Adobe (Nasdaq:ADBE) today reported financial results for its
second quarter fiscal year 2025 ended May 30, 2025.
“Our strategy to deliver ground-breaking innovation for Business
Professionals and Consumers, and Creative and Marketing
Professionals is delighting customers and we are pleased to raise
Adobe’s FY25 revenue target,” said Shantanu Narayen, chair and CEO,
Adobe. “Adobe’s AI innovation is transforming industries enabling
individuals and enterprises to achieve unprecedented levels of
creativity.”
“As a result of us driving strong performance in the first half
of the year, we are pleased to raise Adobe’s FY25 total revenue and
EPS targets,” said Dan Durn, executive vice president and CFO,
Adobe. “We continue to invest in AI innovation across our customer
groups to enhance value realization and expand the universe of
customers we serve.”
Second Quarter Fiscal Year 2025 Financial Highlights
- Adobe achieved record revenue of $5.87 billion in its second
quarter of fiscal year 2025, which represents 11 percent
year-over-year growth as reported and in constant currency. Diluted
earnings per share was $3.94 on a GAAP basis and $5.06 on a
non-GAAP basis.
- GAAP operating income in the second quarter was $2.11 billion
and non-GAAP operating income was $2.67 billion. GAAP net income
was $1.69 billion and non-GAAP net income was $2.17 billion.
- Cash flows from operations were $2.19 billion.
- Exiting the quarter, Remaining Performance Obligations (“RPO”)
were $19.69 billion, and Current Remaining Performance Obligations
(“cRPO”) were 67 percent.
- Adobe repurchased approximately 8.6 million shares during the
quarter.
Second Quarter Fiscal Year 2025 Business Segment
Highlights
- Digital Media segment revenue was $4.35 billion, which
represents 11 percent year-over-year growth, or 12 percent in
constant currency. Digital Media Annualized Recurring Revenue
(“ARR”) exiting the quarter was $18.09 billion, representing 12.1
percent year-over-year growth.
- Digital Experience segment revenue was $1.46 billion,
representing 10 percent year-over-year growth as reported and in
constant currency. Digital Experience subscription revenue was
$1.33 billion, representing 11 percent year-over-year growth as
reported and in constant currency.
Customer Group Supplemental Disclosure
- Business Professionals and Consumers Group subscription revenue
was $1.60 billion, which represents 15 percent year-over-year
growth as reported and in constant currency.
- Creative and Marketing Professionals Group subscription revenue
was $4.02 billion, which represents 10 percent year-over-year
growth, or 11 percent in constant currency.
Financial Targets
The following table summarizes Adobe’s third quarter fiscal year
2025 targets, which assumes current macroeconomic conditions1:
Total revenue
$5.875 billion to $5.925
billion
Digital Media segment revenue
$4.37 billion to $4.40
billion
Digital Experience segment
revenue
$1.45 billion to $1.47
billion
Digital Experience subscription
revenue
$1.35 billion to $1.36
billion
Earnings per share
GAAP: $4.00 to $4.05
Non-GAAP: $5.15 to $5.20
1
Targets assume non-GAAP operating
margin of ~45.5 percent, non-GAAP tax rate of ~18.5 percent and
diluted share count of ~425 million for third quarter fiscal year
2025.
The following updated table summarizes Adobe’s fiscal year 2025
targets, which assumes current macroeconomic conditions2:
Total revenue
$23.50 billion to $23.60
billion
Digital Media segment revenue
$17.45 billion to $17.50
billion
Digital Media ending ARR
growth
11.0% year over year
Digital Experience segment
revenue
$5.80 billion to $5.90
billion
Digital Experience subscription
revenue
$5.375 billion to $5.425
billion
Earnings per share
GAAP: $16.30 to $16.50
Non-GAAP: $20.50 to $20.70
2
Targets assume non-GAAP operating
margin of ~46 percent, non-GAAP tax rate of ~18.5 percent and
diluted share count of ~428 million for fiscal year 2025.
Adobe to Host Conference Call
Adobe will webcast its second quarter fiscal year 2025 earnings
conference call today at 2:00 p.m. Pacific Time from its investor
relations website: http://www.adobe.com/ADBE. Earnings documents,
including Adobe management’s prepared conference call remarks with
slides and an investor datasheet, are posted to Adobe’s Investor
Relations Website in advance of the conference call for
reference.
