ADBE Software - Infrastructure
Adobe Inc.
Adobe is a San Jose, California-based software company whose products span creativity (Photoshop, Illustrator, Premiere and the rest of Creative Cloud, Firefly generative AI models), document productivity (Acrobat, Adobe Express), and marketing (Adobe Experience Platform, GenStudio). 96% of its FY2025 revenue of $23.8 billion came from subscriptions, and annualized recurring revenue (ARR) reached $25.2 billion. It reports three segments — Digital Media (74% of revenue), Digital Experience (25%), and Publishing and Advertising (1%) — and sells to two customer groups: Business Professionals & Consumers, and Creative & Marketing Professionals.
Last updated
Analysis last edited: October 3, 2026 · Financial data fetched: October 3, 2026 11:14 (SEC EDGAR) · Source 10-K filed: January 15, 2026
Next update expectedAfter FY2026’s 10-K is filed (roughly 60–90 days after fiscal year end (sooner for larger filers)), financials and analysis will be refreshed.
01
Company profile
- Legal name
- ADOBE INC.
- Headquarters
- SAN JOSE, CA
- Incorporated in
- Delaware
- Fiscal year end
- 11/27
- Exchange & ticker
- NASDAQ: ADBE
- Industry
- Software - Infrastructure
- CIK
- 796343
- Website
- https://www.adobe.com/ ↗
Workforce (as of FY2025 year-end)
Employees
31,360
Source: Form 10-K (FY2025) cover page and business description
02
Earnings calendar
When the company reports each quarter: the quarter-end date, the day results were released, and when the 10-Q or 10-K was filed.
Next report
Q4 FY2026
Quarter end: November 2026. In past years, Q4 results were released 12 days after quarter end (Dec 10, 2025; Dec 11, 2024; Dec 13, 2023). No date has been announced in the sources this site uses.
Reporting pattern
- Fiscal year ends around November 27.
- Reports four times a year: three quarterly reports (10-Q) and an annual report (10-K) for Q4.
- Earnings releases came 12–13 days after quarter end over the last 12 quarters.
| Quarter | Quarter ended | Earnings release (8-K) | Report filed (10-Q / 10-K) |
|---|---|---|---|
| Q3 FY2026 | Aug 28, 2026 | Sep 10, 2026 (+13 days) | Sep 22, 2026 10-Q (+25 days) |
| Q2 FY2026 | May 29, 2026 | Jun 11, 2026 (+13 days) | Jun 15, 2026 10-Q (+17 days) |
| Q1 FY2026 | Feb 27, 2026 | Mar 12, 2026 (+13 days) | Mar 25, 2026 10-Q (+26 days) |
| Q4 FY2025 | Nov 28, 2025 | Dec 10, 2025 (+12 days) | Jan 15, 2026 10-K (+48 days) |
| Q3 FY2025 | Aug 29, 2025 | Sep 11, 2025 (+13 days) | Sep 24, 2025 10-Q (+26 days) |
| Q2 FY2025 | May 30, 2025 | Jun 12, 2025 (+13 days) | Jun 25, 2025 10-Q (+26 days) |
| Q1 FY2025 | Feb 28, 2025 | Mar 12, 2025 (+12 days) | Mar 26, 2025 10-Q (+26 days) |
| Q4 FY2024 | Nov 29, 2024 | Dec 11, 2024 (+12 days) | Jan 13, 2025 10-K (+45 days) |
| Q3 FY2024 | Aug 30, 2024 | Sep 12, 2024 (+13 days) | Sep 25, 2024 10-Q (+26 days) |
| Q2 FY2024 | May 31, 2024 | Jun 13, 2024 (+13 days) | Jun 26, 2024 10-Q (+26 days) |
| Q2 FY2024 | Mar 1, 2024 | Mar 14, 2024 (+13 days) | Mar 27, 2024 10-Q (+26 days) |
| Q4 FY2023 | Dec 1, 2023 | Dec 13, 2023 (+12 days) | Jan 17, 2024 10-K (+47 days) |
Source: SEC EDGAR filing history. Release dates are the dates the earnings release was furnished to the SEC on Form 8-K (Item 2.02), which is normally the day results are announced. Fiscal years are labeled by the calendar year in which they end.
03
Flagship products & services
Digital Media
Creative Cloud and Firefly
Examples: Photoshop, Lightroom, Illustrator, Premiere, Firefly
Professional creative apps and commercially safe generative AI models.
Digital Media
Acrobat and Adobe Express
Examples: Acrobat Studio, Acrobat Pro, Acrobat Reader, Acrobat AI Assistant, Express
Document productivity and quick content creation; the Business Professionals & Consumers group grew 15% in FY2025.
Digital Experience
Adobe Experience Platform and GenStudio
Examples: Experience Platform and apps, GenStudio, Firefly Services
Enterprise marketing and content supply chain software.
Products are from the FY2025 Form 10-K's Item 1 and MD&A.
04
Recent strategic focus
FY2025–2026 capital allocation and acquisitions, from the 10-K and 10-Q.
