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    Adobe Reports Record Q4 and Fiscal 2024 Revenue

    12/11/24 4:05:00 PM ET
    $ADBE
    Computer Software: Prepackaged Software
    Technology
    Get the next $ADBE alert in real time by email
    • FY2024 Net New Digital Media ARR exceeds $2.0 billion
    • FY2024 Digital Experience revenue exceeds $5.3 billion
    • Record Q4 operating cash flows of $2.92 billion
    • Record RPO of $19.96 billion, 16 percent year-over-year growth

    Adobe (NASDAQ:ADBE) today reported financial results for its fourth quarter and fiscal year 2024 ended Nov. 29, 2024.

    "Adobe delivered record FY24 revenue, demonstrating strong demand and the mission-critical role Creative Cloud, Document Cloud and Experience Cloud play in fueling the AI economy," said Shantanu Narayen, chair and CEO, Adobe. "Our highly differentiated technology platforms, rapid pace of innovation, diversified go-to-market and the integration of our clouds position us for a great year ahead."

    "Adobe drove FY24 records of $21.51 billion in revenue, $8.06 billion in cash flows from operations and $19.96 billion in RPO," said Dan Durn, executive vice president and CFO, Adobe. "Adobe's strategy, AI innovation and massive cross-cloud opportunity position us well for 2025 and beyond."

    Fourth Quarter Fiscal Year 2024 Financial Highlights

    • Adobe achieved revenue of $5.61 billion in its fourth quarter of fiscal year 2024, which represents 11 percent year-over-year growth as reported and in constant currency. Diluted earnings per share was $3.79 on a GAAP basis and $4.81 on a non-GAAP basis.
    • GAAP operating income in the fourth quarter was $1.96 billion and non-GAAP operating income was $2.60 billion. GAAP net income was $1.68 billion and non-GAAP net income was $2.13 billion.
    • Record cash flows from operations were $2.92 billion.
    • Remaining Performance Obligations ("RPO") exiting the quarter were $19.96 billion.
    • Adobe repurchased approximately 4.6 million shares during the quarter.

    Fourth Quarter Fiscal Year 2024 Business Segment Highlights

    • Digital Media segment revenue was $4.15 billion, which represents 12 percent year-over-year growth as reported and in constant currency. Document Cloud revenue was $843 million, representing 17 percent year-over-year growth as reported and in constant currency. Creative revenue grew to $3.30 billion, representing 10 percent year-over-year growth or 11 percent in constant currency.
    • Net new Digital Media Annualized Recurring Revenue ("ARR") was $578 million, exiting the quarter with Digital Media ARR of $17.33 billion. Document Cloud ARR grew to $3.48 billion and Creative ARR grew to $13.85 billion.
    • Digital Experience segment revenue was $1.40 billion, representing 10 percent year-over-year growth as reported and in constant currency. Digital Experience subscription revenue was $1.27 billion, representing 13 percent year-over-year growth or 12 percent in constant currency.

    Fiscal Year 2024 Financial Highlights

    • Adobe achieved revenue of $21.51 billion in fiscal year 2024, which represents 11 percent year-over-year growth as reported and in constant currency. Diluted earnings per share was $12.36 on a GAAP basis and $18.42 on a non-GAAP basis.
    • GAAP operating income was $6.74 billion and non-GAAP operating income was $10.02 billion. GAAP net income was $5.56 billion and non-GAAP net income was $8.28 billion.
    • Adobe generated $8.06 billion in operating cash flows during the year.
    • Adobe repurchased approximately 17.5 million shares during the year.

    Fiscal Year 2024 Business Segment Highlights

    • Digital Media segment revenue was $15.86 billion, which represents 12 percent year-over-year growth as reported and in constant currency. Net new Digital Media ARR was $2.00 billion during the fiscal year.
    • Document Cloud revenue was $3.18 billion, representing 18 percent year-over-year growth as reported and in constant currency.
    • Creative revenue grew to $12.68 billion, representing 10 percent year-over-year growth or 11 percent in constant currency.
    • Digital Experience segment revenue was $5.37 billion, representing 10 percent year-over-year growth as reported and in constant currency. Digital Experience subscription revenue was $4.86 billion, representing 12 percent year-over-year growth as reported and in constant currency.

