTIONED:

Ticker Company Name Rating

ADBE Adobe Buy ADBE Adobe Buy MSFT Microsoft Corp. Buy

MARKET MAKING: Griffin Securities does not maintain a market in the shares of these Companies or any other company mentioned in the report.

COMPENSATION OR SECURITIES OWNERSHIP:

The analyst Jay Vleeschhouwer who is responsible for covering the securities in this report receives compensation based upon, among other factors, the overall profitability of Griffin Securities, including profits derived from investment banking revenue. Jay Vleeschhouwer who prepared the research report, did not receive any compensation from the Companies or any other companies mentioned in this report in connection with the preparation of this report.

The analyst Jay Vleeschhouwer who is responsible for covering the securities in this report currently does not own common stock in the Companies or any other companies mentioned in this report, but in the future may from time to time engage in transactions with respect to the Companies or other companies mentioned in the report.

Griffin Securities from time to time in the future may request expenses to be paid for copying, printing, mailing and distribution of the report by the Companies and other companies mentioned in this report. Griffin Securities expects to receive, or intends to seek, compensation for investment banking services from the Companies in the next three months. Griffin Securities Equity Research 13 Adobe August 11, 2020

Rating and Price Target History for: Adobe (ADBE US) as of 08-10-2020

10/19/17 12/15/17 01/22/18 03/16/18 06/21/18 09/14/18 03/15/19 06/19/19 09/18/19 11/05/19 12/13/19 06/12/20 B:$192 B:$210 B:$226 B:$242 B:$278 B:$296 B:$300 B:$303 B:$317 B:$330 B:$334 B:$427 500 450 400 350 300 250 200 150 100 Q3 2018 Q1 Q2 Q3 2019 Q1 Q2 Q3 2020 Q1 Q2

Created by: BlueMatrix

Rating and Price Target History for: Microsoft Corp. (MSFT US) as of 08-10-2020

10/27/17 02/01/18 04/27/18 07/23/18 10/25/18 04/25/19 07/01/19 07/19/19 10/24/19 01/02/20 01/30/20 04/30/20 07/23/20 B:$103 B:$109 B:$119 B:$124 B:$130 B:$145 B:$150 B:$158 B:$162 B:$180 B:$192 B:$200 B:$249 220 200 180 160 140 120 100 80 60 Q3 2018 Q1 Q2 Q3 2019 Q1 Q2 Q3 2020 Q1 Q2

Created by: BlueMatrix

FORWARD-LOOKING STATEMENTS: This Report contains forward-looking statements, which involve risks and uncertainties. Actual results may differ significantly from such forward-looking statements. Factors that might cause such a difference include, but are not limited to, those discussed in the “Risk Factors” section in the SEC filings available in electronic format through SEC Edgar filings at www.SEC.gov on the Internet.

GENERAL: Griffin Securities, Inc. (“Griffin Securities”) a FINRA member firm with its principal office in New York, New York, USA is an investment banking firm providing corporate finance, merger and acquisitions, brokerage, and investment opportunities for institutional, corporate, and private clients. The analyst(s) are employed by Griffin Securities. Our research professionals provide important input into our investment banking and other business selection processes. Our salespeople, traders, and other professionals may provide oral or written market commentary or trading strategies to our clients that reflect opinions that are contrary to the opinions expressed herein, and our proprietary trading and investing businesses may make investment decisions that are inconsistent with the recommendations expressed herein.

Griffin Securities may from time to time perform corporate finance or other services for some companies described herein and may occasionally possess material, nonpublic information regarding such companies. This information is not used in preparation of the opinions and estimates herein. While the information contained in this report and the opinions contained herein are based on sources believed to be reliable, Griffin Securities has not independently verified the facts, assumptions and estimates contained in this report. Accordingly, no representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information and opinions contained in this report.

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Griffin Securities Equity Research 14 Adobe August 11, 2020

for the general information of clients of Griffin Securities. It does not take into account the particular investment objectives, financial situations, or needs of individual clients. Before acting on any advice or recommendation in this material, clients should consider whether it is suitable for their particular circumstances and, if necessary, seek professional advice. Certain transactions - including those involving futures, options, and other derivatives as well as non-investment-grade securities - give rise to substantial risk and are not suitable for all investors. The material is based on information that we consider reliable, but we do not represent that it is accurate or complete, and it should not be relied on as such. The information contained in this report is subject to change without notice and Griffin Securities assumes no responsibility to update the report. In addition, regulatory, compliance, or other reasons may prevent us from providing updates.

DISCLOSURES FOR OTHER COMPANIES MENTIONED IN THIS REPORT: To obtain applicable current disclosures in electronic format for the subject companies in this report, please refer to SEC Edgar filings at www.SEC.gov. In particular, for a description of risks and uncertainties related to subject companies’ businesses in this report, see the “Risk Factors” section in the SEC filings.

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