Record buybacks
Adobe paid $11.28B for repurchases in FY2025; $5.90B remained under its March 2024 $25B authorization (through March 14, 2028) after a $2.5B arrangement entered in September 2025.
Source: Form 10-K (FY2025) MD&A
Buying search and brand-visibility tools
Adobe completed the $1.87B Semrush acquisition on April 28, 2026, saying it enhances its ability to serve marketers with search engine optimization, generative engine optimization, and agentic search optimization.
Source: Form 10-Q (Q3 FY2026)
Capex ÷ D&A (FY2025)
0.22x
Below depreciation — investment is being pared back
formulacapital expenditures ÷ depreciation & amortization
e.g.$179M ÷ $818M = 0.22x
termsCapital expenditures (capex) · Depreciation & amortization (D&A)
R&D-to-revenue ratio (FY2025)
18.1%
formularesearch & development expense ÷ revenue × 100
e.g.$4,294M ÷ $23,769M × 100 = 18.1%
M&A spend (5-year total)
$2.83B
Latest year: $17M
Cash-flow-statement spending on acquisitions, net of cash acquired
Where the money goes, over time
Unit: $M. Capex went from $348M in FY2021 to $179M in FY2025
- Capex
- R&D
- M&A spend
formulacapital expenditures ÷ depreciation & amortization
termsCapital expenditures (capex) · Depreciation & amortization (D&A)
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2026-01-15
05
Key figures at a glance
FY2021–FY2025, 5 years.
Revenue (FY2025)
$23.77B
As reported in the 10-K
Revenue CAGR (4 years)
+10.8%▲favorable
formula(last-period revenue ÷ first-period revenue) ^ (1 ÷ years) − 1
e.g.($23,769M ÷ $15,785M) ^ (1÷4) − 1 = 10.8%
termsCAGR · ^ (exponent) · Revenue (net sales)
Operating margin (FY2025)
36.6%
-0.1pt vs. 4 years ago
formulaoperating income ÷ revenue × 100
e.g.$8,706M ÷ $23,769M × 100 = 36.6%
ROE (FY2025)
55.4%▲favorable
5-year average: 38.6%
As reported in the 10-K
P/B (FY2025 end)
11.38x
formulaP/E × EPS ÷ BVPS (= period-end share price ÷ book value per share)
e.g.19.2x × $16.70 ÷ $28.14 = 11.38x
Period-end (fiscal year-end) value, not today's P/B
EV/EBITDA (FY2025 end)
14.4x
formula(market cap + interest-bearing debt − cash and equivalents) ÷ (operating income + depreciation & amortization)
e.g.($136,682M + $6,210M − $5,431M) ÷ ($8,706M + $818M) = 14.4x
termsEV/EBITDA · Market capitalization · Interest-bearing debt · EBITDA · Depreciation & amortization (D&A)
Period-end (fiscal year-end) value, not today's multiple
- ▲
Revenue grew +10.8% a year over 4 years (strong growth)
From $15.79B in FY2021 to $23.77B in FY2025. The annualized rate (CAGR) makes it possible to compare growth pace across companies of different sizes.
- ―
Operating margin held roughly flat: 36.8% → 36.6%
How much operating profit is left per $100 of revenue. It moved -0.1 points over 4 years — pricing power, cost control, and product mix all show up here.
- ―
Equity ratio is 39.4% (a middling level)
The share of total assets funded by equity rather than debt. 50%+ is often read as low bankruptcy risk, though the right level varies by industry (real estate and leasing run lower, for instance).
- ▲
Free cash flow was positive in 5 of 5 years
Operating cash flow minus capital expenditures: the cash left over after funding the business’s own investment, available for dividends, buybacks, acquisitions, or debt paydown. A negative year can mean heavy investment, or weak core earnings — worth distinguishing.
- ▲
ROE averaged 38.6% over 5 years (latest: 55.4%)
How much profit was generated on shareholders’ equity. Roughly 10%+ is often cited as solid for a U.S. company, though this varies a lot by industry and capital intensity.
06
Business model
Digital Media (Creative Cloud, Acrobat, Express)
Subscription software for creating content and working with documents: Creative Cloud apps such as Photoshop, Lightroom, Illustrator, and Premiere; Firefly generative AI; and Acrobat and Adobe Express for business professionals and consumers, including free tiers such as Acrobat Reader.
01 what it draws on
Inputs & resources
- R&D of $4.3B in FY2025
- Firefly models trained on licensed content and public domain assets
- An installed base of individual and team subscribers
02 what it does
Activities
- Developing desktop, web, and mobile apps with AI features
- Selling subscriptions directly online and through distributors, retailers, app stores, and resellers
03 who it serves
Customers
- Creators and creative professionals
- Business professionals and consumers
- Enterprises buying team licenses
04 how money comes in
How it earns
- Subscriptions recognized ratably over the subscription term
- Freemium entry points converting to paid plans
Digital Media (Creative Cloud, Acrobat, Express): how it makes money
- Digital Media revenue was $17.6B in FY2025 (+11%) at a 95% gross margin.