    Financial Targets

    We measure ARR on a constant currency basis during the fiscal year and revalue ending ARR at year-end. Foreign exchange rate changes between the end of fiscal year 2023 and the end of fiscal year 2024 have resulted in a $117 million decrease to the Digital Media ARR balance entering fiscal year 2025, from $17.33 billion to $17.22 billion and is reflected in our investor data sheet. We expect an approximate $200 million headwind to fiscal year 2025 revenue, as a result of the effect of foreign exchange and a smaller impact of the continued move to subscriptions from perpetual offerings.

    The following table summarizes Adobe's fiscal year 2025 targets1:

    Total revenue

    $23.30 billion to $23.55 billion

       

    Digital Media segment revenue

    $17.25 billion to $17.40 billion

       

    Digital Media ending ARR growth

    11.0% year over year

       

    Digital Experience segment revenue

    $5.80 billion to $5.90 billion

       

    Digital Experience subscription revenue

    $5.375 billion to $5.425 billion

       

    Earnings per share

    GAAP: $15.80 to $16.10  

    Non-GAAP: $20.20 to $20.50

       
    1

    Targets assume non-GAAP operating margin of ~46 percent, non-GAAP tax rate of ~18.5 percent and diluted share count of ~433 million for fiscal year 2025.

    The following table summarizes Adobe's first quarter fiscal year 2025 targets2:

    Total revenue

    $5.63 billion to $5.68 billion

       

    Digital Media segment revenue

    $4.17 billion to $4.20 billion

       

    Digital Experience segment revenue

    $1.38 billion to $1.40 billion

       

    Digital Experience subscription revenue

    $1.27 billion to $1.29 billion

       

    Earnings per share

    GAAP: $3.85 to $3.90  

    Non-GAAP: $4.95 to $5.00

       
    2

    Targets assume non-GAAP operating margin of ~47 percent, non-GAAP tax rate of ~18.5 percent and diluted share count of ~439 million for first quarter fiscal year 2025.

    Adobe to Host Conference Call

    Adobe will webcast its fourth quarter and fiscal year 2024 earnings conference call today at 2:00 p.m. Pacific Time from its investor relations website: http://www.adobe.com/ADBE. Earnings documents, including Adobe management's prepared conference call remarks with slides and an investor datasheet are posted to Adobe's Investor Relations Website in advance of the conference call for reference.

    Forward-Looking Statements, Non-GAAP and Other Disclosures

    In addition to historical information, this press release contains "forward-looking statements" within the meaning of applicable securities laws, including statements related to our business, strategy, artificial intelligence and innovation momentum; our market opportunity and future growth; market trends; current macroeconomic conditions; fluctuations in foreign currency exchange rates; strategic investments; customer success; revenue; operating margin; annualized recurring revenue; tax rate; earnings per share; and share count. Each of the forward-looking statements we make in this press release involves risks, uncertainties and assumptions based on information available to us as of the date of this press release. Such risks and uncertainties, many of which relate to matters beyond our control, could cause actual results to differ materially from these forward-looking statements. Factors that might cause or contribute to such differences include, but are not limited to: failure to innovate effectively and meet customer needs; issues relating to development and use of AI; failure to realize the anticipated benefits of investments or acquisitions; failure to compete effectively; damage to our reputation or brands; service interruptions or failures in information technology systems by us or third parties; security incidents; failure to effectively develop, manage and maintain critical third-party business relationships; risks associated with being a multinational corporation and adverse macroeconomic conditions; failure to recruit and retain key personnel; complex sales cycles; changes in, and compliance with, global laws and regulations, including those related to information security and privacy; failure to protect our intellectual property; litigation, regulatory inquiries and intellectual property infringement claims; changes in tax regulations; complex government procurement processes; risks related to fluctuations in or the timing of revenue recognition from our subscription offerings; fluctuations in foreign currency exchange rates; impairment charges; our existing and future debt obligations; catastrophic events; and fluctuations in our stock price. Further information on these and other factors are discussed in the section titled "Risk Factors" in Adobe's most recently filed Annual Report on Form 10-K and Adobe's most recently filed Quarterly Reports on Form 10-Q. The risks described in this press release and in Adobe's filings with the U.S. Securities and Exchange Commission should be carefully reviewed.

