Adobe(US:ADBE)2026-01-15 22:01Financial Performance - Total Adobe ARR reached approximately $25.20 billion as of November 28, 2025, reflecting an 11.5% increase from $22.61 billion as of November 29, 2024[243]. - Digital Media ARR grew to $19.20 billion at the end of fiscal 2025, representing an 11.5% year-over-year growth from $17.22 billion[224]. - Digital Media segment revenue increased to $17.65 billion in fiscal 2025, up from $15.86 billion in fiscal 2024, marking an 11% year-over-year growth[224]. - Digital Experience revenue was $5.86 billion in fiscal 2025, up from $5.37 billion in fiscal 2024, representing a 9% year-over-year growth[226]. - Net income for fiscal 2025 was $7.13 billion, an increase of $1.57 billion or 28% compared to fiscal 2024[243]. - Total revenue for fiscal 2025 reached $23,769 million, an increase of 11% compared to $21,505 million in fiscal 2024[246]. Revenue Breakdown - Subscription revenue for fiscal 2025 was $22.90 billion, representing a 12% increase from $20.52 billion in fiscal 2024[239]. - Digital Media segment revenue grew by $1.79 billion to $17,649 million, representing an 11% increase from $15,864 million in fiscal 2024[246]. - Subscription revenue for Digital Media increased by 12% to $17,389 million, driven by strong performance in Creative Cloud Pro and Acrobat[247]. - Revenue from the Americas was $14,120 million, accounting for 59% of total revenue, with a 10% increase from $12,891 million in fiscal 2024[251]. Expenses and Costs - Cost of revenue for fiscal 2025 was $2.55 billion, which increased by $193 million or 8% compared to fiscal 2024[243]. - Operating expenses for fiscal 2025 were $12.51 billion, remaining relatively flat compared to fiscal 2024[243]. - Research and development expenses increased by 9% to $4,294 million, maintaining 18% of total revenue[259]. - Operating expenses totaled $12,512 million, a slight increase of 1% from $12,406 million in fiscal 2024[259]. - Interest expense rose by 56% to $263 million, primarily due to new senior notes issued in January 2025[267]. - Provision for income taxes increased by 17% to $1,604 million, with an effective tax rate of 18%[273]. Cash Flow and Investments - Cash flows from operations amounted to $10.03 billion during fiscal 2025, increasing by $1.98 billion or 25% compared to fiscal 2024[243]. - Net cash provided by operating activities for fiscal 2025 was $10.03 billion, an increase from $8.06 billion in fiscal 2024[292]. - Net cash used for investing activities in fiscal 2025 was $1.19 billion, primarily due to purchases of short-term and long-term investments[293]. - Net cash used for financing activities in fiscal 2025 was $11.06 billion, mainly due to common stock repurchases and repayment of notes[294]. Acquisitions and Agreements - The company entered into a definitive agreement to acquire Semrush Holdings, Inc. for approximately $1.9 billion, expected to close in the first half of fiscal 2026[299]. Financial Position - As of November 28, 2025, the company had $5.43 billion in cash and cash equivalents, down from $7.61 billion as of November 29, 2024[291]. - The company has a $1.5 billion senior unsecured revolving credit agreement, with no outstanding borrowings as of November 28, 2025[300]. - The stock repurchase program authorized up to $25 billion through March 14, 2028, with $11.28 billion spent on repurchases during fiscal 2025[305][306]. - The total valuation allowance for deferred tax assets was $806 million as of November 28, 2025, primarily related to certain U.S. state and federal credits and capital loss carryforwards[275]. Foreign Currency Exposure - For fiscal 2025, significant foreign currency revenue exposures include €3.43 billion in Euros, ¥163.83 billion in Japanese Yen, and £942 million in British Pounds[312]. - As of November 28, 2025, the gross notional amounts of outstanding foreign exchange contracts totaled $6.54 billion, with $3.27 billion in Euros and $884 million in Japanese Yen[312]. - A sensitivity analysis indicates that a 10% increase in the U.S. Dollar would increase the fair value of financial hedging instruments by $456 million[313]. - Long-term investment exposure in non-U.S. Dollar functional currency foreign subsidiaries totaled $1.32 billion as of November 28, 2025, with no hedging applied[314]. - The company does not use foreign exchange contracts for speculative trading or to entirely offset foreign currency exposure[315]. - Cash flow hedges for foreign currency revenue and expenses are utilized to mitigate risks, with maturities of up to 24 months[316]. Interest Rate Risk - As of November 28, 2025, the company had $1.16 billion in short-term investments, with a potential $4 million market value change from a 150 basis point shift in interest rates[322]. - The company has $6.15 billion of senior notes outstanding, with interest rate swaps converting $2.70 billion of fixed rates to floating rates[323]. - An immediate 50 basis point change in market interest rates would result in a $71 million change in the fair value of the hedged fixed-rate debt[323]. - The total carrying amount of senior notes was $6.21 billion, with a fair value of $6.18 billion based on observable market prices[324].