Forward-Looking Statements, Non-GAAP and Other
Disclosures
In addition to historical information, this press release
contains “forward-looking statements” within the meaning of
applicable securities laws, including statements related to our
business, strategy, artificial intelligence (“AI”) and innovation
momentum; our market and AI opportunity and future growth; market
and AI trends; current macroeconomic conditions; fluctuations in
foreign currency exchange rates; strategic investments; customer
success and groups; revenue; operating margin; operating
efficiencies; annualized recurring revenue; tax rate; earnings per
share; and share count. Each of the forward-looking statements we
make in this press release involves risks, uncertainties and
assumptions based on information available to us as of the date of
this press release. Such risks and uncertainties, many of which
relate to matters beyond our control, could cause actual results to
differ materially from these forward-looking statements. Factors
that might cause or contribute to such differences include, but are
not limited to: failure to innovate effectively and meet customer
needs; issues relating to development and use of AI; failure to
compete effectively; damage to our reputation or brands; failure to
realize the anticipated benefits of investments or acquisitions;
service interruptions or failures in information technology systems
by us or third parties; security incidents; failure to effectively
develop, manage and maintain critical third-party business
relationships; risks associated with being a multinational
corporation and adverse macroeconomic conditions; complex sales
cycles; failure to recruit and retain key personnel; litigation,
regulatory inquiries and intellectual property infringement claims;
changes in, and compliance with, global laws and regulations,
including those related to information security and privacy;
failure to protect our intellectual property; changes in tax
regulations; complex government procurement processes; risks
related to fluctuations in or the timing of revenue recognition
from our subscription offerings; fluctuations in foreign currency
exchange rates; impairment charges; our existing and future debt
obligations; catastrophic events; and fluctuations in our stock
price. Further information on these and other factors are discussed
in the section titled “Risk Factors” in Adobe’s most recently filed
Annual Report on Form 10-K and Adobe's most recently filed
Quarterly Reports on Form 10-Q. The risks described in this press
release and in Adobe’s filings with the U.S. Securities and
Exchange Commission should be carefully reviewed.
Undue reliance should not be placed on the financial information
set forth in this press release, which reflects estimates based on
information available at this time. These amounts could differ from
actual reported amounts stated in Adobe’s Quarterly Report on Form
10-Q for our fiscal quarter ended May 30, 2025, which Adobe expects
to file in June 2025. Adobe assumes no obligation to, and does not
currently intend to, update these forward-looking statements.
A reconciliation between GAAP and non-GAAP earnings results and
financial targets and a statement regarding use of non-GAAP
financial information are provided at the end of this press release
and on Adobe’s investor relations website.
About Adobe
Adobe is changing the world through personalized digital
experiences. For more information, visit www.adobe.com.
©2025 Adobe. All rights reserved. Adobe, Creative Cloud,
Document Cloud and the Adobe logo are either registered trademarks
or trademarks of Adobe (or one of its subsidiaries) in the United
States and/or other countries. All other trademarks are the
property of their respective owners.
Condensed Consolidated Statements of
Income
(In millions, except per share data;
unaudited)
Three Months Ended
Six Months Ended
May 30, 2025
May 31, 2024
May 30, 2025
May 31, 2024
Revenue:
Subscription
$
5,641
$
5,060
$
11,124
$
9,976
Product
88
104
183
223
Services and other
144
145
280
292
Total revenue
5,873
5,309
11,587
10,491
Cost of revenue:
Subscription
505
456
995
911
Product
6
8
12
13
Services and other
127
134
253
264
Total cost of revenue
638
598
1,260
1,188
Gross profit
5,235
4,711
10,327
9,303
Operating expenses:
Research and development
1,082
984
2,108
1,923
Sales and marketing
1,626
1,445
3,121
2,797
General and administrative
377
355
744
707
Acquisition termination fee
—
—
—
1,000
Amortization of intangibles
41
42
82
84
Total operating expenses
3,126
2,826
6,055
6,511
Operating income
2,109
1,885
4,272
2,792
Non-operating income (expense):