    Undue reliance should not be placed on the financial information set forth in this press release, which reflects estimates based on information available at this time. These amounts could differ from actual reported amounts stated in Adobe's Annual Report on Form 10-K for our fiscal year ended Nov. 29, 2024, which Adobe expects to file in Jan. 2025. Adobe assumes no obligation to, and does not currently intend to, update these forward-looking statements.

    A reconciliation between GAAP and non-GAAP earnings results and financial targets and a statement regarding use of non-GAAP financial information are provided at the end of this press release and on Adobe's investor relations website.

    About Adobe

    Adobe is changing the world through personalized digital experiences. For more information, visit www.adobe.com.

    ©2024 Adobe. All rights reserved. Adobe, Creative Cloud, Document Cloud and the Adobe logo are either registered trademarks or trademarks of Adobe (or one of its subsidiaries) in the United States and/or other countries. All other trademarks are the property of their respective owners.

    Condensed Consolidated Statements of Income

    (In millions, except per share data; unaudited)

     

    Three Months Ended

     

    Year Ended

     

    November 29,

    2024

     

    December 1,

    2023

     

    November 29,

    2024

     

    December 1,

    2023

    Revenue:

     

     

     

     

     

     

     

    Subscription

    $

    5,365

     

     

    $

    4,763

     

     

    $

    20,521

     

     

    $

    18,284

     

    Product

     

    81

     

     

     

    114

     

     

     

    386

     

     

     

    460

     

    Services and other

     

    160

     

     

     

    171

     

     

     

    598

     

     

     

    665

     

    Total revenue

     

    5,606

     

     

     

    5,048

     

     

     

    21,505

     

     

     

    19,409

     

     

     

     

     

     

     

     

     

    Cost of revenue:

     

     

     

     

     

     

     

    Subscription

     

    475

     

     

     

    505

     

     

     

    1,799

     

     

     

    1,822

     

    Product

     

    6

     

     

     

    6

     

     

     

    25

     

     

     

    29

     

    Services and other

     

    135

     

     

     

    123

     

     

     

    534

     

     

     

    503

     

    Total cost of revenue

     

    616

     

     

     

    634

     

     

     

    2,358

     

     

     

    2,354

     

     

     

     

     

     

     

     

     

    Gross profit

     

    4,990

     

     

     

    4,414

     

     

     

    19,147

     

     

     

    17,055

     

     

     

     

     

     

     

     

     

    Operating expenses:

     

     

     

     

     

     

     

    Research and development

     

    999

     

     

     

    889

     

     

     

    3,944

     

     

     

    3,473

     

    Sales and marketing

     

    1,536

     

     

     

    1,368

     

     

     

    5,764

     

     

     

    5,351

     

    General and administrative

     

    456

     

     

     

    372

     

     

     

    1,529

     

     

     

    1,413

     

    Acquisition termination fee

     

    —

     

     

     

    —

     

     

     

    1,000

     

     

     

    —

     

    Amortization of intangibles

     

    42

     

     

     

    42

     

     

     

    169

     

     

     

    168

     

    Total operating expenses

     

    3,033

     

     

     

    2,671

     

     

     

    12,406

     

     

     

    10,405

     

     

     

     

     

     

     

     

     

    Operating income

     

    1,957

     

     

     

    1,743

     

     

     

    6,741

     

     

     

    6,650

     

     

     

     

     

     

     

     

     

    Non-operating income (expense):

     

     

     

     

     

     

     

    Interest expense

     

    (50

    )

     

     

    (28

    )

     

     

    (169

    )

     

     

    (113

    )

    Investment gains (losses), net

     

    14

     

     

     

    4

     

     

     

    48

     

     

     

    16

     

    Other income (expense), net

     

    70

     

     

     

    89

     

     

     

    311

     

     

     

    246

     

    Total non-operating income (expense), net

     

    34

     

     

     

    65

     

     

     

    190

     

     

     

    149

     

    Income before income taxes

     

    1,991

     

     

     

    1,808

     

     

     

    6,931

     

     

     

    6,799

     

    Provision for income taxes

     

    308

     

     

     

    325

     

     

     

