Adobe

Software - Application • Technology • San Jose, CA, United States • ADBE (NMS)

408 536 6000 345 Park Avenue, San Jose, CA 95110-2704, United States

Quarter: Q1 2025 Reported: March 12, 2025 Sentiment: Neutral

Adobe Inc. operates as a technology company worldwide. Its Digital Media segment offers products and services that enable individuals, teams, and enterprises to create, publish, and promote content; Document Cloud, a cloud-based document services platform; and Creative Cloud, a subscription service that allows subscribers to use its creative products and applications (apps) integrated with cloud-delivered services across various surfaces and platforms. This segment serves photographers, video editors, graphic and experience designers, game developers, content creators, students, marketers, knowledge workers, and consumers. The company's Digital Experience segment provides an integrated platform; and products, services, and solutions that enable brands and businesses to create, manage, execute, measure, monetize, and optimize customer experiences from analytics to commerce. This segment serves marketers, advertisers, agencies, publishers, merchandisers, merchants, web analysts, data scientists, developers, and executives across the C-suite. Its Publishing and Advertising segment offers e-learning, technical document publishing, web conferencing, document and forms platform, web application development, high-end printing, and Adobe Advertising solutions. It provides consulting, training, customer management, technical support, and learning services. The company offers its solutions to enterprise customers, and businesses and consumers; and licenses its products to end-user customers through app stores and website at adobe.com. It markets and distributes its products through distributors, retailers, software developers, mobile app stores, systems integrators, independent software vendors, value-added resellers, and original equipment and hardware manufacturers. The company has a strategic alliance with HUMAIN for the development of generative AI models and AI-powered applications. The company was formerly known as Adobe Systems Incorporated and changed its name to Adobe Inc. in October 2018. Adobe Inc. was founded in 1982 and is headquartered in San Jose, California.

Analysis Summary

Adobe's Q1 FY2025 earnings report, issued on March 12, 2025, primarily focused on the disclosure of its financial results via a press release (Exhibit 99.1). The accompanying document extensively clarifies Adobe's methodology for presenting non-GAAP financial measures, including adjusted revenue growth rates, operating income, net income, diluted EPS, operating margin, and tax rate. Management emphasizes that these non-GAAP metrics are crucial for internal operating decisions, budgeting, and assessing core profitability, as they exclude items like stock-based compensation, deferred compensation expenses, and amortization of intangibles. The company believes these exclusions offer greater transparency and facilitate comparisons with historical results and peer companies by focusing on cash-settled expenses and operational performance. However, the transcript explicitly states that these non-GAAP measures are not in accordance with GAAP and should be used in conjunction with GAAP measures, acknowledging their inherent limitations. No specific financial performance figures, strategic initiatives, forward guidance, competitive analysis, or analyst Q&A details were provided within this excerpt.

Key Highlights

• Adobe announced Q1 FY2025 financial results on March 12, 2025.
• Results were furnished via a press release (Exhibit 99.1).
• Extensive explanation provided for the use of non-GAAP financial measures.
• Non-GAAP measures exclude stock-based compensation, deferred compensation, and amortization of intangibles.
• Non-GAAP metrics are used for internal operating decisions, budgeting, and assessing core profitability.
• Acknowledgement that non-GAAP measures are not GAAP compliant and have limitations.

Financial Metrics

eps

N/A

YoY: N/A

revenue

N/A N/A

YoY: N/A

guidance

net income

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YoY: N/A

Stock Performance (90 Days)

Data through Dec 30, 2025

Positive Signals

• Commitment to transparency regarding non-GAAP measure calculations.
• Clear rationale provided for using non-GAAP metrics in operational decision-making.
• Emphasis on non-GAAP measures for assessing core profitability and investment strategies.
• Belief that non-GAAP measures offer meaningful supplemental information to investors.

Risks & Concerns

— Non-GAAP measures are not in accordance with GAAP and have inherent limitations.
— Non-GAAP measures may differ from those used by other companies, complicating peer comparisons.
— Exclusion of ongoing expenses (e.g., stock-based compensation) from non-GAAP results might not fully reflect operational costs.
— Reliance on non-GAAP measures without corresponding GAAP context could misrepresent financial performance.