- Digital Media ARR reached $19.2B at FY2025 year-end, up about 11%.
- Business Professionals & Consumers subscription revenue (Acrobat and Express) grew 15% to $6.5B, faster than the creative and marketing side (+11%).
Digital Experience (Experience Platform, GenStudio)
Enterprise software for marketers to manage content, data, and customer journeys: Adobe Experience Platform and apps, and GenStudio for content supply chains. Revenue is mostly subscriptions, plus services.
01 what it draws on
Inputs & resources
- Enterprise sales teams and systems-integrator partners
- Acquired platforms such as Marketo, Magento, Workfront, and Semrush
02 what it does
Activities
- Selling and implementing marketing, analytics, and content-management platforms
- Building AI agents on the Adobe Experience Platform
03 who it serves
Customers
- Marketing organizations at large enterprises
04 how money comes in
How it earns
- Subscription revenue
- Services and other revenue
Digital Experience (Experience Platform, GenStudio): how it makes money
- Digital Experience revenue was $5.9B in FY2025 (+9%) at a 72% gross margin.
- The 10-K notes some enterprise solutions have extended and complex sales cycles.
Revenue by segment (FY2025)
Unit: $M — bar length = revenue, (%) = share of total company revenue, margin = segment profit ÷ segment revenue × 100
Digital Media
17,649 (74%)profit 16,808 · margin 95.2%
Digital Experience
5,864 (25%)profit 4,239 · margin 72.3%
Publishing and Advertising
256 (1%)profit 171 · margin 66.8%
Source: Form 10-K (FY2025) — Note on segment information Profit here is segment gross profit (revenue minus cost of revenue), the measure Adobe reports by segment; operating expenses aren't allocated, so margins look far higher than operating margin (37% in FY2025).
07
Where it earns
Many U.S.-listed companies earn most of their revenue outside the U.S. — this breaks down revenue by country/region so it's clear where the business actually makes its money.
Largest market (FY2025)
Americas — 59% of revenue
Revenue by country / region (FY2025)
Unit: $M — bar length = revenue, (%) = share of total company revenue
Americas
14,120 (59%)EMEA
6,289 (26%)APAC
3,360 (14%)
Source: Form 10-K (FY2025) — MD&A, geographical information The 10-K reports revenue for these three regions only.
08
Contract structure
Short-term or spot sales carry different earnings quality than long-term or auto-renewing contracts — this shows how the company actually contracts with its customers.
96% of FY2025 revenue was subscriptions, recognized ratably over the subscription term, so a change in subscriptions or renewals in one period shows up in revenue only gradually. Remaining performance obligations were $22.5B at FY2025 year-end, up 13%. Product licenses (2%) and services (2%) make up the rest.
- Multi-year / recurring
Subscriptions (Creative Cloud, Acrobat, Experience Platform and others)
96% of FY2025 revenue ($22.9B)
Typical term: Recognized ratably over the subscription term
Total Adobe ARR was $25.2B at FY2025 year-end, up 11.5%.
- Spot / one-off transaction
Product
1% of FY2025 revenue ($325M)
Typical term: Product revenue, recognized when delivered
Declining (−16% in FY2025) as subscriptions dominate.
- Short-term contract
Services and other
2% of FY2025 revenue ($540M)
Typical term: Services and other revenue
Down 10% in FY2025.
09
Customers & suppliers
Who the company sells to and buys from. Companies rarely name either, so named counterparties come only from the company's own filings and press releases; otherwise this lists the concentration figures the 10-K discloses.
Customers
Adobe sells directly (online and through an enterprise sales force) and through distributors, retailers, software developers, mobile app stores, systems integrators, independent software vendors, value-added resellers, and hardware makers.
Named by the company
None named; the 10-K doesn't disclose any customer or distributor accounting for a material share of revenue.
What the filings disclose
- Customers fall into two groups: Business Professionals & Consumers ($6.5B of FY2025 subscription revenue) and Creative & Marketing Professionals ($16.3B). (Form 10-K (FY2025), MD&A)
- Government entities are also customers, and the 10-K flags risks in government procurement. (Form 10-K (FY2025), Item 1A)
Suppliers
Adobe relies on third-party distributors and sales partners, and on third parties for critical business operations, including systems that keep its online services available. The 10-K doesn't name them.
Named by the company
None named in the 10-K or the company’s press releases.
What the filings disclose
- Firefly models are trained on licensed content and public domain assets; customers can also use third-party partner AI models within certain Adobe applications. (Form 10-K (FY2025), Item 1)
10
Competitors & peers
Competitors the 10-K names, and the peer group the company itself chose in its proxy statement. Nothing here is this site's own pick.
Adobe's 10-K says it competes with software companies, AI companies, hardware makers, operating system developers, and social media companies, describing competing product types for business professionals and consumers, creative professionals, and marketers. No company is named.
Competitors named in the 10-K
Adobe's 10-K describes competing product types but doesn't name competitors.