Interest expense
(68
)
(41
)
(130
)
(68
)
Investment gains (losses), net
2
4
8
22
Other income (expense), net
58
82
133
152
Total non-operating income (expense),
net
(8
)
45
11
106
Income before income taxes
2,101
1,930
4,283
2,898
Provision for income taxes
410
357
781
705
Net income
$
1,691
$
1,573
$
3,502
$
2,193
Basic net income per share
$
3.95
$
3.50
$
8.10
$
4.86
Shares used to compute basic net income
per share
428
449
432
451
Diluted net income per share
$
3.94
$
3.49
$
8.08
$
4.83
Shares used to compute diluted net income
per share
429
451
433
454
Condensed Consolidated Balance
Sheets
(In millions; unaudited)
May 30, 2025
November 29, 2024
ASSETS
Current assets:
Cash and cash equivalents
$
4,931
$
7,613
Short-term investments
782
273
Trade receivables, net of allowances for
doubtful accounts of $16 and $14, respectively
1,735
2,072
Prepaid expenses and other current
assets
1,530
1,274
Total current assets
8,978
11,232
Property and equipment, net
1,890
1,936
Operating lease right-of-use assets,
net
259
281
Goodwill
12,830
12,788
Other intangibles, net
631
782
Deferred income taxes
1,984
1,657
Other assets
1,535
1,554
Total assets
$
28,107
$
30,230
LIABILITIES AND STOCKHOLDERS’
EQUITY
Current liabilities:
Trade payables
$
360
$
361
Accrued expenses and other current
liabilities
2,256
2,336
Debt
—
1,499
Deferred revenue
6,220
6,131
Income taxes payable
129
119
Operating lease liabilities
74
75
Total current liabilities
9,039
10,521
Long-term liabilities:
Debt
6,166
4,129
Deferred revenue
114
128
Income taxes payable
477
548
Operating lease liabilities
323
353
Other liabilities
540
446
Total liabilities
16,659
16,125
Stockholders’ equity:
Preferred stock
—
—
Common stock
—
—
Additional paid-in capital
14,375
13,419
Retained earnings
41,744
38,470
Accumulated other comprehensive income
(loss)
(333
)
(201
)
Treasury stock, at cost
(44,338
)
(37,583
)
Total stockholders’ equity
11,448
14,105
Total liabilities and stockholders’
equity
$
28,107
$
30,230
Condensed Consolidated Statements of
Cash Flows
(In millions; unaudited)
Three Months Ended
May 30, 2025
May 31, 2024
Cash flows from operating activities:
Net income
$
1,691
$
1,573
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, amortization and
accretion
209
214
Stock-based compensation
481
467
Other non-cash adjustments
(101
)
(99
)
Changes in deferred revenue
(156
)
(424
)
Changes in other operating assets and
liabilities
67
209
Net cash provided by operating
activities
2,191
1,940
Cash flows from investing activities:
Purchases, sales and maturities of
short-term investments, net
(96
)
163
Purchases of property and equipment
(47
)
(41
)
Purchases and sales of long-term
investments, intangibles and other assets, net
(135
)
(11
)
Net cash provided by (used for) investing
activities
(278
)
111
Cash flows from financing activities:
Repurchases of common stock
(3,500
)
(2,500
)
Taxes paid related to net share settlement
of equity awards, net of proceeds from treasury stock
re-issuances
(112
)
(135
)
Proceeds from issuance of debt
—
1,997
Other financing activities, net
(176
)
(4
)
Net cash used for financing activities
(3,788
)
(642
)
Effect of exchange rate changes on cash
and cash equivalents
48
(3
)
Net change in cash and cash
equivalents
(1,827
)
1,406
Cash and cash equivalents at beginning of
period
6,758
6,254
Cash and cash equivalents at end of
period
$
4,931
$
7,660
Non-GAAP Results
The following table shows Adobe’s GAAP results reconciled to
non-GAAP results included in this release.
(In millions, except per share data)
Three Months Ended
May 30, 2025
May 31, 2024
February 28,
2025
Operating income:
GAAP operating income
$
2,109
$
1,885
$
2,163
Stock-based and deferred compensation
expense
482
472
469
Amortization of intangibles
83
84
83
Non-GAAP operating income
$
2,674
$
2,441
$
2,715
Net income:
GAAP net income
$
1,691
$
1,573
$
1,811
Stock-based and deferred compensation
expense
482
472
469
Amortization of intangibles
83
84
83
Investment (gains) losses, net
(2
)
(4
)
(6
)
Income tax adjustments
(83
)
(102
)
(133
)
Non-GAAP net income
$
2,171
$
2,023
$
2,224
Diluted net income per share:
GAAP diluted net income per share
$
3.94
$
3.49
$
4.14
Stock-based and deferred compensation
expense
1.12
1.04
1.07
Amortization of intangibles
0.19
0.19
0.19
Investment (gains) losses, net
—
(0.01
)
(0.01
)
Income tax adjustments
(0.19
)
(0.23
)
(0.31
)
Non-GAAP diluted net income per share
$
5.06
$
4.48
$
5.08
Shares used to compute diluted net income
per share
429
451
438
The following table shows Adobe’s second quarter fiscal year
2025 GAAP tax rate reconciled to the non-GAAP tax rate included in
this release.
