Financial Data and Key Metrics Changes - Adobe achieved revenue of $5.71 billion in Q1 FY 2025, representing an 11% year-over-year growth [6][40] - GAAP earnings per share for the quarter was $4.14, while non-GAAP earnings per share was $5.08, reflecting a 13% year-over-year growth [6][40] - Cash flows from operations reached a record $2.48 billion, with remaining performance obligations growing 12% year-over-year to $19.69 billion [40][43] Business Line Data and Key Metrics Changes - Digital Media revenue was $4.23 billion, growing 12% year-over-year, with ending ARR of $17.63 billion, also up 12.6% year-over-year [15][40] - Digital Experience revenue was $1.41 billion, representing a 10% year-over-year growth, with subscription revenue growing 11% year-over-year to $1.3 billion [30][42] - The Creative and Marketing Professionals Group subscription revenue was $3.92 billion, reflecting a 10% year-over-year growth, while the Business Professionals and Consumers Group subscription revenue was $1.53 billion, showing a 15% year-over-year growth [42] Market Data and Key Metrics Changes - Strong performance was noted in emerging markets, with significant growth in both Creative Cloud and Document Cloud [15][16] - Acrobat's monthly active users grew by 23% year-over-year, and Express saw a 10x year-over-year engagement increase from Acrobat users [18][56] - The introduction of new offerings like Firefly services and the expansion of the partner ecosystem contributed to strong demand in the enterprise segment [27][60] Company Strategy and Development Direction - Adobe's strategy focuses on leveraging AI to enhance creativity and productivity across its product offerings, aiming to serve a broader customer base [8][14] - The company plans to integrate its creative and marketing solutions more closely, particularly through offerings like GenStudio [11][35] - Upcoming product innovations will be showcased at Adobe Summit, emphasizing the importance of generative AI in driving future growth [28][36] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the company's ability to navigate current macroeconomic conditions, citing a diverse business model [82] - The ongoing digital transformation across industries presents significant growth opportunities for Adobe's solutions [44][45] - The company reaffirmed its fiscal 2025 targets, indicating confidence in meeting the growing needs of its customer base [7][44] Other Important Information - Adobe's effective tax rate in Q1 was 17% on a GAAP basis and 18.5% on a non-GAAP basis [42] - The company entered into share repurchase agreements totaling $3.25 billion, with $14.4 billion remaining of its $25 billion authorization [43][71] Q&A Session Summary Question: When does AI become more material to revenue? - Management outlined the AI journey in three parts: innovation, tracking usage, and monetization, expressing confidence in the growth of AI-related revenue streams [47][48] Question: Can you provide more color on demand trends across Creative and Document Clouds? - Digital Media ARR grew by 12.6%, with strong performance in Acrobat and Express, driven by user engagement and conversion strategies [53][54] Question: Is the growth rate of Business Professionals and Consumers Group expected to catch up with Creative and Marketing Professionals Group? - Management acknowledged the potential for growth in the Creative and Marketing segment, emphasizing the untapped opportunities in that market [66][67] Question: How sustainable is the pace of share repurchases? - Management indicated a strong financial profile and a commitment to opportunistic share repurchases, reaffirming guidance for the year [71][72] Question: How does the current macroeconomic environment affect customer behavior? - Management noted that while customers are cautious, Adobe's diverse business model mitigates the impact of economic fluctuations [82]

