Why Is Adobe (ADBE) Down 3.3% Since Last Earnings Report?

Core Viewpoint - Adobe Systems has experienced a decline of approximately 3.3% in share price over the past month, underperforming the S&P 500 index [1][2] Financial Performance - Adobe reported Q4 fiscal 2025 non-GAAP earnings of $5.50 per share, exceeding estimates by 2.04% and reflecting a year-over-year increase of 14.3% [3] - Total revenues reached $6.194 billion, surpassing consensus estimates by 1.5% and showing a year-over-year growth of 10.5% [4] - Annualized recurring revenues (ARR) at the end of Q4 fiscal 2025 were $25.66 billion, indicating an 11.5% growth from the previous year [4] Revenue Breakdown - Subscription revenues constituted $5.989 billion, accounting for 96.7% of total revenues, with an 11.6% year-over-year increase [5] - Digital Media segment revenues were $4.62 billion, up 11% year over year, with an ARR of $19.2 billion [6] - Digital Experience revenues increased to $1.52 billion, reflecting a 9% year-over-year growth [7] Operating Metrics - Adobe's Q4 GAAP gross margin was 90.4%, expanding by 10 basis points year over year [9] - Operating expenses rose to $2.78 billion, up 12.6% year over year, representing 44.8% of total revenues [9] Balance Sheet and Cash Flow - As of November 28, 2025, cash and short-term investments totaled $6.6 billion, an increase from $5.94 billion [10] - Cash generated from operations was $3.16 billion in the reported quarter, compared to $2.2 billion in the previous quarter [10] Future Guidance - For Q1 fiscal 2026, Adobe anticipates total revenues between $6.25 billion and $6.30 billion, with non-GAAP earnings expected between $5.85 and $5.90 per share [12] - For fiscal 2025, total revenues are projected to be between $25.9 billion and $26.1 billion, with non-GAAP earnings expected between $23.30 and $23.50 per share [13] Market Sentiment - Recent estimates for Adobe have shown an upward trend, indicating positive investor sentiment [14] - Adobe currently holds a Zacks Rank 3 (Hold), suggesting an expectation of in-line returns in the coming months [16]