Peer group the company chose
Peer group for fiscal 2025, from the proxy statement. Peers are companies the board considers comparable — for example when setting executive pay — not necessarily direct competitors.
Criteria shown in the proxy include competing with Adobe for talent, positive revenue growth, and listing Adobe as a peer.
- Alphabet (Google)site ↗
- Amazonsite ↗
- Advanced Micro Devicessite ↗
- Airbnbsite ↗
- Applesite ↗
- Autodesksite ↗
- Broadcomsite ↗
- Cisco Systemssite ↗
- Intuitsite ↗
- Meta Platformssite ↗
- Microsoftsite ↗
- Netflixsite ↗
- NVIDIAsite ↗
- Oraclesite ↗
- Palo Alto Networkssite ↗
- PayPalsite ↗
- Salesforcesite ↗
- SAPsite ↗
- ServiceNowsite ↗
- Workdaysite ↗
The committee added three companies to the peer group for fiscal 2026.
Source: Proxy statement (DEF 14A, filed 2026-02-27) — Compensation Discussion and Analysis, peer groupCompany names link to this site’s analysis where one exists; “site ↗” opens the company’s own website.
11
M&A history
Companies acquired over the last five years, plus older large acquisitions that still anchor a current business — what each was bought to do, and what happened afterward. From the 10-K, 8-Ks, and the company's press releases.
Adobe built its Digital Experience business largely through acquisitions — Magento and Marketo (2018), Workfront (2021) — and added Frame.io to Creative Cloud (2021). Its largest attempted deal, Figma, was abandoned with a $1B termination fee paid in FY2024. In April 2026 it bought Semrush.
Cash spent on acquisitions, FY2021–FY2025: $2.83B
Apr 2026 (FY2026)
Semrush Holdings
$1.87B, primarily cash
A publicly held brand visibility platform company.
- Stated purpose (company)
- "Enhances our ability to serve marketers at every scale with solutions for search engine optimization, generative engine optimization and agentic search optimization."
Since then: Results included from the acquisition date.
Source: Form 10-Q (Q3 FY2026) — Acquisitions · Form 10-K (FY2025) — Liquidity (agreement)
Oct 2021 (FY2021)
Frame.io
About $1.18B, primarily cash
A privately held cloud-based video collaboration platform.
- Stated purpose (company)
- Integrated into Creative Cloud.
Q1 FY2021
Workfront
About $1.52B cash
A privately held workflow platform company.
- Stated purpose (company)
- Integrated into the Digital Experience segment.
Oct 2018 (FY2018)
Marketo
About $4.74B cash
Older deal, core to today's businessA privately held marketing cloud platform for business-to-business marketers.
- Stated purpose (company)
- Integrated into the Adobe Marketing Cloud as the Marketo Engagement Platform.
Since then: Part of today's Digital Experience segment ($5.9B of FY2025 revenue).
Jun 2018 (FY2018)
Magento
About $1.64B
Older deal, core to today's businessA privately held commerce platform company.
- Stated purpose (company)
- Integrated into the Adobe Experience Cloud as Magento Commerce Cloud.
Since then: Part of today's Digital Experience segment.
The abandoned Figma acquisition isn't listed as a deal; Adobe paid a $1B termination fee in FY2024. Deal dates are closing dates; Adobe's fiscal year ends in late November or early December.
12
Five years of financials
Each chart's axis holds a single unit (never mixing dollars, %, and $/share). The table's per-period header links to the filing the numbers came from.
Revenue over time
Unit: $M
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2026-01-15
Profit over time (operating → net)
Unit: $M
- Operating income
- Pretax income
- Net income
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2026-01-15
Margins over time
Unit: %
- Operating margin
- Net margin
formulaoperating income ÷ revenue × 100
formulanet income attributable to the company ÷ revenue × 100
Cash flow over time
Unit: $M (below zero = cash went out)
- Operating CF
- Investing CF
- Free CF
formulacash flow from operations − capital expenditures
termsFree cash flow (FCF) · Cash flow from operations (operating CF) · Capital expenditures (capex)
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2026-01-15
Financial stability & capital efficiency
Unit: %
- Equity ratio
- ROE
formulatotal equity ÷ total assets × 100 (as reported in the 10-K)
termsStockholders’ equity · Total assets
formulanet income ÷ average equity (beginning + ending, ÷2) × 100 (as reported in the 10-K)
termsNet income (attributable to the company) · Stockholders’ equity
Earnings per share (EPS) and dividend per share
Unit: $
- EPS
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2026-01-15