[Adobe Q1 FY2025 Performance Overview](index=1&type=section&id=Adobe%20Q1%20FY2025%20Performance%20Overview) Adobe reported record Q1 FY2025 revenue and strong growth across Digital Media and Digital Experience segments [Financial Highlights](index=1&type=section&id=First%20Quarter%20Fiscal%20Year%202025%20Financial%20Highlights) Adobe reported record Q1 revenue of $5.71 billion, a 10% year-over-year increase, driven by strong performance across its business segments. The company achieved significant growth in earnings per share and generated record operating cash flows of $2.48 billion, while also reaffirming its full-year 2025 financial targets | Financial Metric | Q1 FY2025 | YoY Growth | Constant Currency Growth | | :--- | :--- | :--- | :--- | | Total Revenue | $5.71 billion | 10% | 11% | | GAAP Diluted EPS | $4.14 | - | - | | Non-GAAP Diluted EPS | $5.08 | - | - | | GAAP Operating Income | $2.16 billion | - | - | | Non-GAAP Operating Income | $2.72 billion | - | - | | Operating Cash Flows | $2.48 billion | - | - | - The company repurchased approximately **7.0 million shares** during the first quarter[6](index=6&type=chunk) - **Remaining Performance Obligations (RPO)** reached **$19.69 billion** by the end of the quarter[6](index=6&type=chunk) [Business Segment & Customer Group Highlights](index=1&type=section&id=First%20Quarter%20Fiscal%20Year%202025%20Business%20Segment%20Highlights) Both the Digital Media and Digital Experience segments posted double-digit year-over-year growth. Digital Media revenue grew 11% to $4.23 billion, while Digital Experience revenue increased 10% to $1.41 billion. A new disclosure for customer groups revealed that the Business Professionals and Consumers group subscription revenue grew by 15% YoY | Segment | Q1 FY2025 Revenue | YoY Growth | Constant Currency Growth | | :--- | :--- | :--- | :--- | | Digital Media | $4.23 billion | 11% | 12% | | Digital Experience | $1.41 billion | 10% | 10% | | Customer Group | Q1 FY2025 Subscription Revenue | YoY Growth | | :--- | :--- | :--- | | Business Professionals and Consumers | $1.53 billion | 15% | | Creative and Marketing Professionals | $3.92 billion | 10% | - **Digital Media Annualized Recurring Revenue (ARR)** grew to **$17.63 billion**, representing a **12.6% year-over-year increase**[6](index=6&type=chunk) - New AI-first standalone and add-on innovations exited the quarter with over **$125 million** in **ending ARR**[2](index=2&type=chunk) [Financial Outlook](index=3&type=section&id=Financial%20Targets) Adobe provided Q2 and reaffirmed full-year FY2025 financial targets, projecting continued revenue growth and strong EPS [Q2 Fiscal Year 2025 Targets](index=3&type=section&id=Q2%20Fiscal%20Year%202025%20Targets) Adobe projects total revenue for the second quarter of fiscal year 2025 to be between $5.77 billion and $5.82 billion, with targeted GAAP EPS of $3.80 to $3.85 and non-GAAP EPS of $4.95 to $5.00 | Q2 FY2025 Target | Range | | :--- | :--- | | Total Revenue | $5.77B - $5.82B | | Digital Media Segment Revenue | $4.27B - $4.30B | | Digital Experience Segment Revenue | $1.43B - $1.45B | | GAAP EPS | $3.80 - $3.85 | | Non-GAAP EPS | $4.95 - $5.00 | [Full Fiscal Year 2025 Targets](index=3&type=section&id=Full%20Fiscal%20Year%202025%20Targets) The company reaffirmed its full-year 2025 targets, anticipating total revenue in the range of $23.30 billion to $23.55 billion. Full-year GAAP EPS is expected to be between $15.80 and $16.10, with non-GAAP EPS projected at $20.20 to $20.50 | Full FY2025 Target | Range / Growth | | :--- | :--- | | Total Revenue | $23.30B - $23.55B | | Digital Media Segment Revenue | $17.25B - $17.40B | | Digital Media ending ARR growth | 11.0% **YoY** | | Digital Experience Segment Revenue | $5.80B - $5.90B | | GAAP EPS | $15.80 - $16.10 | | Non-GAAP EPS | $20.20 - $20.50 | [Corporate Updates](index=3&type=section&id=Corporate%20Updates) Adobe introduced new customer group disclosures and announced upcoming investor communications, including an Investor Meeting [New Customer Group Disclosure](index=3&type=section&id=Supplemental%20Disclosure%20for%20Customer%20Groups) To provide additional insight, Adobe has begun disclosing subscription revenue by two new customer groups: "Business Professionals and Consumers" and "Creative and Marketing Professionals". This new segmentation aims to offer greater clarity on revenue sources - The "**Business Professionals and Consumers Group**" includes subscription revenue from Document Cloud, Acrobat subscriptions in Creative Cloud, and Adobe Express subscriptions in Creative Cloud[7](index=7&type=chunk) - The "**Creative and Marketing Professionals Group**" comprises all subscription revenue from Digital Experience and the remaining subscription revenue from Creative Cloud[7](index=7&type=chunk) [Investor Communications](index=3&type=section&id=Investor%20Communications) Adobe announced it will host its Q1 FY2025 earnings conference call and will also hold an Investor Meeting at the Adobe Summit 2025 in Las Vegas to provide updates on its