    1,371

     

     

     

    1,371

     

    Net income

    $

    1,683

     

     

    $

    1,483

     

     

    $

    5,560

     

     

    $

    5,428

     

    Basic net income per share

    $

    3.81

     

     

    $

    3.26

     

     

    $

    12.43

     

     

    $

    11.87

     

    Shares used to compute basic net income per share

     

    441

     

     

     

    455

     

     

     

    447

     

     

     

    457

     

    Diluted net income per share

    $

    3.79

     

     

    $

    3.23

     

     

    $

    12.36

     

     

    $

    11.82

     

    Shares used to compute diluted net income per share

     

    443

     

     

     

    459

     

     

     

    450

     

     

     

    459

     

     

    Condensed Consolidated Balance Sheets

    (In millions; unaudited)

     

    November 29, 2024

     

    December 1, 2023

    ASSETS

     

     

     

     

     

     

     

    Current assets:

     

     

     

    Cash and cash equivalents

    $

    7,613

     

     

    $

    7,141

     

    Short-term investments

     

    273

     

     

     

    701

     

    Trade receivables, net of allowances for doubtful accounts of $14 and $16, respectively

     

    2,072

     

     

     

    2,224

     

    Prepaid expenses and other current assets

     

    1,274

     

     

     

    1,018

     

    Total current assets

     

    11,232

     

     

     

    11,084

     

     

     

     

     

    Property and equipment, net

     

    1,936

     

     

     

    2,030

     

    Operating lease right-of-use assets, net

     

    281

     

     

     

    358

     

    Goodwill

     

    12,788

     

     

     

    12,805

     

    Other intangibles, net

     

    782

     

     

     

    1,088

     

    Deferred income taxes

     

    1,657

     

     

     

    1,191

     

    Other assets

     

    1,554

     

     

     

    1,223

     

    Total assets

    $

    30,230

     

     

    $

    29,779

     

     

     

     

     

    LIABILITIES AND STOCKHOLDERS' EQUITY

     

     

     

     

     

     

     

    Current liabilities:

     

     

     

    Trade payables

    $

    361

     

     

    $

    314

     

    Accrued expenses

     

    2,336

     

     

     

    1,942

     

    Debt

     

    1,499

     

     

     

    —

     

    Deferred revenue

     

    6,131

     

     

     

    5,837

     

    Income taxes payable

     

    119

     

     

     

    85

     

    Operating lease liabilities

     

    75

     

     

     

    73

     

    Total current liabilities

     

    10,521

     

     

     

    8,251

     

     

     

     

     

    Long-term liabilities:

     

     

     

    Debt

     

    4,129

     

     

     

    3,634

     

    Deferred revenue

     

    128

     

     

     

    113

     

    Income taxes payable

     

    548

     

     

     

    514

     

    Operating lease liabilities

     

    353

     

     

     

    373

     

    Other liabilities

     

    446

     

     

     

    376

     

    Total liabilities

     

    16,125

     

     

     

    13,261

     

     

     

     

     

    Stockholders' equity:

     

     

     

    Preferred stock

     

    —

     

     

     

    —

     

    Common stock

     

    —

     

     

     

    —

     

    Additional paid-in capital

     

    13,419

     

     

     

    11,586

     

    Retained earnings

     

    38,470

     

     

     

    33,346

     

    Accumulated other comprehensive income (loss)

     

    (201

    )

     

     

    (285

    )

    Treasury stock, at cost

     

    (37,583

    )

     

     

    (28,129

    )

    Total stockholders' equity

     

    14,105

     

     

     

    16,518

     

    Total liabilities and stockholders' equity

    $

    30,230

     

     

    $

    29,779

     

     

    Condensed Consolidated Statements of Cash Flows

    (In millions; unaudited)

     

    Three Months Ended

     

    November 29, 2024

     

    December 1, 2023

    Cash flows from operating activities:

     

     

     

    Net income

    $

    1,683

     

     

    $

    1,483

     

    Adjustments to reconcile net income to net cash provided by operating activities:

     

     

     

    Depreciation, amortization and accretion

     

    218

     

     

     

    222

     

    Stock-based compensation

     

    441

     

     

     

    427

     

    Lease-related asset impairments

     