Second Quarter Fiscal
2025
Effective income tax rate:
GAAP effective income tax rate
19.5
%
Income tax adjustments
1.5
Stock-based and deferred compensation
expense
(2.1
)
Amortization of intangibles
(0.4
)
Non-GAAP effective income tax rate (*)
18.5
%
(*)
Represents Adobe’s fixed
long-term non-GAAP tax rate based on projections and currently
available information through fiscal 2025
Reconciliation of GAAP to Non-GAAP Financial Targets and
Assumptions
The following tables show Adobe's third quarter fiscal year 2025
financial targets and assumptions reconciled to non-GAAP financial
targets and assumptions included in this release.
(Shares in millions)
Third Quarter Fiscal
2025
Low
High
Diluted net income per share:
GAAP diluted net income per share
$
4.00
$
4.05
Stock-based and deferred compensation
expense
1.19
1.19
Amortization of intangibles
0.19
0.19
Income tax adjustments
(0.23
)
(0.23
)
Non-GAAP diluted net income per share
$
5.15
$
5.20
Shares used to compute diluted net income
per share
425
425
Third Quarter Fiscal
2025
Operating margin:
GAAP operating margin
36.0
%
Stock-based and deferred compensation
expense
8.2
Amortization of intangibles
1.3
Non-GAAP operating margin
45.5
%
Third Quarter Fiscal
2025
Effective income tax rate:
GAAP effective income tax rate
19.0
%
Stock-based and deferred compensation
expense
(1.7
)
Amortization of intangibles
(0.3
)
Income tax adjustments
1.5
Non-GAAP effective income tax rate (*)
18.5
%
(*)
Represents Adobe’s fixed
long-term non-GAAP tax rate based on projections and currently
available information through fiscal 2025
Reconciliation of GAAP to Non-GAAP Financial Targets and
Assumptions (continued)
The following tables show Adobe's updated annual fiscal year
2025 financial targets and assumptions reconciled to non-GAAP
financial targets and assumptions included in this release.
(Shares in millions)
Fiscal Year 2025
Low
High
Diluted net income per share:
GAAP diluted net income per share
$
16.30
$
16.50
Stock-based and deferred compensation
expense
4.56
4.56
Amortization of intangibles
0.72
0.72
Income tax adjustments
(1.08
)
(1.08
)
Non-GAAP diluted net income per share
$
20.50
$
20.70
Shares used to compute diluted net income
per share
428
428
Fiscal Year 2025
Operating margin:
GAAP operating margin
36.0
%
Stock-based and deferred compensation
expense
8.7
Amortization of intangibles
1.3
Non-GAAP operating margin
46.0
%
Fiscal Year 2025
Effective income tax rate:
GAAP effective income tax rate
18.0
%
Stock-based and deferred compensation
expense
(1.7
)
Amortization of intangibles
(0.3
)
Income tax adjustments
2.5
Non-GAAP effective income tax rate (*)
18.5
%
(*)
Represents Adobe’s fixed
long-term non-GAAP tax rate based on projections and currently
available information through fiscal 2025
Use of Non-GAAP Financial Information
Adobe continues to provide all information required in
accordance with GAAP, but believes evaluating its ongoing operating
results may not be as useful if an investor is limited to reviewing
only GAAP financial measures. Adobe uses non-GAAP financial
information to evaluate its ongoing operations and for internal
planning and forecasting purposes. Adobe's management does not
itself, nor does it suggest that investors should, consider such
non-GAAP financial measures in isolation from, or as a substitute
for, financial information prepared in accordance with GAAP. Adobe
presents such non-GAAP financial measures in reporting its
financial results to provide investors with an additional tool to
evaluate Adobe's operating results. Adobe believes these non-GAAP
financial measures are useful because they allow for greater
transparency with respect to key metrics used by management in its
financial and operational decision-making. This allows
institutional investors, the analyst community and others to better
understand and evaluate Adobe’s operating results and future
prospects in the same manner as management.
Adobe's management believes it is useful for itself and
investors to review, as applicable, both GAAP information as well
as non-GAAP measures, which may exclude items such as stock-based
and deferred compensation expenses, amortization of intangibles,
investment gains and losses, income tax adjustments and other items
that are not considered part of Adobe’s ongoing operations, and the
income tax effect of the non-GAAP pre-tax adjustments from the
provision for income taxes. Adobe uses these non-GAAP measures in
order to assess the performance of Adobe's business and for
planning and forecasting in subsequent periods. Whenever such a
non-GAAP measure is used, Adobe provides a reconciliation of the
non-GAAP financial measure to the most closely applicable GAAP
financial measure. Investors are encouraged to review the related
GAAP financial measures and the reconciliation of these non-GAAP
financial measures to their most directly comparable GAAP financial
measure as detailed above.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20250612259889/en/
Investor Relations Contact Steve Day Adobe ir@adobe.com
Public Relations Contact Ashley Levine Adobe
adobepr@adobe.com
Adobe (NASDAQ:ADBE)
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