strategy, innovation, and financials - The company will webcast its Q1 FY2025 earnings conference call on March 12, 2025[9](index=9&type=chunk) - An Investor Meeting with financial analysts and investors is scheduled for March 18, 2025, at the Adobe Summit in Las Vegas[10](index=10&type=chunk) [Condensed Consolidated Financial Statements (Unaudited)](index=6&type=section&id=Condensed%20Consolidated%20Financial%20Statements%20(Unaudited)) Unaudited condensed consolidated financial statements detail Adobe's Q1 FY2025 income, balance sheet, and cash flow performance [Statements of Income](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Income) For the three months ended February 28, 2025, Adobe's total revenue increased to $5.71 billion from $5.18 billion in the prior-year period. Net income saw a substantial rise to $1.81 billion, compared to $620 million in the same quarter last year, which included a $1 billion acquisition termination fee | (In millions) | Three Months Ended Feb 28, 2025 | Three Months Ended Mar 1, 2024 | | :--- | :--- | :--- | | Total revenue | $5,714 | $5,182 | | Gross profit | $5,092 | $4,592 | | Operating income | $2,163 | $907 | | Net income | $1,811 | $620 | [Balance Sheets](index=7&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) As of February 28, 2025, Adobe's total assets were $29.96 billion, a slight decrease from $30.23 billion at the end of fiscal 2024. Total liabilities increased to $16.86 billion, while total stockholders' equity decreased to $13.10 billion, primarily due to treasury stock repurchases | (In millions) | February 28, 2025 | November 29, 2024 | | :--- | :--- | :--- | | Total current assets | $10,855 | $11,232 | | Total assets | $29,955 | $30,230 | | Total current liabilities | $9,163 | $10,521 | | Total liabilities | $16,860 | $16,125 | | Total stockholders' equity | $13,095 | $14,105 | [Statements of Cash Flows](index=8&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) The company generated $2.48 billion in net cash from operating activities during the first quarter, a significant increase from $1.17 billion in the prior-year period. Cash used for financing activities was $2.84 billion, largely due to $3.25 billion in common stock repurchases | (In millions) | Three Months Ended Feb 28, 2025 | Three Months Ended Mar 1, 2024 | | :--- | :--- | :--- | | Net cash provided by operating activities | $2,482 | $1,174 | | Net cash provided by (used for) investing activities | $(484) | $66 | | Net cash used for financing activities | $(2,841) | $(2,128) | | Net change in cash and cash equivalents | $(855) | $(887) | [Reconciliation of GAAP to Non-GAAP Financial Measures](index=9&type=section&id=Reconciliation%20of%20GAAP%20to%20Non-GAAP%20Financial%20Measures) This section reconciles Q1 FY2025 results and future financial targets from GAAP to non-GAAP measures [Q1 FY2025 Results Reconciliation](index=9&type=section&id=Q1%20FY2025%20Results%20Reconciliation) Adobe provides a reconciliation of its Q1 GAAP results to non-GAAP figures, adjusting for items such as stock-based compensation and amortization of intangibles. Non-GAAP operating income was $2.72 billion compared to GAAP operating income of $2.16 billion, and non-GAAP net income was $2.22 billion versus GAAP net income of $1.81 billion | (In millions, except per share data) | Q1 FY2025 GAAP | Q1 FY2025 Non-GAAP | | :--- | :--- | :--- | | Operating income | $2,163 | $2,715 | | Net income | $1,811 | $2,224 | | Diluted net income per share | $4.14 | $5.08 | [Financial Targets Reconciliation](index=10&type=section&id=Financial%20Targets%20Reconciliation) The report includes reconciliations for its Q2 and full-year 2025 financial targets from GAAP to non-GAAP. For the full year, the non-GAAP operating margin is targeted at approximately 46.0%, compared to a GAAP operating margin of 36.0%, with adjustments primarily for stock-based compensation and amortization | Q2 FY2025 Targets | GAAP | Non-GAAP | | :--- | :--- | :--- | | Diluted net income per share | $3.80 - $3.85 | $4.95 - $5.00 | | Operating margin | ~35.0% | ~45.0% | | Full FY2025 Targets | GAAP | Non-GAAP | | :--- | :--- | :--- | | Diluted net income per share | $15.80 - $16.10 | $20.20 - $20.50 | | Operating margin | ~36.0% | ~46.0% | [Use of Non-GAAP Financial Information](index=11&type=section&id=Use%20of%20Non-GAAP%20Financial%20Information) Adobe explains that it uses non-GAAP financial measures for internal planning, forecasting, and evaluating its ongoing operations. The company believes these measures provide investors with greater transparency and a better tool to evaluate operating results in the same manner as management - Management uses non-GAAP financial information to evaluate ongoing operations and for internal planning and forecasting[32](index=32&type=chunk) - Non-GAAP measures are presented to provide investors with an additional tool to evaluate Adobe's operating results, allowing for greater transparency with respect to key metrics used by management[32](index=32&type=chunk)[33](index=33&type=chunk)