    78

     

     

     

    —

     

    Unrealized investment (gains) losses, net

     

    (11

    )

     

     

    (3

    )

    Other non-cash adjustments

     

    (105

    )

     

     

    (129

    )

    Changes in deferred revenue

     

    353

     

     

     

    467

     

    Changes in other operating assets and liabilities

     

    264

     

     

     

    (870

    )

    Net cash provided by operating activities

     

    2,921

     

     

     

    1,597

     

     

     

     

     

    Cash flows from investing activities:

     

     

     

    Purchases, sales and maturities of short-term investments, net

     

    50

     

     

     

    219

     

    Purchases of property and equipment

     

    (48

    )

     

     

    (47

    )

    Purchases and sales of long-term investments, intangibles and other assets, net

     

    17

     

     

     

    (19

    )

    Net cash provided by investing activities

     

    19

     

     

     

    153

     

     

     

     

     

    Cash flows from financing activities:

     

     

     

    Repurchases of common stock

     

    (2,500

    )

     

     

    (1,000

    )

    Taxes paid related to net share settlement of equity awards, net of proceeds from treasury stock re-issuances

     

    (152

    )

     

     

    (202

    )

    Other financing activities, net

     

    151

     

     

     

    (15

    )

    Net cash used for financing activities

     

    (2,501

    )

     

     

    (1,217

    )

    Effect of exchange rate changes on cash and cash equivalents

     

    (19

    )

     

     

    7

     

    Net change in cash and cash equivalents

     

    420

     

     

     

    540

     

    Cash and cash equivalents at beginning of period

     

    7,193

     

     

     

    6,601

     

    Cash and cash equivalents at end of period

    $

    7,613

     

     

    $

    7,141

     

     

    Non-GAAP Results

     

    The following table shows Adobe's GAAP results reconciled to non-GAAP results included in this release.

     

    (In millions, except per share data)

    Three Months Ended

     

    Year Ended

     

    November 29,

    2024

     

    December 1,

    2023

     

    August 30,

    2024

     

    November 29,

    2024

     

    December 1,

    2023

    Operating income:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    GAAP operating income

    $

    1,957

     

     

    $

    1,743

     

     

    $

    1,992

     

     

    $

    6,741

     

     

    $

    6,650

     

    Stock-based and deferred compensation expense

     

    455

     

     

     

    431

     

     

     

    485

     

     

     

    1,881

     

     

     

    1,735

     

    Amortization of intangibles

     

    84

     

     

     

    91

     

     

     

    83

     

     

     

    334

     

     

     

    373

     

    Acquisition-related expenses (1)

     

    —

     

     

     

    34

     

     

     

    —

     

     

     

    1,007

     

     

     

    116

     

    Loss contingency (reversal) (2)

     

    —

     

     

     

    44

     

     

     

    (45

    )

     

     

    (44

    )

     

     

    44

     

    Lease-related asset impairments and other charges (3)

     

    100

     

     

     

    —

     

     

     

    —

     

     

     

    100

     

     

     

    —

     

    Non-GAAP operating income

    $

    2,596

     

     

    $

    2,343

     

     

    $

    2,515

     

     

    $

    10,019

     

     

    $

    8,918

     

     

     

     

     

     

     

     

     

     

     

    Net income:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    GAAP net income

    $

    1,683

     

     

    $

    1,483

     

     

    $

    1,684

     

     

    $

    5,560

     

     

    $

    5,428

     

    Stock-based and deferred compensation expense

     

    455

     

     

     

    431

     

     

     

    485

     

     

     

    1,881

     

     

     

    1,735

     

    Amortization of intangibles

     

    84

     

     

     

    91

     

     

     

    83

     

     

     

    334

     

     

     

    373

     

    Acquisition-related expenses (1)

     

    —

     

     

     

    34

     

     

     

    —

     

     

     

    1,007

     

     

     

    116

     

    Loss contingency (reversal) (2)

     

    —

     

     

     

    44

     

     

     

    (45

    )

     

     

    (44

    )

     

     

    44

     

    Lease-related asset impairments and other charges (3)

     

    100

     

     

     

    —

     

     

     

    —

     

     

     

    100

     

     

     

    —

     

    Investment (gains) losses, net

     

