Adobe(US:ADBE)2025-06-25 20:02Financial Performance - Digital Media ARR reached $18.09 billion as of May 30, 2025, reflecting a 12.1% increase from $16.14 billion as of May 31, 2024[149] - Digital Media revenue for the three months ended May 30, 2025, was $4.35 billion, an increase of $437 million or 11% year-over-year[149] - Digital Experience revenue for the same period was $1.46 billion, up $130 million or 10% compared to the previous year[151] - Total revenue for the three months ended May 30, 2025, was $5,873 million, representing an 11% increase compared to $5,309 million for the same period in 2024[171] - Net income for the three months ended May 30, 2025, was $1.69 billion, an increase of $118 million or 8% year-over-year[168] Revenue Breakdown - Subscription revenue for the three months ended May 30, 2025, was $5.64 billion, representing an 11% increase from $5.06 billion in the same period last year[165] - Digital Media revenue increased by $437 million (11%) to $4,345 million for the three months ended May 30, 2025, while Digital Experience revenue rose by $130 million (10%) to $1,457 million[171] - Subscription revenue for Digital Media grew by 12% to $4,280 million for the three months ended May 30, 2025, driven by strong performance in Creative Cloud and Acrobat[172] - Total subscription revenue increased by 11% to $5,641 million for the three months ended May 30, 2025, compared to $5,060 million in the same period of 2024[172] - Americas region accounted for 60% of total revenue, with a 10% increase to $3,500 million for the three months ended May 30, 2025[175] Expenses and Costs - Cost of revenue increased to $638 million during the three months ended May 30, 2025, a rise of $40 million or 7% year-over-year[168] - Operating expenses for the same period were $3.13 billion, increasing by $300 million or 11% year-over-year[168] - Research and development expenses rose by 10% to $1,082 million for the three months ended May 30, 2025, reflecting increased compensation and hosting costs[183] - Sales and marketing expenses increased by 13% to $1,626 million for the three months ended May 30, 2025, primarily due to higher advertising and compensation costs[188] - Total operating expenses for the three months ended May 30, 2025, were $3,126 million, an 11% increase compared to $2,826 million in the same period of 2024[183] Cash Flow and Investments - Cash flows from operations for the six months ended May 30, 2025, were $4.67 billion, up $1.56 billion or 50% compared to the previous year[168] - Net cash provided by operating activities for the six months ended May 30, 2025, was $4.67 billion, compared to $3.11 billion for the same period in 2024[214] - Net cash used for investing activities was $762 million for the six months ended May 30, 2025, primarily due to purchases of short-term and long-term investments[215] - Net cash used for financing activities was $6.63 billion for the six months ended May 30, 2025, mainly due to common stock repurchases and repayment of notes[216] - As of May 30, 2025, cash and cash equivalents totaled $4.93 billion, down from $7.61 billion as of November 29, 2024[213] Taxation - Provision for income taxes for the three months ended May 30, 2025, was $410 million, an increase of 15% compared to $357 million for the same period in 2024[198] - The effective tax rate for the three months ended May 30, 2025, was 20%, up from 18% in the prior year, primarily due to increased net tax expense related to stock-based compensation[198] Strategic Focus - The company continues to focus on AI-powered product innovation to drive growth across its Digital Media and Digital Experience segments[144] - The company plans to continue significant investments in research and development to enhance offerings and maintain competitiveness in the market[187] Debt and Credit - The company has a $1.5 billion senior unsecured revolving credit agreement, with no outstanding borrowings as of May 30, 2025[222] - The stock repurchase program has $10.90 billion remaining under the authority granted in March 2024, with $6.75 billion spent on repurchases during the six months ended May 30, 2025[226] - The total valuation allowance for deferred tax assets was $779 million as of May 30, 2025, primarily related to certain state credits and capital loss carryforwards[200] - The company executed agreements that increased minimum purchase obligations by approximately $1.3 billion through December 2029[225] Interest and Financing - Interest expense increased by 66% to $68 million for the three months ended May 30, 2025, attributed to higher floating rates and average debt balances[193]