Adobe Inc. ADBE will release its first-quarter financial results, after the closing bell, on Wednesday, March 12.Analysts expect the San Jose, California-based company to report quarterly earnings at $4.97 per share, up from $4.48 per share in the year-ago period. Adobe projects quarterly revenue of $5.66 billion, compared to $5.18 billion a year earlier, according to data from Benzinga Pro.On Dec. 11, 2024, Adobe reported fourth-quarter revenue of $5.61 billion, beating the consensus estimate of $5.54 bill ...

Adobe (NASDAQ: ADBE ) shares are down more than 20% over the last six months as the market has become concerned they are not going to be an AI winner. SharesThis account is managed by Noah's Arc Capital Management. Our goal is provide Wall Street level insights to main street investors. Our research focus is mainly on 20th century stocks (old economy) undergoing a 21st century transformation, but occasionally we'll write on companies that help transform 20th century firms as well. We look for innovations in ...

Core Viewpoint - Adobe has shown resilience in a challenging tech sector, but its growth prospects for fiscal 2025 appear weak, raising questions about its AI strategy and overall performance [1][6][10]. Group 1: Performance Overview - Adobe has outperformed other major tech stocks in 2025, despite a significant sell-off in 2024 where it lost over 25% of its value [2][3]. - The company has been growing annual sales in the low double digits and earnings in the low to mid double digits, with fiscal 2025 projections indicating the lowest annual revenue increase and nearly the lowest earnings growth in a decade [7][8]. Group 2: Financial Guidance - The midpoints of fiscal 2025 guidance are $23.43 billion in revenue and $20.35 in adjusted earnings per share (EPS), implying 8.9% year-over-year revenue growth and 10.5% adjusted EPS growth [5][8]. - The revenue growth forecast is significantly lower than historical rates, raising concerns about the effectiveness of Adobe's AI initiatives [6][10]. Group 3: AI Strategy and Market Position - Adobe has developed new AI tools but lacks a clear monetization roadmap compared to competitors like Salesforce, leading to uncertainty about the impact on its bottom line [3][4]. - The company is focusing on attracting new users and measuring engagement with its AI tools rather than increasing prices, which may not satisfy investors looking for immediate returns [9][10]. Group 4: Valuation and Investment Consideration - Despite recent underperformance, Adobe's stock valuation appears reasonable, with a forward price-to-earnings ratio of 21.9 based on adjusted fiscal 2025 EPS [11]. - The company remains a high-margin business generating substantial free cash flow, and its stock buybacks have reduced the share count by 9.7% over the last five years, making it a potential long-term buy for patient investors [10][11][12].

Core Insights - Adobe is a significant player in the creative software, productivity, and digital marketing sectors, operating on a subscription-based business model that is reliable and predictable [1] - The company is currently facing heightened competition from other large enterprises and AI productivity tools, which may impact its market position [1] Company Overview - Adobe's business model is subscription-based, providing a steady revenue stream [1] - The company is recognized for its strong presence in creative software and digital marketing [1] Competitive Landscape - Increased competition is emerging from both established companies and new AI productivity tools, posing challenges to Adobe's market share [1] Valuation - Adobe's valuation is described as very high, indicating potential concerns regarding its market pricing relative to its earnings and growth prospects [1]