| Line item | FY202110-K on EDGAR ↗ | FY202210-K on EDGAR ↗ | FY202310-K on EDGAR ↗ | FY202410-K on EDGAR ↗ | FY202510-K on EDGAR ↗ |
|---|---|---|---|---|---|
| Income statement ($M) | |||||
| Revenue | 15,785 | 17,606 | 19,409 | 21,505 | 23,769 |
| Operating income | 5,802 | 6,098 | 6,650 | 6,741 | 8,706 |
| Pretax income | 5,705 | 6,008 | 6,799 | 6,931 | 8,734 |
| Net income (attributable) | 4,822 | 4,756 | 5,428 | 5,560 | 7,130 |
| Revenue growthcalc(this year’s revenue − last year’s revenue) ÷ last year’s revenue × 100 | — | 11.5% | 10.2% | 10.8% | 10.5% |
| Operating margincalcoperating income ÷ revenue × 100 | 36.8% | 34.6% | 34.3% | 31.3% | 36.6% |
| Net margincalcnet income attributable to the company ÷ revenue × 100 | 30.5% | 27.0% | 28.0% | 25.9% | 30.0% |
| Balance sheet ($M) | |||||
| Total assets | 27,241 | 27,165 | 29,779 | 30,230 | 29,496 |
| Total equity | 14,797 | 14,051 | 16,518 | 14,105 | 11,623 |
| Interest-bearing debtSum of short- and long-term borrowings, notes/bonds payable | 4,123 | 3,629 | 3,634 | 4,129 | 6,210 |
| Equity ratio | 54.3% | 51.7% | 55.5% | 46.7% | 39.4% |
| ROE | 32.6% | 33.0% | 35.5% | 36.3% | 55.4% |
| Cash flow ($M) | |||||
| Operating CF | 7,230 | 7,838 | 7,302 | 8,056 | 10,031 |
| Investing CF | -3,537 | -570 | 776 | 149 | -1,187 |
| Financing CF | -4,301 | -6,825 | -5,182 | -7,724 | -11,060 |
| Free cash flowcalccash flow from operations − capital expenditures | 6,882 | 7,396 | 6,942 | 7,873 | 9,852 |
| Cash and equivalents | 3,844 | 4,236 | 7,141 | 7,613 | 5,431 |
| Per share & other | |||||
| EPS ($) | 10.02 | 10.10 | 11.82 | 12.36 | 16.70 |
| BVPS ($) | 31.15 | 30.41 | 36.30 | 31.98 | 28.14 |
| P/E (x) | 61.5 | 33.8 | 51.8 | 41.7 | 19.2 |
| EV/EBITDA (x)calc(market cap + interest-bearing debt − cash and equivalents) ÷ (operating income + depreciation & amortization) | 45.1 | 23.0 | 36.9 | 30.1 | 14.4 |
| P/B (x)calcP/E × EPS ÷ BVPS (= period-end share price ÷ book value per share) | 19.79 | 11.23 | 16.87 | 16.13 | 11.38 |
P/B and EV/EBITDA use each period’s period-end (fiscal year-end) figures, not the current share price. Figures without a "calc" tag are as reported in the Form 10-K (five-year selected financial data and the consolidated financial statements), pulled automatically from SEC EDGAR. Where a later filing restated a prior period, the restated figure is used.
13
Is ROIC above WACC?
ROIC (the return on money invested in the business) above WACC (the cost of raising that money) means the company is creating value. WACC is an estimate, so its assumptions can be adjusted below.
ROIC (FY2025)
38.1%
formulaoperating income × (1 − tax rate) ÷ invested capital × 100 *invested capital = interest-bearing debt + total equity (average of beginning/ending)
e.g.$8,706M × (1 − 21%) ÷ $18,034M × 100 = 38.1%
termsOperating income · Effective tax rate · Invested capital · Interest-bearing debt · Total equity
WACC (this site’s estimate)
8.97%
formulacost of equity × equity weight + cost of debt × (1 − tax rate) × debt weight
e.g.Equity weight: $136.68B ÷ ($136.68B + $6.21B) = 95.7%
e.g.Debt weight: $6.21B ÷ ($136.68B + $6.21B) = 4.3%
e.g.WACC: 9.2% × 95.7% + 4.2% × (1 − 21%) × 4.3% = 8.97%
termsCost of equity · Equity weight (E/(D+E)) · Cost of debt · (1 − tax rate) · Debt weight (D/(D+E)) · Market capitalization
WACC 8.97% is this site’s estimate under the assumptions below (not a figure the company has published)
- Risk-free rate
- 4%
- β
- 0.95 (price-derived adjusted beta)
- Equity risk premium
- 5.5%
- Cost of equity
- 9.22%
- Cost of debt
- 4.24%
- Effective tax rate
- 21%
- Capital structure (equity : debt)
- 96% : 4%
ROIC over time, vs. WACC
Unit: % — bars = each period's ROIC, horizontal line = latest WACC. Bars above the line are green, below are red
- ROIC (above WACC)
- ROIC (below WACC)
- WACC 8.97%
formulaoperating income × (1 − tax rate) ÷ invested capital × 100 *invested capital = interest-bearing debt + total equity (average of beginning/ending)
termsOperating income · Effective tax rate · Invested capital · Interest-bearing debt · Total equity
formulacost of equity × equity weight + cost of debt × (1 − tax rate) × debt weight
termsCost of equity · Equity weight (E/(D+E)) · Cost of debt · (1 − tax rate) · Debt weight (D/(D+E)) · Market capitalization
Try different WACC assumptions
β and the equity risk premium are estimates with a real range of plausible values — move the sliders to check whether ROIC > WACC still holds. The defaults reflect 2026-09.