    (14

    )

     

     

    (4

    )

     

     

    (12

    )

     

     

    (48

    )

     

     

    (16

    )

    Income tax adjustments

     

    (176

    )

     

     

    (120

    )

     

     

    (115

    )

     

     

    (509

    )

     

     

    (303

    )

    Non-GAAP net income

    $

    2,132

     

     

    $

    1,959

     

     

    $

    2,080

     

     

    $

    8,281

     

     

    $

    7,377

     

     

     

     

     

     

     

     

     

     

     

    Diluted net income per share:

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

     

    GAAP diluted net income per share

    $

    3.79

     

     

    $

    3.23

     

     

    $

    3.76

     

     

    $

    12.36

     

     

    $

    11.82

     

    Stock-based and deferred compensation expense

     

    1.03

     

     

     

    0.94

     

     

     

    1.08

     

     

     

    4.18

     

     

     

    3.78

     

    Amortization of intangibles

     

    0.19

     

     

     

    0.20

     

     

     

    0.19

     

     

     

    0.75

     

     

     

    0.81

     

    Acquisition-related expenses (1)

     

    —

     

     

     

    0.07

     

     

     

    —

     

     

     

    2.24

     

     

     

    0.25

     

    Loss contingency (reversal) (2)

     

    —

     

     

     

    0.10

     

     

     

    (0.10

    )

     

     

    (0.10

    )

     

     

    0.10

     

    Lease-related asset impairments and other charges (3)

     

    0.23

     

     

     

    —

     

     

     

    —

     

     

     

    0.22

     

     

     

    —

     

    Investment (gains) losses, net

     

    (0.03

    )

     

     

    (0.01

    )

     

     

    (0.03

    )

     

     

    (0.10

    )

     

     

    (0.03

    )

    Income tax adjustments

     

    (0.40

    )

     

     

    (0.26

    )

     

     

    (0.25

    )

     

     

    (1.13

    )

     

     

    (0.66

    )

    Non-GAAP diluted net income per share

    $

    4.81

     

     

    $

    4.27

     

     

    $

    4.65

     

     

    $

    18.42

     

     

    $

    16.07

     

     

     

     

     

     

     

     

     

     

     

    Shares used to compute diluted net income per share

     

    443

     

     

     

    459

     

     

     

    448

     

     

     

    450

     

     

     

    459

     

    (1)

    Associated with the Figma transaction, and includes deal costs, certain professional fees and the termination fee

    (2)

    Associated with an IP litigation matter

    (3)

    Associated with the optimization of our leased facilities, and primarily includes impairment charges related to certain operating lease right-of-use assets and leasehold improvements

     

    Non-GAAP Results (continued)

     

    The following table shows Adobe's fourth quarter fiscal year 2024 GAAP tax rate reconciled to the non-GAAP tax rate included in this release.

     

     

    Fourth Quarter

    Fiscal 2024

    Effective income tax rate:

     

     

     

    GAAP effective income tax rate

     

    15.5

     

    %

    Income tax adjustments

     

    5.0

     

     

    Stock-based and deferred compensation expense

     

    (1.4

    )

     

    Amortization of intangibles

     

    (0.3

    )

     

    Lease-related asset impairments and other charges (3)

     

    (0.3

    )

     

    Non-GAAP effective income tax rate (4)

     

    18.5

     

    %

    (3)

    Associated with the optimization of our leased facilities, and primarily includes impairment charges related to certain operating lease right-of-use assets and leasehold improvements

    (4)

    Represents Adobe's fixed long-term non-GAAP tax rate based on projections and currently available information through fiscal 2025

     

    Reconciliation of GAAP to Non-GAAP Financial Targets and Assumptions

     

    The following tables show Adobe's annual fiscal year 2025 financial targets and assumptions reconciled to non-GAAP financial targets and assumptions included in this release.