Core Viewpoint - Adobe is expected to report its first-quarter fiscal 2025 results on March 12, with projected revenues and earnings showing positive growth trends compared to the previous year [1][2]. Revenue and Earnings Estimates - Adobe projects total revenues between $5.63 billion and $5.68 billion for Q1 fiscal 2025, with non-GAAP earnings expected between $4.95 and $5 per share [2]. - The Zacks Consensus Estimate for revenues is $5.65 billion, indicating a 9.11% growth from the previous year, while the consensus for earnings is $4.97 per share, reflecting a 10.94% increase [3]. Segment Performance - The Digital Media segment is anticipated to generate revenues between $4.17 billion and $4.2 billion, with a consensus estimate of $4.18 billion, suggesting a 9.6% year-over-year growth [5][6]. - Creative Cloud revenues are estimated at $3.33 billion, indicating an 8.5% year-over-year growth, while Document Cloud is expected to reach $855 million, implying a 14% growth [6]. - The Digital Experience segment is projected to generate revenues of $1.38-$1.40 billion, with subscription revenues expected at $1.27-$1.29 billion, reflecting an 8.5% and 10.8% year-over-year growth respectively [7]. Growth Drivers - Adobe's strong Generative AI portfolio and partnerships with major companies like Amazon, Microsoft, and Alphabet are expected to drive top-line growth [8]. - The launch of new AI models, including Firefly Image Model 3 and enhancements to existing tools, has improved user experiences for creative professionals [9]. - The adoption of Adobe Express by businesses and its integration into popular applications has expanded its customer reach [10]. Competitive Landscape - Adobe faces increasing competition in the Generative AI space, particularly from companies like OpenAI, which may impact its monetization efforts [12][22]. - Despite a 20% decline in Adobe shares over the past year, the broader technology sector has seen a return of 11.1% [13]. Valuation Metrics - Adobe's shares are currently trading at a forward 12-month price/sales ratio of 8.16X, which is higher than the sector average of 6.06X, indicating a stretched valuation [16]. Strategic Partnerships - Adobe's expanded partnerships, including the integration of its Experience Platform with Amazon Web Services and collaborations with Google and Microsoft, are key growth catalysts [20].

Core Insights - TransPerfect has announced a new GlobalLink integration for Adobe Journey Optimizer (AJO), enhancing personalized marketing campaigns across various channels [1][2] - The integration utilizes Adobe's Globalization Content Service, completing TransPerfect's support for the full Adobe Experience Cloud suite [3][4] - TransPerfect has been an Adobe partner for over 15 years, pioneering multiple integrations with Adobe products [4][5] Company Overview - TransPerfect is the world's largest provider of language and AI solutions, operating in over 140 cities and offering services in 200+ languages [6] - The company serves more than 6,000 global organizations with its GlobalLink technology, which simplifies multilingual content management [6] - TransPerfect is ISO 9001 and ISO 17100 certified, indicating a strong commitment to quality and client service [6]

Group 1: Stock Performance - Adobe Systems (ADBE) closed at $440.72, reflecting a +0.49% change from the previous trading day's closing, outperforming the S&P 500's daily loss of 1.76% [1] - Over the past month, ADBE shares gained 0.25%, surpassing the Computer and Technology sector's loss of 4.55% and the S&P 500's loss of 1.26% [1] Group 2: Upcoming Earnings Report - Adobe is scheduled to release its earnings on March 12, 2025, with projected EPS of $4.97, indicating a 10.94% increase compared to the same quarter of the previous year [2] - The consensus estimate for quarterly revenue is $5.65 billion, up 9.11% from the year-ago period [2] Group 3: Full-Year Estimates - Full-year Zacks Consensus Estimates for Adobe are earnings of $20.39 per share and revenue of $23.45 billion, representing year-over-year changes of +10.69% and +9.04%, respectively [3] Group 4: Analyst Estimates and Stock Outlook - Recent modifications to analyst estimates for Adobe reflect short-term business trends, with positive revisions indicating a favorable business outlook [4] - Estimate alterations are linked to stock price performance, and the Zacks Rank system is used to evaluate these changes [5] Group 5: Zacks Rank and Valuation - Adobe currently holds a Zacks Rank of 3 (Hold), with the Zacks Consensus EPS estimate remaining unchanged over the last 30 days [6] - The company is traded at a Forward P/E ratio of 21.5, which is a discount compared to the industry average Forward P/E of 27.77 [7] - Adobe's PEG ratio is 1.73, while the Computer - Software industry holds an average PEG ratio of 2.12 [7] Group 6: Industry Context - The Computer - Software industry is part of the Computer and Technology sector, holding a Zacks Industry Rank of 143, placing it in the bottom 44% of all industries [8] - Top 50% rated industries outperform the bottom half by a factor of 2 to 1 [8]

Group 1 - Adobe, known for its design tools like Photoshop and Illustrator, is currently experiencing low-double-digit growth, a significant decline from its previous high-growth status [1] - The stock is approximately 36% off its peak value, indicating a potential undervaluation in the market [1] Group 2 - The analysis emphasizes the importance of quantitative methods in identifying undervalued stocks across various industries, suggesting a data-driven approach to investment [1]