Initial β: 0.95 (price-derived adjusted beta. Raw β 0.93, R² 0.15, 130 weeks)
formula0.67 × β + 0.33 (β = the slope of weekly stock returns regressed on weekly market returns)
e.g.0.67 × 0.927 + 0.33 = 0.951
termsβ (beta)
Period 2024-04-05–2026-10-02, using S&P 500 ETF (SPY) as the market proxy. Source: Yahoo Finance price history.
formularisk-free rate + β × equity risk premium
e.g.4.0% + 0.95 × 5.5% = 9.2%
termsCAPM · Risk-free rate · β (beta) · Equity risk premium (market risk premium)
formulaP/E × net income ≈ period-end share price × shares outstanding (= market cap)
termsP/E · Net income (attributable to the company) · Market capitalization · Market value of equity
formulainterest expense ÷ interest-bearing debt × 100 (clamped to 0–10%; falls back to the risk-free rate if there’s no debt)
14
What the price implies (DCF)
A company's value can be written as its free cash flow divided by (cost of capital − perpetual growth). Working that backwards from the market's valuation shows how much growth the share price assumed — compared here with the company's actual past growth.
Growth the price implies (FY2025)
1.7%
Perpetual FCF growth: g = r − FCF ÷ EV = 9.0% − 7.2%
Past FCF growth (FY2021–FY2025)
+9.4%
Compound annual rate, 4 years
Past revenue growth (FY2021–FY2025)
+10.8%
Compound annual rate, 4 years
Inputs (FY2025): free cash flow $9.85B (operating CF − capex); enterprise value $136.3B = market cap $136.68B + debt $6.21B − cash and short-term investments $6.6B; r = WACC of 9.0% using this page’s default assumptions (β 0.95, risk-free 4.0%, market premium 5.5%).
Try your own assumptions
V = FCF ÷ (r − g). It starts at the implied growth rate, where the theoretical value equals today’s enterprise value.
Theoretical enterprise value
$134.96B
FCF $9.85B ÷ (9.0% − 1.7%)
Theoretical ÷ actual enterprise value
0.99x
Below 1x: these assumptions value the business below the market did
How sensitive the answer is
Theoretical ÷ actual enterprise value for each combination of r and g.
| g \ r | 7.0% | 8.0% | 9.0% | 10.0% | 11.0% |
|---|---|---|---|---|---|
| 0% | 1.03x | 0.90x | 0.80x | 0.72x | 0.66x |
| 2% | 1.45x | 1.20x | 1.03x | 0.90x | 0.80x |
| 4% | 2.41x | 1.81x | 1.45x | 1.20x | 1.03x |
| 6% | 7.23x | 3.61x | 2.41x | 1.81x | 1.45x |
| 8% | — | — | 7.23x | 3.61x | 2.41x |
A simplified model for seeing what the market price assumes, not a forecast or a target price. It treats free cash flow as growing at one constant rate forever; the result swings widely with small changes in r and g, and is undefined when g reaches r. Free cash flow here is operating cash flow minus capex, which is after interest — a full DCF of enterprise value would use cash flow before interest. Market cap and enterprise value use the fiscal year-end price, not today’s.
15
Earnings quality
The same reported profit can mean different things depending on whether it's backed by cash, driven by the core business, or the result of a one-off item. Four checks below.
- ✓
Operating CF ÷ net income: averages 1.47x
Profit is backed by cash coming in.
- ✓
Accrual ratio (latest): -9.7%
A small share of profit rests on accounting estimates.
- ✓
Core-earnings share (operating income ÷ pretax income): 100%
Most profit comes from core operations.
- ✓
Days sales outstanding: 43 → 36 days
No major slowdown in collecting on sales.
Operating CF vs. net income
Unit: $M — operating CF above net income means profit is backed by cash
- Operating CF
- Net income
formulacash flow from operations ÷ net income attributable to the company
termsCash flow from operations (operating CF) · Net income (attributable to the company)
formula(net income − operating CF) ÷ average total assets × 100
termsNet income (attributable to the company) · Cash flow from operations (operating CF) · Total assets
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2026-01-15
Profit bridge (FY2025)
Unit: $M — what moved profit from operating income to net income
- Profit (each stage)
- Pushed profit up
- Pushed profit down
formulaoperating income ÷ income before income taxes × 100
termsOperating income · Income before income taxes (pretax income)
Source: each period's Form 10-K (SEC EDGAR). Latest: filed 2026-01-15
Receivables & inventory days
Unit: days — days grow when receivables or inventory build up faster than sales
- Days sales outstanding
formulaperiod-end receivables ÷ revenue × 365
formulaperiod-end inventory ÷ revenue × 365
termsInventory · Revenue (net sales)
Worked examples (latest period)
formulacash flow from operations ÷ net income attributable to the company
e.g.$10,031M ÷ $7,130M = 1.41x
termsCash flow from operations (operating CF) · Net income (attributable to the company)
formulaoperating income ÷ income before income taxes × 100
e.g.$8,706M ÷ $8,734M × 100 = 100%
termsOperating income · Income before income taxes (pretax income)
formulaperiod-end receivables ÷ revenue × 365
e.g.$2,344M ÷ $23,769M × 365 = 36 days
16
Strengths & weaknesses
Strengths
1. Almost entirely recurring revenue
Subscriptions were 96% of FY2025 revenue, and remaining performance obligations rose 13% to $22.5B; the 10-K describes revenue and earnings as relatively predictable because of the subscription model.