     

    (Shares in millions)

    Fiscal Year 2025

     

    Low

     

    High

    Diluted net income per share:

     

     

     

     

     

     

     

    GAAP diluted net income per share

    $

    15.80

     

     

     

    $

    16.10

     

     

    Stock-based and deferred compensation expense

     

    4.69

     

     

     

     

    4.69

     

     

    Amortization of intangibles

     

    0.71

     

     

     

     

    0.71

     

     

    Income tax adjustments

     

    (1.00

    )

     

     

     

    (1.00

    )

     

    Non-GAAP diluted net income per share

    $

    20.20

     

     

     

    $

    20.50

     

     

     

     

     

     

    Shares used to compute diluted net income per share

    433

     

     

     

    433

     

     

     

     

    Fiscal Year 2025

    Operating margin:

     

     

     

    GAAP operating margin

     

    36.0

    %

    Stock-based and deferred compensation expense

     

    8.7

     

    Amortization of intangibles

     

    1.3

     

    Non-GAAP operating margin

     

    46.0

    %

     

    Reconciliation of GAAP to Non-GAAP Financial Targets and Assumptions (continued)

     

    The following tables show Adobe's first quarter fiscal year 2025 financial targets and assumptions reconciled to non-GAAP financial targets and assumptions included in this release.

     

    (Shares in millions)

    First Quarter Fiscal 2025

     

    Low

     

    High

    Diluted net income per share:

     

     

     

     

     

     

     

    GAAP diluted net income per share

    $

    3.85

     

     

     

    $

    3.90

     

     

    Stock-based and deferred compensation expense

     

    1.13

     

     

     

     

    1.13

     

     

    Amortization of intangibles

     

    0.19

     

     

     

     

    0.19

     

     

    Income tax adjustments

     

    (0.22

    )

     

     

     

    (0.22

    )

     

    Non-GAAP diluted net income per share

    $

    4.95

     

     

     

    $

    5.00

     

     

     

     

     

     

    Shares used to compute diluted net income per share

    439

     

     

     

    439

     

     

     

    First Quarter

    Fiscal 2025

    Operating margin:

     

     

     

    GAAP operating margin

     

    37.0

    %

    Stock-based and deferred compensation expense

     

    8.5

     

    Amortization of intangibles

     

    1.5

     

    Non-GAAP operating margin

     

    47.0

    %

     

     

    First Quarter

    Fiscal 2025

    Effective income tax rate:

     

     

     

    GAAP effective income tax rate

     

    19.0

     

    %

    Stock-based and deferred compensation expense

     

    (1.7

    )

     

    Amortization of intangibles

     

    (0.3

    )

     

    Income tax adjustments

     

    1.5

     

     

    Non-GAAP effective income tax rate (4)

     

    18.5

     

    %

    (4)

    Represents Adobe's fixed long-term non-GAAP tax rate based on projections and currently available information through fiscal 2025

    Use of Non-GAAP Financial Information

    Adobe continues to provide all information required in accordance with GAAP, but believes evaluating its ongoing operating results may not be as useful if an investor is limited to reviewing only GAAP financial measures. Adobe uses non-GAAP financial information to evaluate its ongoing operations and for internal planning and forecasting purposes. Adobe's management does not itself, nor does it suggest that investors should, consider such non-GAAP financial measures in isolation from, or as a substitute for, financial information prepared in accordance with GAAP. Adobe presents such non-GAAP financial measures in reporting its financial results to provide investors with an additional tool to evaluate Adobe's operating results. Adobe believes these non-GAAP financial measures are useful because they allow for greater transparency with respect to key metrics used by management in its financial and operational decision-making. This allows institutional investors, the analyst community and others to better understand and evaluate our operating results and future prospects in the same manner as management.

    Adobe's management believes it is useful for itself and investors to review, as applicable, both GAAP information as well as non-GAAP measures, which may exclude items such as stock-based and deferred compensation expenses, amortization of intangibles, investment gains and losses, income tax adjustments, and the income tax effect of the non-GAAP pre-tax adjustments from the provision for income taxes. Adobe uses these non-GAAP measures in order to assess the performance of Adobe's business and for planning and forecasting in subsequent periods. Whenever such a non-GAAP measure is used, Adobe provides a reconciliation of the non-GAAP financial measure to the most closely applicable GAAP financial measure. Investors are encouraged to review the related GAAP financial measures and the reconciliation of these non-GAAP financial measures to their most directly comparable GAAP financial measure as detailed above.

    View source version on businesswire.com: https://www.businesswire.com/news/home/20241211684094/en/

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