Adobe’s fiscal fourth‑quarter revenue reached a record $6.19 billion, up 10% from $5.61 billion in Q4 2024, driven by a 15% rise in subscription revenue to $1.72 billion for Business Professionals & Consumers and an 11% increase in Digital Media revenue to $4.62 billion. Non‑GAAP earnings per share hit $5.50, beating the consensus estimate of $5.39 by $0.11, a 2.0% beat that reflects disciplined cost management and a favorable mix of high‑margin AI‑enhanced products such as Acrobat and Express.
Adobe’s total annual recurring revenue (ARR) for FY2025 climbed to $25.20 billion, an 11.5% increase over the $22.50 billion reported in FY2024. Operating cash flow exceeded $10 billion, underscoring the company’s strong liquidity position. Management noted that AI‑influenced ARR now accounts for over one‑third of total recurring revenue, a jump from roughly 28% in FY2024, indicating accelerating adoption of generative‑AI features across the platform.
Guidance for fiscal 2026 was raised to revenue of $25.90 billion–$26.10 billion and non‑GAAP EPS of $23.30–$23.50, up from the prior outlook of $25.50 billion–$25.70 billion and $23.10–$23.30. CEO Shantanu Narayen said the increase reflects confidence in continued double‑digit ARR growth and margin expansion, driven by the AI‑first strategy and the monetization of new generative‑AI capabilities.
Segment‑level analysis shows that Creative Cloud and Document Cloud contributed $12.3 billion and $8.7 billion respectively, up 9% and 12% YoY, while Experience Cloud grew 7% to $4.1 billion. Operating margin contracted to 45.6% from 46.3% in FY2024, largely due to higher investment in AI research and development and a shift toward higher‑margin subscription services. Despite the margin squeeze, the company’s free‑cash‑flow margin remained above 30%.
Market reaction was muted; analysts noted that while the earnings beat was solid, the slight decline in guidance and the margin compression tempered enthusiasm. The company’s aggressive share‑repurchase program, which bought back 30.8 million shares in FY2025, and the announced intent to acquire Semrush Holdings for approximately $1.9 billion, were highlighted as strategic moves to broaden its marketing‑automation portfolio and reinforce its AI ecosystem.
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