Evidence: Form 10-K (FY2025) MD&A
2. Very high gross margins
Gross margin was 89% overall in FY2025, and 95% in Digital Media.
Evidence: Form 10-K (FY2025) segment note
3. Faster growth in document and consumer products
Subscription revenue from Business Professionals & Consumers (Acrobat and Express) grew 19% in FY2024 and 15% in FY2025.
Evidence: Form 10-K (FY2025) MD&A
Weaknesses
1. Buybacks larger than cash generation
Adobe paid $11.28B for share repurchases in FY2025, more than its $10.03B of operating cash flow and $7.13B of net income; total debt rose to $6.2B and stockholders' equity fell from $14.1B to $11.6B.
Evidence: Form 10-K (FY2025) MD&A; SEC EDGAR XBRL
2. Revenue concentrated in the Americas
The Americas were 59% of FY2025 revenue.
Evidence: Form 10-K (FY2025) MD&A
3. Slower growth on the creative and marketing side
Creative & Marketing Professionals subscription revenue — about 72% of Digital Media and Digital Experience subscription revenue — grew 11% in FY2025, versus 15% for Business Professionals & Consumers.
Evidence: Form 10-K (FY2025) MD&A
17
What draws investors to it
Why the stock can look attractive to investors — each point paired with what has to hold for it to stay true, and the opposing view. This is this site's analysis, not a recommendation to buy or sell.
P/E (FY2025)
19.2x
Price at fiscal year-end ÷ diluted EPS
Dividend yield (FY2025)
—
Dividends per share ÷ fiscal year-end price
Payout ratio (FY2025)
—
Dividends per share ÷ diluted EPS
FCF yield (FY2025)
7.2%
(Operating CF − capex) ÷ market cap
1. Predictable subscription cash flow
96% of revenue is subscriptions, ARR grew 11.5% to $25.2B, and operating cash flow was $10.0B in FY2025 with capex of only $0.2B.
- What has to hold
- Subscribers keep renewing as AI tools spread.
- The other side
- The 10-K names AI companies and new entrants among its competitors; ratable revenue would show any renewal slowdown only with a lag.
Evidence: Form 10-K (FY2025) MD&A and Item 1A
2. Shrinking share count
Shares outstanding fell from 475M (FY2021) to 413M (FY2025), about 13%, as Adobe spent heavily on buybacks; diluted EPS rose from $10.02 to $16.70.
- What has to hold
- Cash flow continues to fund repurchases.
- The other side
- FY2025 buybacks exceeded operating cash flow and were partly funded by more debt ($6.2B at year-end).
Evidence: SEC EDGAR XBRL; Form 10-K (FY2025) MD&A
3. Valuation reset
P/E at the FY2025 year-end price was about 19x, down from 42x at FY2024 year-end and 62x at FY2021 year-end, while EPS kept rising.
- What has to hold
- Earnings keep growing at recent rates.
- The other side
- A lower multiple can mean the market expects slower growth; the 10-K doesn't address valuation.
Evidence: SEC EDGAR XBRL and fiscal year-end prices
P/E and FCF yield above use the fiscal year-end share price, not today's price. Adobe pays no dividend.
18
Resilience
How well the company could absorb a bad year: its financial buffer, how its revenue and profit held up in the worst year on record, and what the 10-K says about the business's exposure to shocks. Figures and filing statements only — no overall rating.
1. Financial buffer (FY2025)
Cash & short-term investments ÷ debt due within a year
No debt due
$6.6B vs. $0
Interest coverage (operating income ÷ interest expense)
33.1x
$8.71B vs. $263M
Free cash flow ÷ dividends paid
—
2. Worst year in the record, and the recovery
| Figure | Worst year-over-year change | Back to the prior level? |
|---|---|---|
| Revenue | No decline in the record | — |
| Operating income | No decline in the record | — |
Covers only the 5 fiscal years on record (FY2021–FY2025), which may not include a full recession — the worst year here isn’t necessarily how the company would fare in a severe downturn.
3. Business resilience (from the 10-K)
Liquidity
Adobe says its cash, short-term investments, operating cash flow, and its undrawn $1.5B revolving credit agreement (through June 30, 2027) will be sufficient for the next twelve months and the foreseeable future.
