10-QPeriod: Q1 FY2025

ADOBE INC. Quarterly Report for Q1 Ended Feb 28, 2025

Filed March 26, 2025For Securities:ADBE

Summary

Adobe Inc. reported strong financial results for the quarter ending February 28, 2025, demonstrating robust growth across its key segments. Total revenue increased by 10% year-over-year to $5.71 billion, driven primarily by a 12% surge in subscription revenue, which now constitutes 96% of total revenue. The Digital Media segment, a significant contributor, saw revenue grow by 11% to $4.23 billion, with its Annualized Recurring Revenue (ARR) increasing by 12.6% to $17.63 billion. The Digital Experience segment also showed healthy growth, with revenue up 10% to $1.41 billion. Profitability was significantly boosted by a 192% increase in net income to $1.81 billion. This improvement was largely due to a favorable year-over-year comparison, as the prior year included a substantial $1 billion acquisition termination fee. Operating expenses decreased by 21%, primarily due to the absence of this one-time charge. The company also generated substantial operating cash flow of $2.48 billion, an increase of 111% year-over-year, highlighting strong operational performance and efficient cash generation. Adobe continued its commitment to returning capital to shareholders through a robust stock repurchase program, repurchasing $3.25 billion worth of common stock during the quarter.

Financial Highlights

53 data points
Beta

Revenue

$5.71B

89.1% Gross Margin

Net Income

$1.81B

31.7% Net Margin

EPS (Diluted)

$4.14

Total Assets

$29.95B

Cash & Equivalents

$6.76B

Free Cash Flow

$2.46B

Financial Statements
Beta
Revenue$5.71B
Cost of Revenue$622.00M
Gross Profit$5.09B
Operating Expenses$2.93B
Operating Income$2.16B
Net Income$1.81B
EPS (Basic)$4.15
EPS (Diluted)$4.14
Shares Outstanding (Basic)436.20M
Shares Outstanding (Diluted)437.60M

Key Highlights

  • 1Total revenue grew 10% year-over-year to $5.71 billion, with subscription revenue up 12% to $5.48 billion.
  • 2Digital Media segment revenue increased 11% to $4.23 billion, and Digital Media ARR grew 12.6% to $17.63 billion.
  • 3Digital Experience segment revenue increased 10% to $1.41 billion.
  • 4Net income surged 192% to $1.81 billion, benefiting from a favorable comparison to the prior year's acquisition termination fee.
  • 5Operating expenses decreased 21% year-over-year to $2.93 billion, primarily due to the absence of the prior year's $1 billion acquisition termination fee.
  • 6Operating cash flow increased significantly by 111% to $2.48 billion.
  • 7Adobe repurchased $3.25 billion of its common stock during the quarter as part of its ongoing capital return program.

Frequently Asked Questions

Adobe's primary revenue driver is subscription revenue, which accounted for 96% of total revenue in the quarter, growing 12% year-over-year to $5.48 billion. This reflects the company's successful transition to a subscription-based model across its Digital Media and Digital Experience segments.

Adobe's net income saw a substantial increase of 192% to $1.81 billion. This significant improvement was largely due to the absence of a $1 billion acquisition termination fee that was incurred in the prior year's quarter. Excluding this one-time item, underlying profitability drivers would require further analysis.

Adobe actively returns capital to shareholders through its stock repurchase program. In the current quarter, the company repurchased $3.25 billion of its common stock, demonstrating a commitment to enhancing shareholder value and managing dilution.

Adobe is actively integrating AI, particularly generative AI, across its product portfolio. Examples include Adobe Firefly powering generative AI features in Digital Media apps like Photoshop and Express, and the Acrobat AI Assistant for enhanced document experiences. The company views AI as a key driver for innovation and customer value across both its Digital Media and Digital Experience segments.