Source: Form 10-K (FY2025), MD&A Liquidity
Recurring revenue
With 96% of revenue from subscriptions recognized ratably and $22.5B of remaining performance obligations, a drop in new sales would reduce revenue gradually rather than at once.
Source: Form 10-K (FY2025), MD&A · See Contract structure
Low capital needs
Capital expenditures were $179M in FY2025 against $10.0B of operating cash flow.
Source: SEC EDGAR XBRL
Discretionary buybacks
Repurchases ($11.28B in FY2025) are discretionary and could be reduced if cash flow fell.
Source: Form 10-K (FY2025), MD&A
Catastrophic events
The 10-K lists catastrophic events, including those associated with climate change, as a risk that could disrupt the business.
Source: Form 10-K (FY2025), Item 1A
19
Risks (including geopolitical)
Starting from the 10-K's Risk Factors section, organized by category — geopolitical, currency, raw materials, regulatory, disaster, and more — with impact and likelihood assessed by this site.
Risk map
Vertical = impact on results, horizontal = likelihood. Upper right = most severe. Numbers match the list below (placement is this site’s own assessment).
Likelihood →
"Company disclosure" vs. "this site’s assessment"
The description and mitigation for each risk are this site’s summary of the 10-K’s "Risk Factors" section. Impact and likelihood are this site’s own assessment, not the company’s — where the company discloses its own likelihood assessment, that is noted in the summary.
Impact is judged from how large the affected business is relative to total revenue/profit, and from the risk’s track record of moving results in the past. Likelihood is judged from the filing’s wording and the current business environment (already occurring, or recurring).
- 1Competition & technology shift
AI and new competitors
- Company disclosure (summarized from the 10-K)
- The 10-K lists failure to innovate in response to rapid technological change, intense competition — including AI companies, cloud-native companies, and social media platforms with built-in editing — and issues from developing and using AI as risks.
- Company’s stated mitigation
- Building AI into its apps, Firefly models trained on licensed content, and partner models available within its applications.
- This site’s assessment
- Impact High / Likelihood High
- 2Demand & macro
Subscription renewals
- Company disclosure (summarized from the 10-K)
- Because revenue is recognized ratably, the 10-K warns that a change in subscriptions or renewals may not be immediately reflected in revenue, so a slowdown could surface with a lag.
- Company’s stated mitigation
- Not stated in the 10-K.
- This site’s assessment
- Impact Med / Likelihood Med
- 3Governance & quality
Acquisitions
- Company disclosure (summarized from the 10-K)
- The 10-K says it may not realize the expected benefits of acquisitions. In FY2024 it paid a $1B termination fee when its Figma acquisition was abandoned, and in April 2026 it completed the $1.87B Semrush acquisition.
- Company’s stated mitigation
- Not stated in the 10-K.
- This site’s assessment
- Impact Med / Likelihood Med
- 4Supply chain
Service interruptions and third parties
- Company disclosure (summarized from the 10-K)
- The 10-K lists failures of its own IT systems or those of third parties, and its reliance on third-party distributors, sales partners, and other third parties for critical operations, as risks.
- Company’s stated mitigation
- Not stated in the 10-K.
- This site’s assessment
- Impact Med / Likelihood Low
- 5FX & interest rates
Currency
- Company disclosure (summarized from the 10-K)
- 41% of FY2025 revenue came from outside the Americas; the 10-K says it may not be able to effectively hedge currency exposure. Revaluing at FY2026 opening rates would have raised year-end ARR by about $460M.
- Company’s stated mitigation
- Hedging, which the 10-K says may not be fully effective.
- This site’s assessment
- Impact Med / Likelihood Med
- 6Law & regulation
Privacy, AI, and other regulation
- Company disclosure (summarized from the 10-K)
- The 10-K cites increasing regulatory focus on privacy and security, compliance with laws globally, and litigation and regulatory inquiries as risks.
- Company’s stated mitigation
- Not stated in the 10-K.
- This site’s assessment
- Impact Med / Likelihood Med
20
What to watch going forward
- Total Adobe ARR growth, the company's main performance metric.
- Whether AI-first competitors slow Creative Cloud growth.
- Growth of Acrobat and Express in the Business Professionals & Consumers group.
- Semrush's integration into Digital Experience (completed April 2026).
- The pace of buybacks relative to cash flow, and the debt level.
21
Source documents
This page's financial figures come from the Form 10-Ks listed below. Check the original filings for full detail.
Last updated
Analysis last edited: October 3, 2026 · Financial data fetched: October 3, 2026 11:14 (SEC EDGAR) · Source 10-K filed: January 15, 2026
Next update expectedAfter FY2026’s 10-K is filed (roughly 60–90 days after fiscal year end (sooner for larger filers)), financials and analysis will be refreshed.
This page is this site’s own analysis based on public information, and does not represent Adobe Inc.’s views. It is not a recommendation to buy or sell any security, and this site does not guarantee the accuracy of any figure or statement here. Always verify against the original source documents before making an investment decision.